Not all brokers who jump into the banking environment find this strange new world refreshing.

Ask any bank broker about the advantages of working inside a bank and you'll get an earful about foot traffic, the “captive audience” that parades past your desk every afternoon, and the referrals that roll in from colleagues.

“A new broker coming into the bank system has ready-made referrals,” says Phil Wannenmacher, a rep who's worked in a Liberty Bank branch in Springfield, Mo., since he left Merrill Lynch in May 2000. And those referrals from bank colleagues make it easier to build a book inside a bank branch than inside a brokerage office, he says. A bank broker has to cultivate them, but the payoff is worth it, says Wannenmacher, who uses Raymond James Financial Services as his broker/dealer.

While banks provide a steady stream of prospective clients, there's one major problem with that captive audience, says John Dube, a rep with American Express Financial Advisors who works inside the Business Bank of Nevada in Las Vegas.

They want to escape.

“The biggest challenge of working inside a bank is that people who go into banks want to spend as little time as possible there,” Dube says. Banks are transactional in nature, he says, so even when a client has an appointment, convincing the person to stay for the time needed to review retirement goals or portfolios is difficult, he says.

And there is one more stumbling block. All that foot traffic consists of bank customers who usually don't differentiate between a teller and a financial planner. Both are there to facilitate a transaction, they think. No appointment necessary.

“Imagine someone opening up your office door and peeking in and saying, ‘Hi, I've heard I can buy stocks here,’” Dube says, laughing. For a wirehouse broker who is unaccustomed to these interruptions and distractions, entering the bank lobby is like entering a strange new world and a strange new culture.

“I wasn't prepared for the lack of autonomy I encountered,” admits Kathleen Cole, a broker with Country Club Bank in Overland Park, Kan., for the past year. Cole joined the bank after four years with Edward Jones. Her broker/dealer is Country Club Financial Services, a subsidiary of the bank.

“The mentality and the culture are completely different,” Cole says. “Bankers are used to sitting behind their mahogany desks and deciding who will have the privilege of doing business with them. Some bankers have a tough time understanding that brokers need to get out there and market themselves, do some selling,” she says, adding that her bank's management gives reps the freedom to “do what needs to be done.”

Converts and Believers

Some successful brokers find the bank culture refreshing. Wannenmacher says the bank is not as focused on production numbers as Merrill Lynch was and there isn't so much product-pushing.

“It's more of a family atmosphere,” he says. Despite the relaxed environment, Wannenmacher still considers himself a full-service broker. His payout is comparable to Merrill's, he says, as is the array of products and services. In fact, several bank brokers are quick to point out that banks have come a long way in their investment product offerings.

“In the past, bank brokers have focused on fixed annuities, but that has changed,” says Sally Blume, vice president of investments and a CFP with a LaSalle Bank branch in Chicago.

Before she joined the branch in 1993, Blume was an institutional bond salesperson at LaSalle. But she grew tired of the fierce competition and the lack of loyalty among her corporate clients. She jumped at the chance to join the retail world, despite the fact that the broker she replaced was the third rep in a year and a half to leave the position. She started from scratch.

Today, Blume has more than 1,100 clients in her book, ranging from a cab driver who drops off $500 every quarter for his IRA to a CEO who just sold his business for $15 million, she says. Her book has about $100 million in assets and generates gross annual revenues of about $800,000.

Blume does lots of 401(k) rollovers, sells individual equities and munis, mutual funds, UITs, and variable and fixed annuities. She also offers full-scale financial planning — a rarity for bank brokers (fewer than 10% of the 35,000 CFPs in the United States today are working in banks, she says). She markets her business very much like a wirehouse producer but without, she says, much of the red tape. Her bank understands her need for freedom.

“I have the full support of senior management,” Blume says. “If I need something, I can pick up the phone and talk to the chairman.”

Blume says she gets plenty of seven-figure recruitment offers from wirehouses, but she has rejected all of them because she likes the bank environment. Like many other bank brokers, she loves the intense loyalty of her clients, and loves being a big fish in a small pond.

In fact, Cole says the real key to success as a bank broker is to be the only broker in that branch, and to work with a branch that employs a personal banking representative — someone who opens new bank accounts and flags prospects for you. “If you can find a bank where the frontline people have been trained to ask some qualifying questions, that would be the equivalent of a licensed assistant at another firm,” she says.

But Then Again …

Not all brokers who jump into the banking environment find this strange new world refreshing.

Stephen Klinicki was working as a broker with American Express Financial Advisors in Houston in 1997, managing portfolios and doing estate plans for high-net-worth clients when he decided he wanted more of a 9-to-5 job. So Klinicki signed on with Griffin Financial Services, a wholly owned subsidiary of Savings of America, and became the bank's “investment services officer” at four branches in the Houston area.

But Klinicki didn't last long in that position. In fact, several nagging ethical questions drove him completely out of the brokerage business after only four months at Savings of America. The thing that bothered Klinicki most was that his “captive audience” of elderly bank customers were sitting ducks. “They hear that they have an investment services officer from the bank calling them, and they will come in and pretty much sign anything you put in front of them,” he says. The sale was like “shooting fish in a barrel,” he says.

Finding these prospects was simple, he says. The bank provided him with a list of customers who owned CDs that were maturing. Some were worth as much as $100,000 or $200,000. His sales pitch went something like this: “I've been reviewing your account, and I've noticed that we can probably place you in a better position from a growth standpoint,'” he says.

But one question kept pestering him: Should a 78-year-old widow really be concentrating on growing her portfolio? “Most of these people had their money exactly where they needed to have it,” he says.

Although Klinicki insists that everything was perfectly legal, all the disclosures and disclaimers were made clear and the clients were all aware of his arm's-length relationship with the bank, the practice still left a bad taste in his mouth.

“I just up and left — and that could have been a very lucrative business,” he says.

Cole also says she still sees some “confusion” among her retired clients, despite all the documentation she provides explaining that their investments are not FDIC-insured.

“They're in the bank building, so I need to spell out exactly what I do,” Cole says.

Your Internal Customers

One of the most dramatic changes a broker notices inside a bank is the need to network with every employee in the branch to generate referrals, and then send referrals back when appropriate. A bank broker needs to inspire, motivate and reward bank colleagues.

“Understand that tellers and loan officers are normally not as adept at referrals as we are,” says John Dube, a broker with the Business Bank of Nevada in Las Vegas.

Sure, your bank might provide you with a list of maturing CD owners, but if you want to grow your business beyond that base, you'll need to market yourself in-house and out.

“I tell the insurance people and wirehouse brokers who want to get into the industry that you have to work with the bankers, tellers and your commercial lenders,” says Sally Blume, an $800,000 producer at LaSalle Bank in Chicago. “You also have to market your services. It's not like you walk through the door and clients start rolling in.”

And all that networking takes time, says Blume, who holds an open house in April and October. Each attracts about 2,000 clients and prospects.

Forget about working banker's hours, too, she says. “For the first seven years, I was here six days a week and the first person in the office.”

And leave the Porsche at home. Most of your coworkers will be earning a small fraction of the money you earn, several bank brokers say. Envious colleagues aren't exactly quick to refer business.
— M.H.

Bank Clients are Different

How is the typical bank customer different from the client who walks into a Merrill Lynch branch?

“Most people who rely on their banks for their investments are low on the information scale; they are not savvy investors,” says Stephen Klinicki, formerly a broker with Savings of America in Houston. “Anything above a CD is a new concept for them.”

And for some strange reason, extended family members always seem to stick their noses where they don't belong, says Klinicki. “I got really tired of nephews and children coming into my office and saying, ‘Why in the hell did you move this money?’”

Likewise, Mark Sehnem, the branch development director at broker/dealer Investacorp in Miami Lakes, Fla., says his firm doesn't consider banks a “standard or normal channel” for its brokers. “It's high risk,” he says. “Full of little old ladies who think their investments are FDIC-insured.”
— M.H.

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