In the past few years, an increasing number of banks have established new departments offering trust and asset management services. At the same time, changing demographics have brought in a new wave of customers looking for advice and support.
However, these new customers often have negative perceptions about the traditional aspects of trust banking.
Thus the challenge to banks introducing these services is a question of semantics: Maybe it makes sense not to call the new trust department a trust department?
The word "trust" is one of the most beautiful in the English language. However, when it is in reference to a bank's fiduciary and asset management services, some people will think of very old-line, ultraconservative investing. That stodgy image is out of step with contemporary attitudes about investment management.
These people will also view the archetypical trust customer as either the aged widow begging for her monthly allowance or the Daddy Warbucks- clone lighting cigars with $50 bills.
Deserved or not, this negative perception means banks should consider eliminating or downplaying the word "trust" in naming their new departments and marketing them to the new trust audience.
Additionally, new trust and asset management services will find the bulk of their business to be in lifetime asset management, nottrue fiduciary trust business. Why then emphasize "trust," when the services being provided are more of the "asset management" variety?
A study of recently created bank trust departments clearly shows the majority of those departments' assets are maintained in lifetime asset management services.
The aging of the baby boomers has brought a host of marketing potential for bank trust and asset management service providers. These people willingly admit they need assistance in lifetime asset management. And as they mature, they will increasingly need the pure trust service provider as well.
To get to the boomers now, during their peak performing years, and to maintain a relationship with them is a key goal in marketing these services.
Institutions should not turn their backs on the pure trust business; it will represent a storehouse of income in the future. However, from a semantics standpoint, use of the term "asset management" might be preferred as an all-encompassing title.
Some institutions are using similar terminology, such as "financial management services," "investment services," or "financial resource center," to convey the services provided.
Since the most of the business conducted by the new department over the first several years will be lifetime asset management, that it should be the focus of marketing efforts. The objectives should be, firstly, to persuade prospects to change their service provider; and secondly, to create a need for these services among those who do not use them.
When first marketing a new trust and asset management services department, a great deal of time and energy must be spent on increasing awareness. Institutions that have not previously provided these services will find they need to tell their story over and over.
During this period, some strategically placed advertisements or well- targeted direct mailings are important. Today's newer trust and asset management customers will not be turned off by the hard sell.
Aside from pure awareness,seminar series for niche markets - women in business, retirement planners, and so on - can be very effective marketing tools.
Consider First National Bank of Hope, N.J., which introduced its new trust services in February 1994 with a seminar offering antique appraisals.
Five hundred invitations went out to collectors, inviting them to bring their antiques to the bank for free appraisal - and to meet with the new trust officers!
The response was extraordinary, with 200 people arriving despite a heavy snowfall.
Also worth considering is the need to market this new sense of trust within the bank's organization. Changing the attitude of bank personnel to be more aligned with modern-day reality can be difficult. Many bank officers and directors have relied upon their historical idea of a trust department.
Trust and asset management departments have a responsibility to bring this important shift in service offerings and the potential client to the attention of bank management, and ultimately to the board.
Assessing the demographics of the markets where prospects live, identifying the needs and interests of the current target generation, and relaying this information to those making decisions about bank services and marketing are extremely important in trying to change the old-line view of a bank trust department.
Mr. Phillips is president of Trust Resource, a Portland, Conn., consulting firm.