They're banks' secret driver of wealth management income: the behind-the-scenes second-story adviser.

These elite advisers typically manage $50 million to $75 million in assets and bring in $750,000 to $1 million, the bulk of it coming from fee-based business. They're so prolific they no longer receive or need referrals from the branches as do other bank advisers.

While a minority, second-story advisers are a growing force in the bank channel, particularly as the industry gravitates to advisory relationships, according to industry observers.

"There are plenty of advisers out there who now have significant managed money and they don't need that new referral to produce income," said Peter Bielan, managing principal at consulting firm Kehrer Bielan Research & Consulting and a second-story adviser evangelist.

NO FIRM HEADCOUNT
Of the top 20 banks, at least 15 have second-story advisers, according to Bielan. And more are coming on board as banks embrace more advice-based client relationships in the wake of the fiduciary rule. Old National Bank of Indiana and Webster Bank, for example, both recently adopted second-story adviser programs.

The actual number of second-story advisers, however, is not known, as the bank channel does not track it. Raymond James estimates that roughly 5% of the firm's advisers working in affiliated banks and credit unions are second-story advisers. Cetera puts its estimate at close to 10%.

"We have a lot of banks that view this as an additional growth channel beyond the traditional bank referral setup and a strategic consideration for future implementation," said Tim Killgoar, head of Raymond James Financial Institutions Division.

A BIG DEAL
SunTrust saw the opportunity years ago. Bielan, then SunTrust's program manager, started the bank's second-story adviser program in 2002 and roughly 100 of its 500 advisers at the time took the firm's offer to move up to "second-story" roles.

"It was a big deal and it really changed the dynamic of the business," Bielan said, adding that he has since recommended the arrangement to many firms.

Several of SunTrust's original second-story advisers are still with the bank, he said.

Advisers have many reasons to move up. They're able to work their books of business without having to deal with branch traffic and are spared from usual branch obligations, such as training and sales development. Second-story advisers are often moved "upstairs" or relocated to a corporate office where they can focus on deepening their relationships with existing customers and engage in more comprehensive financial planning work.

FISH IN A FISHBOWL
The arrangement is a win-win for both the advisers and their banks, according to bank wealth executives. Advisers appreciate being able to focus on the things they do best, while bank management resolves a number of issues. Because second-story advisers exit the branches, they open up space for new advisers, allowing programs to grow.

It's akin to being "a fish in a fish bowl," said Bielan of programs that no longer have room to accommodate more advisers in their branch network. "It can only get so big in that environment."

The opportunity to bring in fresh advisers was one of the reasons Key Bank implemented a second-story adviser program two years ago, said Marc Vosen, president of Key Investment Services.

He'd be able to "backfill" the spots vacated by second-story advisers, he explained.

Advisers who get bumped up relinquish their smaller accounts, which are then assigned to incoming new advisers. "You're going to do more production and create more revenue," Vosen said.

RETENTION PLOY
Having a second-story adviser program also helps prevent star producers from going to a wirehouse, according to industry observers.

"It retains the adviser in a role that they were moving toward anyway, which is a lot more independent," said Bielan.

Of course, advisers might still be tempted to jump ship, but the likelihood is less, according to Bielan.

"You may not retain every one of those advisers looking at a wirehouse but you're going to retain a lot more than if you didn't have a viable alternative," Bielan said.