Last month, while cleaning out some old storage boxes in my office, I came upon a pile of old magazines.

I’m a bit of a pack rat when it comes to anything related to the bank investment program market. I found back issues of Bank Investment Representative and Bank Investment Marketing from the past 20 years, with the earliest issues going back to 1991.

I couldn’t help but thumb through them, fascinated by the articles and even the advertisements from firms whose names have faded from the scene (remember Kemper Financial, New England Annuities or GT Global?)

But while I strolled down memory lane, I was struck by two seemingly incompatible thoughts: First, the more things change, the more they stay the same. And second, Wow, things have really changed.

How can those ideas be reconciled? On one hand, many of the articles focused on what we would today call “the fundamentals.” Some were on generating referrals from the platform, wholesaler-sponsored seminars, and the value of asset allocation.

Reading these articles I was struck by how relevant they still are today. That is, a financial advisor may well still be looking for advice on building a high-net-worth business; or a program manager may be looking for help in leading and motivating his or her advisors. These basics of 20 years ago are still the basics of today.

At the same time, however, it was almost quaint to look at the articles that focus on product or technology. Back 20 years ago, it really was only a pretty vanilla menu of mutual funds (dominated by income and U.S. government bond funds), tax-exempt UIT’s, simple fixed annuities and a smattering of individual equities sold by most bank programs.

Also, much ink was spilled on how banks were making major advances in building and distributing proprietary mutual funds products.

It wasn’t until 1994 that I could find anything at all about variable annuities. No indexed annuities, no single premium whole life, no structured investments, no long-term care, no REITs and, of course, no ETFs. And I had to chuckle when I read the 1993 article on how “A Computer Can Launch Your High Performance Year.”

The fact is, while many of the fundamentals that are the foundation of bank investment programs have remained virtually unchanged, the products, technology, compliance requirements, and in fact, the sophistication of both advisors and their clients has increased exponentially.

There’s no doubt that this increased sophistication has had both a positive and negative impact. On the plus side, products like ETFs have helped lower costs, provide significant liquidity and diversification for clients. Both equity indexed annuities and VAs have become such an important part of retirement planning for millions of Americans. And in the low interest rate environment we’ve had for the past six years, so many investors have relied on alternative investment products to pay their bills.

But with the sophistication of products comes complexity. Guaranteed income riders, participation rates, sector ETFs, reverse convertibles, and let’s not forget derivatives and synthetic securities just to name a few. There’s a famous Einstein quote that says: “If you can’t explain it to a six-year-old, you don’t understand it yourself.”

I’d like to see most advisors explain reverse convertibles to a six-year-old. And complexity has significantly increased the need for advisor education and training. To truly provide comprehensive advice to clients, advisors need to fully understand not only the products, but the needs, experiences, risk profiles, and goals of their clients. They also need to know about liquidity issues, diversification, how these products may perform in different interest rate/economic environments and tax implications (I know advisors don’t give tax advice but they must a basic knowledge.)

Back in the “old days,” managers used to admonish their advisors to forget about the details and “just sell.” No more. In my opinion, if there’s has been one failing in today’s bank investment programs it’s that training has not kept pace with product complexity.

Too many programs have relied on their product vendors as the primary source for training and educating their advisors.

Obviously, no one back then could have predicted how technology would come to be such an important part of the business and our entire world.

On the back end, technology has reduced costs to consumers to buy virtually all investment products. Mutual fund loads, stock commissions, and virtually every fee imaginable has declined over the past 20 years and improved technology has been the major reason.

At the program level, without today’s technology there’s no way a program or compliance manager could supervise, review or manage the sheer volume of transactions that flow through their programs on a daily basis.

There is still one major question that many managers are asking of themselves and their regulators: Are we getting to the point where so much time is spent in gathering data that it becomes extremely difficult or impossible to get useful and actionable information.

And of course, no advisor can be far from their computer or smart phone. From managing client contact systems and management, to portfolio and product review, being “tech savvy” is now an absolute job requirement. I don’t think anyone is necessarily pining for the good old days when the business, and indeed the world, was a simpler place.

Indeed, past performance, as they say, is no guarantee of future gains. But if we can learn anything from the past that will help us in the future it’s that things will continue to get more complex, clients will continue to be better informed, and we will rely more and more on technology as a primary tool to keep our heads above water.

Paul A. Werlin is president of recruiting firm Human Capital Resources.


Read More:


Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access