Some Banks Fall Short in Selling Investment Products, Maritz Survey Shows; Credit Unions Can Take a `Proactive' Approach

ST. LOUIS – Despite having the ability to sell securities to the public since 1999, some banks still have not captured significant market share from their full-service brokerage counterparts, according to a recently released Maritz Poll survey of individual investors. Of the 1,200 persons who responded to the survey, only 10% claim that banks are their primary investment provider. Seventy percent of investors selected a full-service brokerage firm because of their range of investment capabilities while only 59% of bank customers chose their institution for this reason. Credit unions were not included as one of the investment providers for respondents. “Banks are not recognized as having the ability to provide the same level of investment advisory services as brokerage firms,” said Dick Pace, director of financial services research at Maritz. For banks, Maritz found several “target optimal clients” who might be open to working with multiple investment providers. Two-thirds or 35% of respondents with $250,000 or more in investable assets are more likely to use multiple firms to invest with, compared with 12% of investors with under $50,000. Likewise, 26% of male Generation Xers ages 35 to 44 are more likely to use multiple firms, compared with just 4% of men aged 18-24. “What we’re seeing is what I call heavily targeted groups – those with $250,000, $500,000 and $1 million (in investable assets) that are fought over aggressively,” said Rodger Stotz, vice president, managing consultant, Maritz. “A number of full-service brokerage firms are targeting them.” The banks tend to go a little lower in their targets – those with between $100,000 and $500,000 in investable assets, Stotz said. Male GenExers with between $5,000 and $50,000 in investable assets are typically getting started, have simpler needs and may not be comfortable with or targeted by larger broker firms, he added. The suggestions from the survey findings on what banks could do to increase their presence as being more of a choice for investors can apply to credit unions too, Stotz said. “To gain market share from investment houses, credit unions and banks need to tweak their strategy so that their employees are focusing less on discrete transactions and more on building client relationships for the long-term,” Stotz said. “It’s imperative for credit unions and banks to put a continuous improvement process in place that focuses on being responsive to clients’ needs, so that frontline employees can generate new business leads and brokers can develop and maintain strong relationships.” Because some credit unions are in the education process meaning they have launched campaigns to just make their members aware that they’re even offering investment products and services, a proactive approach is critical, Stotz said. “It’s an education process for members and employees,” he offered. “We highly recommend that there is ongoing customer research, at least quarterly, to provide the kind of feedback to find out what the local clientele needs so that there is a better understanding of what is working well.” Stotz said this proactive approach could help credit unions be more than just responders to members’ questions about investment services but gives them the ability to discuss how they can be unique to each person’s needs. Credit unions may have an edge over banks when it comes to building relationships. “What’s so interesting about credit unions is they have a great story to tell,” Stotz said. “If they can share their philosophy out on what they bring to the market and move the member experience to the level of providing additional services, it’s a win-win.” Other findings from the Maritz survey showed 93% of respondents said that their bank broker has earned their trust while 86% of those who use a bank’s brokerage group said their broker or advisor treats customers ethically and honestly. -