Midsize companies want their bankers to be trusted advisers, but they give them low marks in this regard. In fact, when my firm asked such companies whom they turn to for good advice, bank relationship managers ranked dead last - behind accountants, insurance brokers, key suppliers, and even lawyers.
Those results are hardly good news for the banking industry, but they do reveal a real opportunity for individual banks.
No banker begins a relationship as a trusted adviser. Banking relationships usually begin with "one-off" sales - of a loan, for example, or a set of cash management services.
The client, usually represented by the treasurer, typically defines a problem and a desired solution, requests proposals from one or more banks, and selects the bank that offers the lowest price, the best terms, or both. That bank may do an excellent job, but there is a limit to the initial depth of the relationship.
At the next level, the treasurer may sense that the banker and the client team bring skills beyond those needed to address the original problem or to provide the initial product set. The client will begin to share information on other problems for which it lacks obvious solutions. If that the bank can offer solutions, the banker will begin to get the attention of the CFO.
At the highest relationship level - trusted adviser - the CEO will consult the banker on all major issues of strategic importance, including mergers, acquisitions, ownership transition planning, risk management, and more. The banker and his or her team will anticipate the needs of the client and help uncover and understand latent needs. The experience will help the banker understand how the same issues may affect other clients.
Beyond the obvious fee opportunities, this trusted-adviser status cements client loyalty and brings numerous other advantages, including more repeat business and fewer "sales" meetings.
Achieving trusted-adviser status today requires new mindsets.
For example, traditional relationship managers use client calls to gather information. This strategy may be adequate for transactional banking, but it will not be enough to advance a relationship to a higher level.
Trusted advisers gather information before a call, create hypotheses and ideas, and try to furnish value to a client or prospect on every call. This level of service requires solid knowledge and a change in work habits.
Middle-market bankers typically lack the luxury of a research department or an industry specialist to help them prepare for a call. They have to go it alone, and their time to prepare is limited.
Luckily the growth of the Internet has turned a trickle of pre-call information into a fire hose. Capitalize on it before the competition does. Off-the-shelf products like First Research are a good start, but the best relationship managers go much deeper.
Though 30 minutes of Internet-based preparation may not yield all the answers for a client call, it will greatly enhance the quality of the questions the banker can pose. It will also demonstrate commitment.
These following steps should give relationship managers a solid foundation for any client call:
Review the client's Web site. A quick review can reveal valuable information - including background on products and services offered, subsidiaries, press releases, and key industries served - that will have a bearing on the client's potential banking needs.
For example, even a basic knowledge of a client's cross-border business can spark pre-call consideration of foreign-exchange requirements.
Compare it to competitors' sites. Too few bankers take this next logical step. The insights it brings can spur questions that will demonstrate sophistication, knowledge, and interest. The company's answers will help the banker understand its needs.
Visit the Web sites of the client's suppliers, customers, and industry associations. These contain a wealth of information about the market in which the client competes. In particular, trade group sites often identify important topics and trends and provide white papers and press releases that can get a banker up to speed fast on the issues that are important to the company.
Check your own bank's site, and your competitors'. Well-prepared customers and prospects study a bank's Web site for products and investor presentations; at a meeting they may ask about a press release or a recent article. Bankers should study their own sites for such information; in fact, they should know everything about their bank that finds its way into the public domain.
Thorough pre-call preparation also arms a relationship manager with confidence, a cornerstone of a successful trusted-adviser relationship. Though bankers fresh out of training will probably lack such confidence for at least two or three years, pre-call preparation can help bring it to those with more experience.
Being a trusted adviser takes something more, though: a connection with the customer that only time can provide.
Relationship manager turnover is an industrywide problem. A full 40% of middle-market companies participating in our research say their relationship manager has been on the account less than two years; only 25% have had the same one for more than five years.
But though continuity is necessary, it is not sufficient. Relationship managers must also make frequent contact. They should conduct annual relationship reviews to identify performance gaps in the relationship and opportunities to provide future value. Such reviews are also opportunities to advise on business trends.
Finally, exploit the huge amounts of information your bank gathers about clients and prospects. Banks often fail to do this. Synthesizing that information, translating it into knowledge, disseminating the knowledge to the client teams, and acting on it helps to build a culture that supports the trusted adviser role.
Clients would welcome benchmarking insights to help them manage, yet banks have not risen to the challenge.
