PHOENIX - Attendees at the annual Bank Securities Association convention here last week got more than grand views of Arizona's saguaro cacti for their bucks. They were also treated to a healthy dose of compliance medicine.
Staying on top of regulations was the main topic of the trade group's eighth annual convention. The event drew 375 participants, plus 90 exhibitors, representing a mix of banks, brokerage firms, and investment products distributors and manufacturers.
Setting the tone for the three-day meeting, the association announced the results of its study of investment sales practices at 17 of its member banks. The mystery-shopping expedition showed a "high degree of compliance and professionalism by bank sales representatives," officials said.
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The group also endorsed five of its member organizations to help banks with continuing education. The National Association of Securities Dealers, which sets professional standards for the brokerage industry, recently boosted its requirements in this area.
James M. Shelton, executive director of the BSA, said the five firms will work with banks - at "discount" prices - to help put training in place before the July 1996 deadline set by the NASD.
The firms are: Securities Training Corp., New York; Investment Training Institute, Atlanta; Examco, Kenner, La; Pass Perfect Associates, Denver; and Financial Training Resources, Lombard, Ill.
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Concern over compliance has brought forward a new breed of consultants.
Take Catherine H. Hanks, an exhibitor at the conference who launched her own firm, Compliance International, in January.
Ms. Hanks, who headed compliance at Citibank's brokerage until last year, said she took the step because she saw "a real need for training about compliance issues" in banks. Though she is competing against about 25 similar firms, she expects to run "a big-volume business."
From a base in Washington, where she can work the regulatory movers and shakers, Ms. Hanks offers courses on securities and banking regulations for bank-based brokers and branch staff.
Ms. Hanks, who formed a joint venture with Securities Training Corp. to help her marketing muscle, said she hopes to fill the gap between licensed and nonlicensed personnel in banks.
One mistake nonlicensed bank employees often make, Ms. Hanks said, is to refer to investment products as bank products.
"To begin with, they say 'we,' " she said. "That means the bank, (but) the bank doesn't have product."
In addition to offering courses, her firm will help bank brokerages conduct annual compliance reviews, write compliance manuals, and review their marketing material.
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What are conferences for, if not for learning and shopping for ideas?
Lowell "Stretch" Smith Jr., chairman of First State Bank in Rio Vista, Tex., did just that at the conference.
Mr. Smith, whose $200 million-asset bank has not yet entered the investment product world, was spotted listening to a presentation given by Curt Anderson, president of the brokerage arm of First Busey Bank, Champaign, Ill.
"I'm here on an education trip," said Mr. Smith, a tall, slim 40-year veteran banker. "We're here to see if we can start something."
Mr. Smith said that starting an investment product program would be a "defensive" measure for his bank, in light of the many banks that have chosen to offer mutual funds and annuities. "I don't see it as a big profit thing."
Mr. Smith said his wife persuaded him to take a harder look at investment products by telling him that a bank not offering mutual funds and annuities nowadays is like a department store not selling some basic goods.
"The customer would walk out disgusted" is the way his wife put it, Mr. Smith said.
