Fulton Financial Corp. in Lancaster, Pa., is preparing to offer a fee-based advisory service for its retail investment customers, the head of its wealth management and trust businesses said.

"This will change the product mix and the kind of interaction we have with clients, to generate more of a fee income stream," said Dave Hanson, the chairman and chief executive of Fulton Financial Advisors.

His unit has not said when it would make the fee-based offerings available, but they would be offered alongside its commission-based offerings.

Fulton Financial Corp., which has 11 banks in five states, is joining a growing trend in which banking companies that have charged sales commissions for investments are offering fee-based advisory services as well. Clients typically pay about 1% of assets under management each year in return for advice, portfolio rebalancing, and other services.

Fulton's brokerage business, which has about $1 billion of assets under management, "has traditionally been more transaction oriented," Mr. Hanson said. Part of the reason his company is getting into the fee-based retail advisory service business is a gradual decrease in the referrals that have fueled commission-based lines, he said.

The drying up of brokerage referrals is an industrywide phenomenon, he said.

"The low-hanging fruit has been picked," Mr. Hanson said. "The larger banks that got deeply into the brokerage business earlier on generally went to the fee-based approach earlier. Some of us got into the game a little bit later, so we're just a few years behind in that life cycle."

Fulton partnered with Raymond James Financial Inc. six weeks ago to create a fee-based advisory service. The partnership will allow Fulton to start offering products and services like separate account management, wrapped mutual funds, and financial planning, he said.

John Houston, managing director of Raymond James' financial institutions division, said more community banks are adding fee-based accounts to their offerings. One reason: The accounts provide a predictable stream of income for banks. Also, they usually involve a financial planning component, which allows bank wealth management and brokerage units to assure customers that the investments in their portfolio will be suitable for them.

"Typically a process goes along with a fee-based account that will help ensure proper diversification for the client," he said.

Fulton Financial Corp. announced its plan to enter the fee-based retail investment account market four months after it started Clermont Wealth Strategies, an investment business that offers unified managed accounts for high-net-worth customers.

The parent company has $6 billion of assets under management in its trust platform, and those customers will continue to pay fees, according to Mr. Hanson, who heads both the retail business and Clermont.

He was promoted to chairman of Fulton Financial Advisors in April. Before that he had been its chief executive and president since May of last year.

Fulton Financial Corp. does not have explicit goals for fee-based retail assets, but the advisory business is meant to help push annual revenue growth from the retail investment business from the single digits into the "strong double digits," Mr. Hanson said. "In order to do that, we need to have a business model that is more oriented toward managing relationships."

The income stream for advisers who use fee-based accounts can take a few years to match what they would earn in commissions, he said, so one of the biggest obstacles for banks trying to launch fee-based platforms has been persuading advisers to forgo those up-front payments.

Fulton has implemented "financial provisions to help them protect their income while they make the transition in the early years," Mr. Hanson said.

After cutting back its investment business in past years, this year his company has increased its corps of investment reps by 20%, to 37, and that growth should rise to 30% by yearend, he said. It is using the hiring effort to add "folks who have already demonstrated the ability and the interest to develop a recurring revenue stream."

The candidate pool has improved from a few months ago, as a result of turmoil at larger competitors, Mr. Hanson said.

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