By consolidating its insurance, wealth and investment units, Bank of the West of San Francisco increased the rate of referrals from bankers in the past year.
Richard Byrd, who heads the wealth, investment and insurance businesses, which are known collectively as the wealth management group, said the consolidation has created a broader range of client services and helped solve the problem of different units competing for referrals.
"Many of the top commercial and corporate bankers felt like our high-end service in particular didn't have the level of expertise that their clients needed," he said in an interview last week. "We're trying to prove to the banking team that our team is every bit as great at servicing clients as they are."
The consolidation at the banking company, a unit of BNP Paribas SA's BancWest Corp. of Honolulu, is the reason referrals rose 100% percent last year, and are up 55% in the first six months of this year from a year earlier, according to Byrd.
Bank of the West, which has $67 billion of assets, hired Byrd in May 2008 to run the newly consolidated wealth management group. The business consists of BancWest Investment Services, a broker-dealer; BW Insurance Agency Inc.; and Bank of the West's investment management and trust division as well as its private banking unit. Byrd had run two broker-dealer units and a personal and business trust services subsidiary for City National Bank of Los Angeles.
In his first 13 months on the job, he has overseen the integration, but he has also managed the segmentation of the group's client base into mass-affluent, high-net-worth and ultra-high-net-worth groups.
High-net-worth and ultra-high-net-worth clients are served by teams and typically use private bankers or private client managers as contacts. Mass-affluent clients' main contacts are usually branch-based financial advisers or a retail banking manager, Byrd said.
Bank of the West's personnel is being cross-trained in everything from retirement planning to estate planning, Byrd said. The common theme is the ability to "provide clients with a variety of solutions to choose from any time they talk to any one of us," he said.
The high-net-worth business has done particularly well. Last year it brought in somewhat more than $250 million of new assets, and this year it has already brought in more than $700 million.
Competition for referrals at banks is a common phenomenon, particularly at larger institutions, said Michael White, who heads the research firm Michael White Associates.
It can be counterproductive, he said. "There are so many demands on front-line personnel these days that when they get [multiple] requests for leads, they feel pestered," he said.
A team-based wealth business, overseen by a single executive, signals to bankers that they can make one sensible referral rather than three, White said.
Bank of the West has an opportunity to fill a vacuum in the marketplace for what Byrd calls the boutique private banking and wealth management space.
"The $2 million to $20 million client base used to be supercompetitive; everyone would fight for them and do a great job," he said.
Over the past few years, however, many of the players in that business have been bought. And the remaining institutions have increasingly adopted a bottom-line mentality that features "1-800-level service," he said.
The wealth management group has been staffing up selectively, Byrd said. It has been recruiting from wire houses, private banks and advisory firms; of the 600 employees in the group, about 20% were hired since May of last year, he said.
The bank is improving its marketing material to reach out to potential clients. In the process of its integration with BNP Paribas, Bank of the West is looking for opportunities "to bring their capabilities to our clients," he said.
The wealth management group has $9.7 billion of assets under management and its insurance business has about 50,000 customers and 965,000 policies in force, Byrd said.
Insurance generates half the revenue of the investment businesses. Its $32.8 million in insurance brokerage income last year ranked Bank of the West 11th among the nation's 3,371 banks that reported such income, according to Michael White Associates' Fee Income Ratings Report. Its investment program income was $45 million, and its fiduciary income was $17.4 million, according to White Associates.
One of the biggest challenges for the wealth management group is figuring out how to lure and serve new clients in a cost-effective manner, Byrd said.
"With so much opportunity, how do you get to it as efficiently as you can?" he said. "We could hire 100 private bankers, but that's also the most expensive way to do it."
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