WealthManagement Magazine

Bank Brokers Selling More Like Stockbrokers

Bank brokers aren't just pitching annuities anymore.A recent sales study by Prophet Market Research shows bank securities professionals are more likely to recommend aggressive equity products to their clients now than in years past.Prophet mystery shoppers secretly audited 636 bank branches in 41 states at 40 of the nation's largest bank-affiliated retail brokerage programs in October and December

Bank brokers aren't just pitching annuities anymore.

A recent sales study by Prophet Market Research shows bank securities professionals are more likely to recommend aggressive equity products to their clients now than in years past.

Prophet mystery shoppers secretly audited 636 bank branches in 41 states at 40 of the nation's largest bank-affiliated retail brokerage programs in October and December 1997.

The study showed bank brokers were most likely to suggest domestic equity funds, recommending them to 37% of the shoppers. Aggressive growth mutual funds were suggested 27% of the time, compared to just 18% in 1996. And in perhaps the biggest break with the past, bank brokers recommended fixed annuities just 3% of the time, compared to 24% in 1994.

Nevertheless, bank brokers still don't have access to the diversity of products found in the nation's largest traditional full-service brokerage firms. Prophet found bank brokers suggested mutual funds and/or annuities exclusively in 93% of the mystery audits where specific recommendations were made. Though traditional stockbrokers also suggested mutual funds in a recent similar study by Prophet, many more of the brokers recommended establishing formal financial plans and developing a diversified portfolio of individual equities, bonds, UITs and/or Treasuries.

Bank brokers also were shown to tout product features exclusively during their presentations, while traditional stockbrokers highlighted additional benefits such as their firm's reputation, research capabilities and their own expertise as credible investment advisers (see chart in magazine).

Among the top finishers in the bank survey were: American Savings Bank and Great Western, two California-based banks recently acquired by Washington Mutual; Wachovia and BankBoston.

The brokerage affiliates of Bank of America, Crestar, Fleet, Key and Wachovia finished above the industry mean in all three Prophet bank brokerage studies since 1994. CalFed, PNC and U.S. Bancorp finished below the industry benchmark in all three. Results convey sales effectiveness in customer profiling, disclosure of fees and risk, and customer service.

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