Trust bankers looking for fee income should open their doors to people with less than $1 million to invest, speakers told a recent conference here on trust compensation.

Lawyers, accountants, and consultants criticized trust departments at commercial banks for leaving the "emerging affluent" to be served by their nonbank competitors. That was the message of the conference, which was sponsored by Federated Investors.

"One of the great failings of the trust industry has been that up until now it has been very hard to get them to serve the middle market," said John H. Langbein, a Yale Law School professor.

Mr. Langbein, who teaches trust and estate law, added that the emerging affluent are rarely reached by the short arm of trust product marketing. Programs at the Metropolitan Opera House in New York are cluttered with ads for bank trust departments targeting only 3% of the population, he said.

Another speaker, Amy J. Errett, chairman of San Francisco-based Spectrem Group, recommended going after the 3.2 million U.S. households with median incomes greater than $100,000 and with more than $500,000 to invest.

"Your competition is focusing on the downmarket - young, affluent, retail trust," Ms. Errett said; "those people are below the cut of your trust department."

"There is a significantly high correlation between these groups and using a brokerage house," she added. "These people will start to establish wealth, and you will never get them back."

To serve this market, trust departments need to roll out more mutual fund wrap accounts, insurance products, and "turnkey" trust accounts for those who might invest less than $100,000 in such a product, Ms. Errett said.

Some trust bankers said they had already started to work for clients other than the very rich.

"Banks are trying to get into it," said Peter W. Ronan, a Comerica Inc. senior vice president in charge personal trust and private banking in southeastern Michigan. "To get to customers first, the approach has to be based on their needs."

Yet other trust departments still deem the less-than-wealthy less-than- profitable. William L. White, a partner at Coopers & Lybrand, suggested reconsidering that attitude.

"The emerging affluent market is growing five times faster than the U.S. population in general," Mr. White said. "The problem is, most bank trust departments are still catering to 'oldsters.'"

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