Old Kent Financial Corp. is on the prowl for investment representatives to swell its brokerage force tenfold over the next two or three years.
The Grand Rapids, Mich.-based bank, which has been selling mutual funds since 1991, has 15 brokers now and wants to have 150 to 200 - about one per branch.
"We're still putting together a master plan, but we are looking for people that are proven producers," said E. Philip Farley, executive vice president overseeing investment services. Old Kent is eying representatives with at least five years experience.
The hiring binge is part of the $10.9 billion-asset banking company's plans to invigorate sales of its own family of Kent Funds. Like many bank executives, Mr. Farley is frustrated that most of the $4 billion of assets in Kent Funds comes from trust conversions and not retail sales.
So far, the bank has persuaded a paltry 0.5%, or 4,500, of its 900,000 household accounts to invest in its family of funds, Mr. Farley estimated. He wants to boost that to 5%, or about 45,000 households, in the next few years.
One observer who follows the bank wasn't very impressed. If the company can capture only 5% of its overall customer base, the earnings contribution will not hit the radar screen, said stock analyst William W. McGinnis of Robert W. Baird Co., Milwaukee. To catch his eye, the bank must reach 40% or 50% of its customer base, Mr. McGinnis said.
Well ... 5% could mean serious dollars if it included the bank's wealthiest 10 customers, Mr. McGinnis said. "Then I'd say they're doing something important, something different."
Mr. Farley acknowledged the challenge is to make brokerage a major bottom-line contributor. He said that 83% of Old Kent customers invest in an individual retirement account elsewhere.
Old Kent hopes to get customers back by pushing representatives out into the field to conduct seminars. "We look on the branch system as being a foundation off which a broker can work a market or neighborhood," he said.
The brokerage unit's president, Mark Crouche, who was hired last summer, is looking for talent at the nation's top brokerage firms and competing financial institutions, Mr. Farley said.
These brokers will target the wealthy and baby boomers, whom Mr. Farley called the "emerging affluent." To reach the middle market, Mr. Farley is considering training his platform personnel to sell securities.
"All of those efforts will add up to a significant part of the Old Kent bottom line," he insisted.
Old Kent got serious about bank brokerage in July, when it internalized a program that had been run by GNA Corp., a Seattle-based company that helps banks design their brokerages.