Even as market conditions have pounded Fifth Third Bancorp's wealth management business, it has completed a series of initiatives that should ultimately improve its profitability, according to its top executive.

Its moves included an aggressive hiring push to upgrade its retail brokerage operation and a redistribution of clients between that unit and the private bank, said David Pittman, the president of Fifth Third Investment Advisors.

These measures should improve client service and retention as well as sales and the wealth management business' rate of employee turnover, he said.

"This is going to give us a benefit when the recovery comes, but it also gives us a benefit right now," he said. "We're very expense-focused, and since we're not going to grow the people side, we have to be more effective."

Pittman described the recently laid groundwork as a silver lining to a year in which early goals for double-digit growth were blown away by the financial crisis. At the end of 2007, Fifth Third had $33 billion of investment assets under management, along with $223 billion of assets under administration.

Since then, assets under management have dwindled to $22 billion, and assets under administration stand at $179 billion. Through the first three quarters of 2008, Fifth Third's securities brokerage income was $39.6 million, down 17.6% from the year earlier, according to Michael White Associates. Its annuity commissions were $31.3 million, down 6%, and fiduciary-related income was $135.1 million, down 1.9%. On the bright side, overall insurance brokerage income was $15.8 million, up 26.5%, according to White Associates.

The market's decline has been a boon to Fifth Third in one sense: It has let the bank stock up on talent cut loose by struggling rivals, Pittman said. The bank kept its total retail broker head count of 300 but swapped in high-performing reps from big brokerage houses, bank programs and elsewhere. "We did a lot of recruiting, we raised standards," he said. "And about a third of that team is new."

In the private bank Fifth Third kept its employee count level but trained existing employees to fill a new relationship manager category.

These "quarterback" positions are central to the private bank's effort to build a team approach, in which experts in different areas collaborate, said Pittman. Such shifts, which have been under way at sizable banks for years, can cause consternation among executives who feel it diminishes their interaction with clients, he said.

Fifth Third has emphasized to its private bankers that clients call whomever they want on their team, and vice versa. This gives clients a single contact, Pittman said.

The managers now have more third-party options to complement their own investments. Fifth Third opened its trust platform to outside managers more than two years ago and in the past year has increased the number of such managers from 12 to 20, he said.

The Cincinnati bank is also making progress on establishing a uniform sales and service approach in each branch. When Pittman was hired in the fall of 2006, he found little uniformity among its regional operations.

A key part of the strategy, is assigning clients with at least $500,000 of investable assets to the private bank and others to the retail side. The change meant shifting more than 15,000 clients in the third quarter.

Fifth Third also simplified the role of its 700 licensed bankers. It set up a mentoring system in the fourth quarter and, this year, changed its compensation structure to encourage bankers to steer prospects to reps rather than selling to them directly.

"That's a large group of people in those branches, and they have a lot of responsibilities," Pittman said. "We wanted to simplify the process for them." This added more than $1 billion of net inflows last year.

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