What are the keys to success in wealth management?
Bank of the West SVP gives advice in this Q&A
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- Written by Super User
Bank of the West has been adding resources to its Wealth Management Group in the belief that the current economic climate and demographic trends offer significant opportunity for traditional banks. ABABJ contributing editor Melanie Scarborough spoke with Carolyn Paul, senior vice-president and regional manager in the bank’s Investment Management and Trust Services and Private Banking unit.
A 25-year veteran of the financial advisory business, Paul is responsible for expanding the bank’s wealth management footprint in the Rocky Mountain region, adding offices in Albuquerque and Salt Lake City. (The $60-billion-assets bank, based in San Francisco, is a unit of BNP Paribas.) In addition to serving wealthy individuals, she says the bank has committed to provide personal wealth management service to clients with assets of $1 million to $3 million—a group many other financial services providers reject as unrewarding.
Paul said she “grew up as a portfolio manager” and misses those daily duties—“It’s the fun of the industry”—now that she supervises a team of about 250. Nonetheless, Paul remains steeped in the challenges through hands-on involvement with portfolio managers and clearly enjoys her present role. In the following interview, she speaks about the keys to building a successful wealth management program—from finding the right employees to directing external outreach to managing clients’ wealth in a turbulent environment—and how to ensure that such a program continues to thrive.
“As the baby boomers age, they recognize that they don’t necessarily know all they need to know to make the best investment decisions. They’re comfortable with having people help them in that area, which may be a little different from the way people behaved in the generation before them.” — Carolyn Paul, Bank of the WestWhat is the key to Bank of the West’s success in wealth management?
It boils down to three things. First, we have a team sales approach. We bring together trust officers, financial advisers, and portfolio managers, depending on a client’s needs. Second, we have a holistic approach; we look at the client’s whole situation so we can come up with consistent and unbiased advice. Our analytic team helps us with that. And, third, we take a planning approach to look at the overall picture for that individual client: What are their needs and how can we best help them manage those needs?
How do you attract clients?
We have a couple of strategies. For one, we have a great base of clients who already are bank customers, so they’re open to hearing about the bank’s wealth management services. We work closely with the company’s private bankers, branch managers, commercial loan officers—all the different lines of business—who can refer customers to us.
In addition, the folks on our team are active in the community. Some serve on boards of directors; they work with nonprofit organizations—they’re in places where they can meet potential wealth management clients. We also work with accountants and attorneys who might let us know when they have clients who need help with trust services. But those people’s needs might also be saving for college education or planning for retirement. Wealth management is not just trust services.
Have recent market upheavals changed the way people view wealth management?
The market changes in the past few years opened up opportunities for us to help people because they now realize they need help. As the baby boomers age, they recognize that they don’t necessarily know all they need to know to make the best investment decisions. They’re comfortable with having people help them in that area, which may be a little different from the way people behaved in the generation before them. The boomers have seen so much change in the market in the past few years. It makes them realize that investment planning is not as simple as picking stocks by throwing darts at listings in the Wall Street Journal. They know they need to have a much more global approach and take a much more disciplined approach to investing. Some of them learned that the hard way.
What specific needs are driving customers to seek help with wealth management?
The needs are very diverse, which is what makes this business so fascinating. You may have folks who have large estates and want their children and grandchildren taken care of after they’re gone. Some are looking for help with tax savings. Others have retirement needs. Some may have just folded a business and want complete safety while figuring out what their next steps are going to be.
Have the recent changes in the structure of financial markets changed the wealth management business itself?
Because the market has been uncertain, people have had a flight to safety; so we’ve been helping a lot more customers who want more conservative equity portfolios. And as baby boomers get older, some are saying they may not be willing to take as much risk with investments as they get closer to retirement. This biggest shift this bank has made is to put more resources into the wealth management group so we can help more clients. We added more employees recently and are looking to hire more this year.
What do you look for in individuals you’re considering hiring?
I look for individuals with well-rounded knowledge. In the old days, bankers knew mostly about credits and deposits. We look for people who have a better understanding of investment and credit. We also look for people who have advanced degrees or some other expertise—like certified financial planners. Of those I’ve hired recently, one was a former CPA; one was formerly an estate-planning attorney. So we look for people with in-depth knowledge and education who can help our clients meet their needs.
Is wealth management a good area for community banks to expand into?
Community banks already have good relationships with their clients. The relationship may go back to when they loaned them money to help start the business that created their wealth. And because the clients know the bank, they have loyalty and are open to suggestions. The close relationships that community bankers have with their clients can help then if they continue to build that partnership into a deeper, broader relationship of wealth management.
What other advice would you give community banks for operating a successful wealth management program?
The most important thing they can do is to leverage the relationships they have within the bank. Become partners with the commercial loan officers and the branch managers. The clients in your bank today are very loyal to you, so you want to be able to leverage the great relationships your business partners have with them.
Is there a best way to structure fees?
There isn’t any one solution. Different people have different thoughts on whether they want to pay annual management fees. And because different products help meet different needs, they are priced differently.
Is there any single mistake that can doom a bank’s wealth management operation?
The people I have worked with for 25 years in wealth management have always had the best interests of their clients at heart. That’s what draws many of us to this business. If you aren’t putting the client first, you’re not going to be successful in wealth management.
How is wealth management likely to change in coming years, and how can banks adjust to keep their wealth management programs profitable?
Banking in general is facing more and more regulation, so we face more and more compliance issues, and that’s something we have to keep in mind. In the long run, regulations can have the good effect of driving folks who may not have put their clients first to go down that path. But the extra regulations do add a layer of complexity and expense that will make it more difficult for some organizations to deal with. Because our program has had good, consistent investment performance, we haven’t had the challenges of negative press that some of our larger competitors have had. Because of bad press, people have lost confidence in some of those other organizations. We stay focused on giving holistic advice, and we have strong contact standards: We make sure clients get the attention they need. Putting together the right team members at the right time to help them meet clients’ needs seems to be working very well for our organization at this time.
It boils down to three things. First, we have a team sales approach. We bring together trust officers, financial advisers, and portfolio managers, depending on a client’s needs. Second, we have a holistic approach; we look at the client’s whole situation so we can come up with consistent and unbiased advice. Our analytic team helps us with that. And, third, we take a planning approach to look at the overall picture for that individual client: What are their needs and how can we best help them manage those needs?
How do you attract clients?
We have a couple of strategies. For one, we have a great base of clients who already are bank customers, so they’re open to hearing about the bank’s wealth management services. We work closely with the company’s private bankers, branch managers, commercial loan officers—all the different lines of business—who can refer customers to us.
In addition, the folks on our team are active in the community. Some serve on boards of directors; they work with nonprofit organizations—they’re in places where they can meet potential wealth management clients. We also work with accountants and attorneys who might let us know when they have clients who need help with trust services. But those people’s needs might also be saving for college education or planning for retirement. Wealth management is not just trust services.
Have recent market upheavals changed the way people view wealth management?
The market changes in the past few years opened up opportunities for us to help people because they now realize they need help. As the baby boomers age, they recognize that they don’t necessarily know all they need to know to make the best investment decisions. They’re comfortable with having people help them in that area, which may be a little different from the way people behaved in the generation before them. The boomers have seen so much change in the market in the past few years. It makes them realize that investment planning is not as simple as picking stocks by throwing darts at listings in the Wall Street Journal. They know they need to have a much more global approach and take a much more disciplined approach to investing. Some of them learned that the hard way.
What specific needs are driving customers to seek help with wealth management?
The needs are very diverse, which is what makes this business so fascinating. You may have folks who have large estates and want their children and grandchildren taken care of after they’re gone. Some are looking for help with tax savings. Others have retirement needs. Some may have just folded a business and want complete safety while figuring out what their next steps are going to be.
Have the recent changes in the structure of financial markets changed the wealth management business itself?
Because the market has been uncertain, people have had a flight to safety; so we’ve been helping a lot more customers who want more conservative equity portfolios. And as baby boomers get older, some are saying they may not be willing to take as much risk with investments as they get closer to retirement. This biggest shift this bank has made is to put more resources into the wealth management group so we can help more clients. We added more employees recently and are looking to hire more this year.
What do you look for in individuals you’re considering hiring?
I look for individuals with well-rounded knowledge. In the old days, bankers knew mostly about credits and deposits. We look for people who have a better understanding of investment and credit. We also look for people who have advanced degrees or some other expertise—like certified financial planners. Of those I’ve hired recently, one was a former CPA; one was formerly an estate-planning attorney. So we look for people with in-depth knowledge and education who can help our clients meet their needs.
Is wealth management a good area for community banks to expand into?
Community banks already have good relationships with their clients. The relationship may go back to when they loaned them money to help start the business that created their wealth. And because the clients know the bank, they have loyalty and are open to suggestions. The close relationships that community bankers have with their clients can help then if they continue to build that partnership into a deeper, broader relationship of wealth management.
What other advice would you give community banks for operating a successful wealth management program?
The most important thing they can do is to leverage the relationships they have within the bank. Become partners with the commercial loan officers and the branch managers. The clients in your bank today are very loyal to you, so you want to be able to leverage the great relationships your business partners have with them.
Is there a best way to structure fees?
There isn’t any one solution. Different people have different thoughts on whether they want to pay annual management fees. And because different products help meet different needs, they are priced differently.
Is there any single mistake that can doom a bank’s wealth management operation?
The people I have worked with for 25 years in wealth management have always had the best interests of their clients at heart. That’s what draws many of us to this business. If you aren’t putting the client first, you’re not going to be successful in wealth management.
How is wealth management likely to change in coming years, and how can banks adjust to keep their wealth management programs profitable?
Banking in general is facing more and more regulation, so we face more and more compliance issues, and that’s something we have to keep in mind. In the long run, regulations can have the good effect of driving folks who may not have put their clients first to go down that path. But the extra regulations do add a layer of complexity and expense that will make it more difficult for some organizations to deal with. Because our program has had good, consistent investment performance, we haven’t had the challenges of negative press that some of our larger competitors have had. Because of bad press, people have lost confidence in some of those other organizations. We stay focused on giving holistic advice, and we have strong contact standards: We make sure clients get the attention they need. Putting together the right team members at the right time to help them meet clients’ needs seems to be working very well for our organization at this time.
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