Many banks may be combining trust and private banking services in the same unit, but few have altered their compensation plans to encourage more cross-selling of these products.

And that failure is striking at the heart of one of the major motivations for these combinations - the desire to see bankers sell both trust and private banking services to a client.

"They are leaving the legacy of old compensation plans, and that encourages the wrong behavior," said Michael P. Kostoff, managing director of the Advisory Board, a Washington consulting firm that focuses on the affluent market.

Instead, consultants like Mr. Kostoff argue, lending and money management specialists operating under the same roof should be paid to sell each other's products. Moreover, they should be offered higher commissions on all sales, these consultants contend.

"That's critical," Mr. Kostoff said, "and that's why most" integrated units fail. "It's because they don't change the compensation plan."

One example of a joint private client group that had competitive, liberal compensation was the former First Interstate Bancorp.

Daniel J. Wroblewski, a sales manager at First Interstate until last spring when Wells Fargo & Co. acquired it, remembers three salespeople who consistently made more money than he did.

Yet Mr. Wroblewski said such circumstances are unusual in banking because senior managers are conservative about compensation.

"A lot of them still have that reserve," said Mr. Wroblewski, now president of First Trade Union Trust Co., Los Angeles. "Bank management doesn't want to stick its head out and pay a salesperson what they are really worth for bringing in business."

Not so at Bankers Trust New York Corp., which has overhauled its compensation in recent years as it unified trust and private banking services, according to a bank spokesman.

He said incentives now make up a greater percentage of overall compensation than before. This plan is in effect at but not limited to the private bank, which offers trust and investment management as well as high- end lending.

"Other financial companies are going in that direction as well, but we put more emphasis on it and began to do it earlier," the Bankers Trust spokesman said.

While base salaries were cut at Bankers Trust, more incentives are paid in the form of cash bonuses and stock options, according to the spokesman.

In addition, William W. Roberts, a partner in the Center for Financial Services Research, Beaverton, Ore., suggested paying perennial commissions on an account as it generate fees over time. Such commissions are known in the industry as trailers.

"Trailers are very effective golden handcuffs - the best people are less likely to leave," he said, adding that the practice is not popular.

Ironically, compensation has improved in trust and private banking units that have remained distinct.

Virtually all traditional trust departments - primarily focused on asset management - now pay incentives for new business, compared to fewer than half 10 years ago, Mr. Kostoff said.

He also estimated that, on the private lending side, fewer than 60% of banks have adopted incentive compensation plans.

Consultants say combined trust and private banking units are the best means of selling several products to each wealthy client, but few banks have structured incentives to meet that objective, they say.

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