For the first time, independent financial advisers can market core banking products and make a buck doing so.
An Internet investment conduit for financial advisers, set up this month by iFinancial Corp. of Brentwood, Tenn., includes banking products and services from nBank.corp of Commerce, Ga., which owns First National Bank of Commerce there.
The nBank offerings include certificates of deposit, checking, savings and money market accounts, mortgages, commercial letters of credit, and commercial lending. Its high-yield checking account has a $2,500 minimum and pays 6.25% annual percentage yield.
"We're calling what we're doing 'financial banking' - a combination of financial services and banking," said Roger E. Sulhoff, president and CEO of First Global Financial Advisors Inc., an Alpharetta, Ga., financial planning firm that iFinancial bought in January. "We're looking to take a fully chartered bank and put it into a financial adviser's office."
Advisers will be paid commissions for selling the insurance and investment products. For banking products, however, the compensation is more customized. Advisers will be paid 25% of the fee for each commercial loan plus 10% of the customer's "profitability" to the bank, as defined by an elaborate formula that includes assets and liabilities.
Edwin Morrow, a financial adviser who is president of the International Association of Retail Financial Consultants, said such an arrangement could be beneficial for banks in the long term.
"Ultimately, if this works, banks looking to get into financial services will have a larger pool of advisers from which to choose, and those advisers will be accustomed to working with banking products," Mr. Morrow said.
For each adviser who affiliates with nBank Financial, iFinancial will build a dedicated Web site. Each site will provide access to a wide menu of financial products - including investments and insurance through units of American General Financial Group.
The site will also have as many as 50 other links - to product sponsors, portfolio management and recordkeeping services, the clearing firm National Financial, and other providers.
Affiliated advisers will be able to sell mutual funds and other registered products via the broker-dealer AG Securities, a subsidiary of American General. They can also use First Global's registered investment adviser license to give investment advice. Private portfolio management services are available via SEI Investments in Philadelphia and Rochdale Investment Management in New York.
The life insurance and annuities come via American General Insurance Co. Advisers can also sell an index-linked annuity from Business Men's Assurance of America, charitable gift annuities from National Community Foundation, and long-term-care and disability income policies from ProvidentUnum and Kanawha. Personal lines such as home and auto will not be available.
Independent advisers and insurance agents can now link up with nBank Financial, and accountants will be able to do so Friday. nBank Financial will also provide what Mr. Sulhoff calls a "training university" to teach its affliated advisers online about the insurance, securities and banking products available.
Advisers who affiliate are not required to offer all of nBank Financial's products and services, but "we figure they'll want to," Mr. Sulhoff said. But an adviser who wants to offer banking must also offer the fixed insurance products, he said.
nBank Financial is the proprietary service arm of 5-year-old nBank.com, a nationally chartered Internet bank with $270 million of assets.
Though nBank.com does not own nBank Financial, iFinancial has licensed nBank's name, and nBank.com has the right to offer products otherwise proprietary to nBank Financial's participating advisers.
The arrangement gives nBank.com several benefits, according to Mr. Sulhoff. First, its distribution is being broadened to financial advisers. Previously, its only active distribution network was through mortgage brokers.
And next year nBank Financial will integrate the insurance and investment products it offers into nbank.com.