The new IRAs created by recent tax law changes provide a major opportunity for banks, but many seem to be ignoring it. There is a lot of emphasis on creating a sales culture in the branch, and encouraging tellers and platform personnel to sell the obvious. The obvious is now the IRA.

The Individual Retirement Account is one of the most convenience-driven bank products: About 80% of all IRA sales occur between March 15 and April 15. Though it is lumped into the investment product category and considered a product where portfolio considerations or rate might dominate choice, it sells much more like a noninterest checking account. Because the IRA is an eleventh-hour purchase, convenience, not financial terms, drives its sale.

It would be ludicrous for banks to let this 30-day opportunity pass them by, and let non-bank financial providers like Merrill Lynch and other mutual funds and financial planners aggressively out-promote them.

Commercial banks have a distinct advantage when consumers shop at the last minute for a complex new product: their branch networks. Sales people in branches can offer one-stop shopping and answer questions about the complicated new IRA laws, and painlessly complete an IRA sales transaction. Most major banks have a branch within a stone's throw of their customers' homes or places of work, and for last-minute IRA shoppers, this translates into convenience.

As for branch managers, prospecting for IRA sales is among the easiest mining they'll do all year. Because convenience is so critical to customers, the trade area for IRAs tends to be concentrated around the branch. According to our data on customer behavior, the decay in IRA sales is 75% per mile from the branch.

For example, if a branch can sell 1,000 IRAs to customers within half a mile of its location, it will sell only 250 IRAs to customers living 1.5 miles away.

Similarly striking is the decay in the average amount kept in an IRA. It drops, on average, $1,200 per mile. The message to branch managers is obvious: Focus hard and first on customers living closest to the branch. Their likelihood of purchase from the branch is greatest, as is their average balance.

When balances fall off this much, the importance of location convenience is reinforced. This drop-off certainly does not mean that people further from branches have less money. It means that households further away have other equally or more convenient competitor branches from which to choose, and do so.

Obviously, the new IRAs have income targets. Our research shows that IRAs that sell through commercial banks are mass-market products that sell less to white-collar professionals or blue-collar workers, and more to individuals employed in the service sector. The target age of purchasers is 30 to 55.

The Roth IRA is more likely to sell to families without children, because of disposable-income issues, while Hope and Education IRAs are for families with children. Homeowners are 31% more likely to buy the product than are renters, and consistently over time, more money is put into IRA funds by suburbanites and urbanites than by rural customers.

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