Fifth Third Bancorp is responding to shifts in the marketplace by making fundamental changes to its investment business where it wants to take more of an advisory role with its wealthy and mass-affluent customers.
A broad slate of initiatives under way include steering licensed platform bankers away from making sales and toward referring business to dedicated investment representatives, said David Pittman, the president of Fifth Third Investment Advisors.
Fifth Third Private Bank, meanwhile, is expanding a program in which clients are paired with a financial quarterback who can assemble a team of experts to guide the client. And in both areas Fifth Third is ramping up hiring.
Jaleigh White, Fifth Third Private Bank's director of wealth planning, said investors have increasingly easy access to products and information on their own through the Internet, so to solidify customer relationships, particularly with wealth individuals, it is critical to provide more.
Customers "need someone" who can "bring all that complexity into something that is relevant to their life," she said.
Mr. Pittman is leading these efforts. The former Wells Fargo & Co. executive has been in charge of operations at the bank's private client business in the Midwest since Fifth Third hired him in fall 2006 to expand its investment advisory business.
On the retail side, Fifth Third has added about 35 of what it calls "investment executives" last year to its corps of 800 registered representatives.
The goal behind these and other changes is to ensure sales consistently grow at least 10% a year, Mr. Pittman said. "We have the opportunity to grow the business annually in the teens," he said. "We would consider anything less than that double-digit growth to be a disappointment."
Programs at Fifth Third Private Bank, where 338 relationship managers serve clients with at least $1 million of investable assets, aim to generate at least double-digit revenue gains, Mr. Pittman said.
Another goal at Fifth Third, which had $33 billion of assets under management and $223 billion assets under administration on Dec. 31, is to add more client-relationship point people, the ones who coordinate specialists to help clients make decisions in areas such as investments, insurance, and trust-related services. It now has 100 of these point people.
Fifth Third also wants to make more non-prorietary products available to its wealthy customers.
Since opening its trust platform to outside managers 15 months ago, the company has forged partnerships with a dozen managers, and plans to double that number within the next year and a half, Mr. Pittman said.
Burton Greenwald, an analyst with BJ Greenwald Associates of Philadelphia, said Fifth Third's changes reflect the intense competition for high-net-worth customers among financial services companies, registered investment advisers, and many others.
"This is an attempt" by Fifth Third "to upgrade their investment capabilities, which midsize banks across the country have never been noted for," he said.
In the retail business, he said, the company is "recognizing that platform bankers are not really equipped to compete with the registered investment advisers of the world, the financial planners or the brokers at Merrill Lynch."
Mr. Pittman said the licensed bankers, who juggled several responsibilities, were subject to "a lot of variable production."
In the third quarter of last year Fifth Third started to shift sales and advice duties to the investment executives, he said,
"Our real focus is on building that referral," Mr. Pittman said.
Fifth Third plans to do plenty of hiring in its private bank. In the second half of this year and into 2009 it will concentrate on recruiting veteran investment executives from both banks and large brokerage houses, Mr. Pittman said.
The bigger need is to find more private banking professionals who can fill the adviser role, he said. The hires could increase Fifth Third Private Bank's staff by 10%.
Mr. Greenwald said that adding wire-house veterans will bring Fifth Third "a broader and deeper knowledge of asset classes and sources of investment management." The mistake banks can make after hiring brokers is giving them too little independence, he said. "If they put them under the bureaucracy that exists at the bank, there will be real issues that will have to be worked out."
The wealth management changes, such as broadening the advisory strategy, are taking place in tandem with Fifth Third's drive to increase consistency of its brand, its sales processes, and its execution throughout its far-flung branches, Mr. Greenwald said.
