Slideshow Can Banks Defuse Banker-Broker Culture Clash?

Published
  • August 13 2013, 1:50pm EDT
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By Margarida Correia

Ever since banks began to offer investment services in the 1980s, the relationship between bankers and brokers has never been easy. Bankers—a generally reserved and risk-averse group—viewed the newcomers as aggressive and overly focused on sales, an unruly bunch sure to stir up trouble for their banks.

Lately, however, the long-standing cultural divide has been losing some of its edge as banks across the country step in to settle differences between bankers and brokers. Here are some of the steps they’re taking to defuse the banker-broker culture clash.

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Cross-Selling Programs

Bank executives are putting in place formal programs to increase cross-selling of banking and investment products. Regions Bank and Citibank are among the banks that have adopted client service approaches that focus on a “360 degree view” of client needs.

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Formal Referral Approaches

Banks are implementing formal referral approaches to get bankers to refer to advisors and advisors to refer to bankers. Some are applying peer pressure by publishing “league ladders” with the names of people making the most referrals released monthly. Others are tying compensation to the referral activity of bankers and brokers.

Joint Business Planning

Banks are insisting that executives from banking and wealth management groups engage in joint business planning, setting joint growth targets for referrals and assets under management. Zions Bancorp., for example, had advisors and bankers engage in partnering sessions to brainstorm how they can more fully serve their clients.

Alignment of Investment and Deposit Goals

Branch managers are often hesitant to refer business to the investment department for fear that clients will move money out of their bank accounts, thereby reducing the bank’s chances of reaching its deposit goals. To eliminate this problem, some banks are aligning investment and deposit goals. At Citibank , for example, bankers and advisors are paid based on the overall size of the client relationship, including both investments and deposits.

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Out-of-the-Box Thinking

Some banks are experimenting with new ideas. U.S. Bank, for example, requires every department to put together a roadshow that they present to other departments on an ongoing basis. Each group describes what it does, how it does it, why it’s valuable and how it can work with other groups.

Others are contemplating changing the compensation structure for bankers and brokers, so that they’re paid in a more similar way. HSBC , for example, recently put all its advisors on salary, marking a huge departure from the industry-wide practice of paying them solely on commission.

For related articles on HSBC’s decision, click here , here , and here .