If you ask successful community bankers "What is your greatest asset in fighting the giants," many will answer:

"Knowledge. I know the community, its people, and its needs."

I suspect many readers of this column come into their banks after lunch or a day on the road, look through a stack of messages (or listen to their voice mail or scan their E-mail), and know just why each person is calling. Such knowledge comes with the territory.

The story is the same when it comes to making loans: The banker often knows as much about the project to be financed as the borrower does. In fact, sometimes the banker knows more than the borrower, if you include knowledge of the community and the economy that is so important in determining whether the project will be a success.

What brought this to mind was a July 24 article in this newspaper by Lee Lodes of Prophet Market Research and Consulting in San Francisco.

The article discussed the results of his company's "mystery shopping" survey of sales of investment products. Mr. Lodes conclusions:

*Bank salespeople were more likely than stockbrokers to sell specific products, rather than develop a course of action.

*Bank brokers did not do adequate follow-up selling.

*Bank brokers are not the reaping full benefit from their greatest advantage - their interface with customers - to establish a prospect's needs.

*Saddest of all, a large percentage of banks and brokers made recommendations with little or no knowledge of the prospect's financial situation, tax bracket, or needs - and without inquiring about the prospect's investment history or risk tolerance.

This is reprehensible - and from a marketing point of view, stupid.

Look at the opportunities a bank has to win investment customers.

*A changed name on an account shows that a man or woman has been widowed.

How often banks fail to contact the customer to see if they can help in any way, with loans or with help in investing insurance payments.

*Local companies lay off many workers.

Can't the bank take cognizance of the situation with statement stuffers reminding depositors what services are available, to help those laid off?

You don't need a list of everyone "downsized" - anyway, it's impossible to get one. But you can remind people what you have to offer.

A statement stuffer saying "we understand the pain and will try to help, by stretching out debt payments and helping protect your severance pay" can do a lot of good, for you and your customers.

All this is just marketing sense. But the failure of bank brokers in over half the cases in the Prophet survey to learn the prospect's tax bracket or income level before making recommendations seems to me to be criminal. So does the failure in 25% of the cases to learn risk tolerance and the prospects' investment history.

You can't give good investment advice without knowing whether the money is replaceable or a lump sum that will have to last the rest of the investor's life. You have to know how old the children are, and what demands will likely be placed on the investor to meet large payments soon or in the further future. And you need to understand the investor's attitude toward risk.

When I am asked for investment advice, first I categorically state that the best investment you can make is to pay off your debts; no investment will yield as much as your borrowing costs you.

As for liquidity, if you may need emergency money later, a line of credit is far superior to holding funds in low-yielding form year after year just in case it may be needed.

Then I ask:

"Which hurts worse: Someone gives you a stock tip, you take it, and the stock goes down? Or someone gives you a stock tip, you don't buy it, and it goes up?" (In other words: Is this truly "gut money" that must be protected, or is it surplus money that can be invested with motives of ego as well as of financial return?)

Only when these questions have been answered is it possible to start talking about investment opportunities and risks.

Mr. Nadler is a contributing editor of the American Banker and professor of finance at Rutgers University Graduate School of Management.

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