While more and more banks are targeting female entrepreneurs, a start-up in tony Scottsdale, Ariz., is courting affluent women, whether they work or not.
The $89 million-asset Legacy Bank opened in January as both a business bank and a private bank. It designated three female bankers to court women who need wealth management and estate planning advice.
They are targeting affluent women who have made their own money as well as those who have never worked or are recently divorced or widowed.
Some of them have never before needed to make financial decisions but must do so now, said Verna Campbell Malone, Legacy’s vice chairman and the director of its women’s initiative in private banking.
“We’re reaching out to women who suddenly have to plan for their future, to make sure they don’t run out of money,” Ms. Malone said. “We try to be very welcoming, and we think it may be easier for them to talk to women bankers.”
A number of young banks, including the $48.5 million-asset Community Business Bank in Sauk City, Wis., cater to women-owned businesses and offer personal banking services to the principals on the side.
Russ Alan Prince, a consultant with Prince & Associates Inc. of Redding, Conn., said it is smart for banks to court affluent women. The number of female millionaires is growing three times as fast as that of male millionaires, he said, and women new to the category are prime candidates for private banking advice.
“These women may be somewhat ‘green,’ and if a bank positions itself as a financial adviser who has the expertise to help them, they can create a very viable niche,” Mr. Prince said.
So far the strategy is not generating much income for Legacy. It made just $3,000 of fee income in the second quarter, compared with $1.2 million of interest income. (It chalked up a net loss of $1.7 million for the quarter, but losses are common for start-up banks.)
However, Ms. Malone said fee income will eventually become a substantial part of the earnings stream as Legacy builds its private banking niche.
This fall it will offer seminars for affluent women in financial planning, estate planning, and “asset protection” from frivolous lawsuits, Ms. Malone said. It is also referring recently divorced or widowed women to lawyers for legal advice in sorting out their financial affairs.
Ms. Malone’s group is also trying to connect with married women who want a more active role in their families’ estate planning as well as advice in contributing to college tuition for their children or grandchildren.
Geri R. Forehand, the director of strategic services at Brintech Inc., a consulting firm in New Smyrna Beach, Fla., said Legacy would do well to focus largely on “slightly rich” women with net worth of less than $1 million.
“They are well below the radar screen of some of the larger banks, who have such large infrastructures in place that they are looking for people of substantially higher net worth,” Mr. Forehand said
This strategy should work well for Legacy in a retirement haven such as Scottsdale, Mr. Forehand said. There are probably many widows living there, looking to invest $100,000 to $500,000 from their husbands’ life insurance policies, he said.
“For a $90 million-asset bank, that type of customer would be great,” Mr. Forehand said.
