Six years ago Trustmark National Bank of Jackson, Miss., had a nice complement of wealth management businesses — trust brokerage, private banking and even a registered investment adviser.
But too often the businesses competed with one another and failed to coordinate their efforts, said Duane Dewey, executive vice president at Trustmark National, a unit of the $9.6 billion-asset Trustmark Corp.
"There was internal competition," said Dewey, whose unit manages or administers $8.5 billion of assets. "My job was to form a collective wealth management group focused on all aspects of affluent clients' financial picture, and to re-energize the unit and grow revenue and the business."
Much has changed since 2003, when Dewey, a veteran of Provident Bank in Cincinnati and Republic National Bank in Dallas, joined Trustmark with marching orders to "bring all the pieces together," he said.
There is less competition between the wealth businesses, and they are starting to work together, Dewey said. A financial planning approach uniformly underpins all client relationships, and a three-year-old insurance business has rounded out the bank's wealth management solutions.
Since 2003 the wealth business has jumped from contributing 5% of Trustmark National's revenue to contributing 9%, Dewey said. Annual revenue has gone from about $24 million to $34 million over the past four years, and profitability has "virtually doubled" over the same period, he said.
The improvement has occurred without a net addition of employees. Dewey oversaw 175 wealth management employees when he started at the bank, and he oversees the same number today. The company has upgraded and reallocated talent, he said.
Turf struggles are all too common within bank wealth management businesses, said Michael White, the president of Michael White Associates in Radnor, Pa. One of the most effective responses is to create a single, powerful position to which all the units report, he said. "Right away, you have a focal point for decision-making," White said.
At Trustmark, Dewey reports to Richard G. Hickson, the chairman and chief executive of Trustmark National and Trustmark Corp. Dewey has worked to have Trustmark's financial planning capability used as a matter of course.
Dewey said a key hire was David Martin, a certified public accountant and certified financial planner with experience selling life, long-term-care and disability insurance. Martin's responsibilities included integrating the bank's financial planning methodology with more complex wealth planning and estate business.
After a few months, it became clear the bank needed a better insurance offering as part of that equation, so it started one from scratch. Martin, the bank's wealth management consulting manager, is now principal of the insurance agency as well.
Trustmark also has a large commercial insurance operation that is not related to the wealth management insurance business.
Another opportunity is in the retail brokerage business. In the early 1990s the bank formed a broker-dealer, but its profitability and growth prospects were concerns. Shortly after Dewey's arrival, the bank decided to shutter the broker-dealer and turned to the third-party broker-dealer Uvest Financial Services. "Uvest helped efficiency wise, and we did a good job of recruiting in 2005 and 2006," Dewey said. "The most significant improvement in profitability has been on the brokerage side of the business."
Trustmark's investment program income ranks 57th among bank holding companies, while its fiduciary income ranks 59th, according to Michael White Associates' Fee Income Ratings Report.
Having the components of Trustmark's wealth management unit report to a single, high-ranking executive has helped temper the turf battles, Dewey said.
One cooperation scenario involved a broker whose client needs trust services: The trust professionals serve the client, but the broker remains in charge of the relationship.
A flexible attitude toward client segmentation has helped, Dewey said. Most brokerage clients have less than $1 million of assets. But Trustmark does not force handoffs to the trust department when brokerage clients have more than that. And financial planning and registered investment adviser services are shared across different units.
Dewey's top initiatives include expanding in markets Trustmark has entered in recent years through acquisitions: Tennessee, Florida and Texas. The area with the most upside is Houston, he said. Expansion into that and other markets has been slow because of economic turmoil he said. In 2006, Trustmark bought Republic Bancshares of Texas Inc. in Houston.