Due Diligence

Aite Group: FAs Not So Into Cross-selling

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Cross-Selling-Up-Selling1-279x300An Aite Group report released Thursday suggested that FAs haven't really bought into the idea of cross-selling bank products to their clients--especially advisors who work at wirehouses controlled by banks and are not dependent on the bank for referrals, like Bank of America Merrill Lynch and Wells Fargo Advisors.

Banks, obviously, want to use their FAs as a distribution channel for consumer banking products. But many FAs have told us that in their experience, service is slow, plus they end up getting called every time something goes wrong with a client's checking account...and that just means a lot of extra work for very little reward. What's more, they often prefer not to sell in-house products, because there are extra disclosures and, well, sometimes there are better, cheaper options out of house. So, Aite's findings definitely make sense. Problem is, banks are having a pretty rough time of it, cutting costs left and right, and they are going to want that extra little revenue push from cross-selling. Looks like a bit of a storm is brewing.

“Given that very few U.S. banks have achieved a more than 25% investment cross-sell ratio with their mass-affluent customer base, U.S. banks have a significant opportunity to capture the investment assets of their customers,” says the Aite report.

“U.S. banks (excluding Bank of America and Wells Fargo) have only captured 5% of U.S. retail investment assets (held at brokerage firms and registered investment advisors [RIAs]). Merrill Lynch and Wells Fargo combined are estimated to have a 20% market share. If banks could capture an additional 5% of the market from brokerage firms and RIAs, they would add between US$3.5 billion and US$5 billion to their top line.”

Below, a couple of graphics from the report. Source: Aite Group

20110907_Bank Referrals Cross Selling_Note_Final-3

20110907_Bank Referrals Cross Selling_Note_Final-8

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