DEVELOPING THE
COMMERCIAL BUSINESS MARKET
Sales Management
Robert F. Grieb

Robert F. Grieb is a Managing Director of the BISA He developed and manages the BISA Sales Management Best Practices Workshops, and works with financial institutions to enhance their investment and insurance programs and overall sales culture.

Email: Robert F. Grieb

 
 
 
 

TRADITIONALLY, the focus of 'bank' investment programs has been on retail customers. Today, however, more institutions are looking to provide investment products and services to customers across the entire institution.

While 'integration with trust' has been a focus at many banks for some time, attention is increasingly being paid to integration with an institution's commercial bankers and their clients.

This integration with the commercial side of the bank, however, requires a very different approach and even mindset, compared to working with retail bankers and clients.

This article will address some of these differences, particularly in terms of needs and relationships, and then discuss approaches to reaching this market.

More-complex needs

The needs of commercial bank clients, particularly small- to medium-size business owners, are typically more complex than those of traditional retail customers. First, business and personal financial issues are often intertwined. A significant portion of the owner's net worth may be in his/her business, and most likely it is illiquid. Personal and business borrowing may overlap, income may be sporadic or even volatile, and some living expenses may be treated differently.

In addition, their retirement planning is likely to be more complex than that of normal employees. All of this requires financial advisors who are able to understand and deal with a much more complex set of issues and potential solutions.

Bank brokerage programs are paying increasing attention these days to integration with commercial bankers and their clients.

Specific business-related issues that may need to be addressed include buy/sell agreements (and their funding), business continuation, complex tax planning, and more. While the financial advisor need not be an expert in each of these areas, he/she should have some knowledge of them and be able to access the appropriate expertise where necessary. In addition, many business owners are wealthier and more sophisticated than typical retail clients, often requiring a more comprehensive product set, including more fee-based products and individual securities.

Relationships

Working with business bankers and clients requires very different relationships than those generally required for consumers on the retail side. First, the financial advisor (FA) must form a close relationship with the business banker(s). These relationships must be developed and nurtured over time. FAs must view the banker as an important client, not just a referral source. These relationships will often be difficult at the start, because many business bankers view financial advisors as too retail/transaction-oriented. Trust and an understanding of how the FA can help business clients must be built slowly over time.

FAs must understand the nature of the business banker's relationship with his/her client. Generally, these are built over years and include an in-depth knowledge of the client's business and numerous revenue-producing services, from loans to deposits to processing services and more. Often, business bankers will spend months or years getting to know a client and positioning themselves before there is any 'sale.' FAs must be sensitive to the business banker's concern about jeopardizing these broad and significant relationships.

FAs must also understand that the client's relationship with the institution is generally tied most closely to the business. The implication is that leading with personal issues will not fit as well as leading with identifying/addressing business-related issues. Let the personal side evolve over time.

Getting started

While some institutions have formal groups to meet business client needs (see "Three cases" below), there is much that an investment program manager or even individual advisor can do to build this niche.

The first step is to build relationships with business bankers. Begin by getting the banker to agree that it is important for your institution to help identify, define, and address a broad range of key business issues for the clients. There must be consensus that: "If we don't, someone else will, and they'll be after our core (banking) business, as well." Show the banker(s) what you can bring to the table to help them serve their business clients. Partner with others to bring a broader spectrum of expertise and, ultimately, possible solutions.

Create (at least informal) teams that include FAs, business bankers, P/C (property/casualty) insurance specialists, and perhaps others. These groups should be charged with meeting periodically (at least once a month) to strategize about specific prospects. Strategies may range from a simple (but highly personal) referral to a coordinated full-team approach. Note that experience has shown a strong tendency for these teams to break down—particularly in the early stages. It is important for managers to stay on top of this process in order to keep it on track.

Work with the business banker(s) to deliver value-added seminars focused on one specific area, such as retirement plans, business continuation/transfer, buy-sell, and so forth. The bankers should know who will be most interested in which topics. Use these seminars to educate clients about issues and possible solutions, and to let them know the resources you have to help them. Do not try to direct these meetings toward product sales, however.

These seminars can be billed as "client appreciation" events. After the FA has won the confidence of the business bankers, he or she may be invited to other types of relationship-building events. Remember, this is the start of long-term relationship building. It is important for managers to coach their reps on 'patience' and to remember that the longer the process, the more impatient reps tend to become.

Three cases

Following are examples of three institutions that have built successful, highly structured approaches to meeting a broad range of business banking client needs as well as those of the institution. Each has approached the market somewhat differently.

Huntington Bank addresses the market through formal wealth management teams. Each team includes a commercial banker, private banker, trust officer, insurance specialist, and investment specialist (FA). In Huntington's model, the FAs are dedicated solely to this client group and do not work in the normal retail network. They are trained to work closely with the team and generally deal with a different (more complex/sophisticated) product set, including asset management products, employee benefit plans, and more individual securities.

Huntington currently has eight wealth management teams. Each wealth management team has a dedicated investment group, including a senior FA and up to three supporting junior brokers. (See related story on page 10.)

Webster Bank's team approach is structured somewhat differently. It is focused on cross-selling/referring across the entire institution. Webster designates cross-discipline teams in each of its market areas. Teams include a commercial banker, small-business banker, 'market manager' (generally overseeing 8-10 branches), a wealth management officer, one or two insurance specialists, and a financial advisor. Each team member is charged with generating/referring a certain level of business for the other team members (business units). Teams meet formally on a monthly basis, but communicate informally much more frequently, to strategize and discuss specific opportunities. In Webster's case, retail FAs are selected to be cross-sell team members based on their demonstrated ability to see and embrace a larger, total relationship picture. Experience has shown that it may take as long as two years for teams to really gel, and it is sometimes necessary to change personnel in order to make the structure work.

M&T Bank has yet a different approach: First, they segment the smaller, local business market from large (middle-market and up) businesses. For the latter, they use wealth management teams similar to Huntington's. To address the small-business market, M&T has teams that include a business banker and dedicated (business) financial advisor to cover four to five branches. The branch managers are also part of these teams that focus on developing full relationships with local businesses and their owners. 'Business FAs' tend to be more seasoned, hold a CFP (certified financial planner) or other professional designation, and have significant experience with retirement plans. The reps serve as a resource to the bankers and their clients, but also help to drive banking business.

Create teams that include FAs, business bankers, and P/C insurance specialists (and perhaps others). These groups should be charged with meeting at least once a month to strategize about specific prospects.

These teams try to coordinate rather than compete with the retail investment reps in each branch. In fact, all investment revenue gets credited to the appropriate branch goal, and retail reps receive a partial credit to their grid. Hartford/Planco, an M&T product partner, has provided valuable training and support for this effort.

In sum, while commercial business (owner) clients can be excellent prospects for investment and insurance programs, it is important to understand how differently they must be served. Keys to success include recognizing that the business banker is usually going to be the lead relationship manager, that the FA's relationship must begin with business issues/solutions (not personal product sales), and above all, that one must be patient. In addition, management buy-in and support across the organization is required.

I would like to thank the people who contributed to this article:Jang Chiu, The Hartford; Rob Comfort, President of Huntington Investment Company; Lou George, National Sales Manager, M&T Securities; Tom Howe, President of Webster Investment Services; and Rick McCann, Vice President of First Interstate Bank.