Are Banks Open to Fee-Based Business?

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Dec 1, 2006 4:46 pm

I know banks (and the bank B/D) are accustomed in most cases to mutual funds and annuities, and that most times the bank b/d profit model is based on these products.


Have the people who work at banks found that banks are open or not to fee-based business?  Obviously it will be a slower path to a profit center, but long-term I think it's better business.  However if the other guy is doing all MF/annuities, someone doing only fee-based is not going to look so good...


The bank I am talking to uses Infinex.  I think they have Lockwood for fee business, but don't know how robust the platform is.




Dec 1, 2006 5:50 pm

It depends on the bank.


I've some despise it and others support it.  My bank is pretty much indifferent.


Dec 1, 2006 9:46 pm
newrookie:

I know banks (and the bank B/D) are accustomed in most cases to mutual funds and annuities, and that most times the bank b/d profit model is based on these products.


Have the people who work at banks found that banks are open or not to fee-based business?  Obviously it will be a slower path to a profit center, but long-term I think it's better business.  However if the other guy is doing all MF/annuities, someone doing only fee-based is not going to look so good...


The bank I am talking to uses Infinex.  I think they have Lockwood for fee business, but don't know how robust the platform is.






Can you feed yourself on 25% of 1%?

Dec 2, 2006 1:05 am
Mike Damone:

My bank is pretty much indifferent.



Kinda sums it up all in one sentence......

Dec 2, 2006 7:56 am

I began as a bank rep when the programs first started, and then there
was NO fee based.  As I grew and wanted to move that way, they
shot it down.  I was a 1 mil plus producer, and found myself with
a deep external referral base where the new business coming in was 500K
plus...and for me to be competitive I needed more than mutual funds,
UIT's, Annuities, and bonds.  There solution was for me to give to
the Trust/PB dept and take a finders fee of 10% of the first years
fee's they would be charging.   The banks response was, and I quote: 
"Why pay Lockwood 1.5 points and the Rep 0.5 points when we can take a
full 1.5 points and pay off the rep to step out of the way?  They
make too much money peddling mutual funds and annuities as it
is".  I was a sales manager and they said it to all of us in a
meeting about this subject.



Anyway, I quit a few months later.  Took my largest clients and my referral sources and began my real career. 



All in all I do not blame the bank(s) for their position on the matter
because it is bank business driven, not FA/Client driven.   I
do not take shots at reps that choose to work in bank programs either,
its a good career for many.  I do get tired of hearing bank reps
complain about their plight knowing all the while what the deal
is.  I have been droning on about this subject since I joined the
forum several years ago:  Here is a little from 2004





I have had success as a bank rep grossing over 400K, heres my
problem.  I have very few accounts over 150K, I have a service
nightmare and would like to work with more affluent investors.  Any
bank reps having success pulling in large accounts.  My bank has no
commercial dept. was looking for ideas to get these people to meet with
me?




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<tr> <td colspan="2" align="center" background="" bgcolor="#e1e2f0"><span style="font-size: 2px;">&nbsp;</span></td> </tr><tr> <td ="smText" background="" bgcolor="#f4f4fb" valign="top"> <a name="83"></a> <span ="bold">rightway</span><br>Senior Member<br> <img src="forum_images/3_star_rating.gif" alt="Senior Member" border="0"><br><br><br>Joined: Dec.&nbsp;02&nbsp;2004<br>Posts: 745 </td> <td ="text" background="" bgcolor="#f4f4fb" valign="top"> <table border="0" cellpadding="0" cellspacing="0" width="100%"> <t><tr> <td ="smText" width="80%">Posted: Dec.&nbsp;02&nbsp;2004 at 8:55pm | IP Logged </td> <td align="right" nowrap="nowrap" width="20%"> <a href="edit_post.asp?M=Q&PID=83&TPN=5" target="_blank"><img src="forum_images/quote_icon.gif" alt="Quote&nbsp;rightway" align="middle" border="0" border="0"></a> </td> </tr> <tr> <td colspan="2"><hr></td> </tr> </t></table>


I was a bank rep for around 10 years and left because of this. 
The bank I worked for had a very large lending and trust area, but it
still never worked well.  I find now it had more to do with
product and service issues.  Affluent clientele seem do their
business with high end wire reps, high end Indy's, Trust dept's, and
family offices.  Good luck





My point is we as FA's have to be smart, and not expect our
organizations to change for us...but rather our busineses need to fit
with our organizations.  For many this is Indy, a bank, or in my
case, the largest wirehouse.  If your visiondoes not fit with your
platform, change one of the two.



Merry Christmas everyone!!


Dec 2, 2006 10:37 am

Rightway, your post(s) scares me a little.  I thought I was set to go with a bank, and now am nervous about doing so. 


I came from a major wirehouse (8 yrs), then left the biz for a year, and since I know the wirehouse environment was not for me, had considered the independent route, but I think getting enough clients back would be a struggle. 


Thought the bank might offer a happy medium.


Dec 2, 2006 2:21 pm

My bank was very open to fee business...even encouraged it.  I had several clients over a million in assets and almost all of them came with me when I went independent.  The client that did not come had a ridiculous 0.25% fee deal not negotiated by me that I chose not to match.


Rightway, despite his problems with the bank, was very successful in a bank setting from my point of view and you can be too.  Just understand that most programs end up not being the panacea that they appear to be at the beginning.  Good luck...and be careful about what kind of contract you sign!!!

Dec 2, 2006 2:49 pm

The bank told me I would need to sign a non-compete, however if I were to bring any of my old clients over, they would go under a separate number, and would remain mine (not under the non-compete).

Dec 2, 2006 3:31 pm

I would accepy only a non-solicit...not a non-compete...there's a big difference.  You have to have the ability to work if you decide to leave.  The only thing a bank should be able to expect is that you will not solicit any clients not exempted under the agreement.

Dec 2, 2006 3:35 pm

...and don't forget to have an attorney review it before you sign it.


(sorry, Bill...almost forgot!)

Dec 2, 2006 11:13 pm
newrookie:

Rightway, your post(s) scares me a little. 
I thought I was set to go with a bank, and now am nervous about doing
so. 


I came from a major wirehouse (8 yrs), then left the biz for a year,
and since I know the wirehouse environment was not for me, had
considered the independent route, but I think getting enough clients
back would be a struggle. 


Thought the bank might offer a happy medium.





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