National City Corp. is seeking to multiply its revenue from retirement products during the next five years by bolstering its sales force and educating existing and potential clients.
Betty Moon, the company's executive vice president for retail investments, said the retail division serves mass-affluent clients. "Our customers are in the middle range, from $5,000 to $500,000," she said. "That's our sweet spot."
In order to add to retirement revenue, National City will continue to hire salespeople, Ms. Moon said.
"We will add retail investment officers and licensed platform bankers," she said. The company now has 185 investment officers and 1,500 platform bankers. "That will grow throughout 2005," she said but declined to specify a staffing target.
National City will also begin offering seminars led by an in-house training team. The seminars are to cover everything from basic investment information to more advanced financial planning guidelines. "We want to make a more educated customer," Ms. Moon said. "We also want to make people aware that we are in this business. People don't typically think of their bank for 401(k) plans."
Ms. Moon acknowledged that some customers may be concerned that the seminars will be strictly sales pitches. She said, however, that their main goal is to "help [customers] ask really great questions and become familiar with a variety of products."
David A. Daberko, National City's chairman and chief executive officer, said in a speech Nov. 16 to a Las Vegas conference of the Bank Administration Institute that his Cleveland banking company wants its retirement planning revenue to grow five- to ten-fold by 2010.
National City's retirement group has more than 1,500 people licensed to sell securities and insurance. Last year it generated $49 million of revenue on sales volume of about $1 billion, most of it from fixed annuities, according to Mr. Daberko. In the first three quarters of this year the group matched its revenue number for all of last year.
"We're pleased with this performance," he said, "but I expect revenues to be five to 10 times larger than this by the end of this decade if we do our job right."
The company sees a chance to help customers with financial planning, especially those who depended on state and municipal authorities that probably will not be able to finance their growing pension obligations or on failed companies that are defaulting on pension promises to their workers, Mr. Daberko said in his prepared remarks.
Ms. Moon said the company targets the mass affluent because this demographic group is "underserved by traditional brokerage firms."
Regarding attractive areas in the retirement industry, Ms. Moon said, "401(k) rollovers are a big one."
"Too often people are puzzled with how to make a decision," she added, and National City is in a good position to win such business. "People do trust their banks," she said, and National City is committed to establishing a relationship well before a customer's 401(k) is ready to be rolled over.
National City sells individual retirement accounts, more than 3,000 mutual funds, and privately managed programs among other retirement products.
Managed accounts is another product area on which National City is focusing. Its retail investment officers specialize in selling managed accounts that are marketed and sold in its branches, Ms. Moon said.
