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Only These Few Top Banks Are Luring HNW Clients

By Murray Coleman January 10, 2018

Wirehouses are moving in all directions these days to attract a bigger piece of the wealth management pie. Besides appealing to mass-affluent investors through robo platforms, global financial services giants like Bank of America are moving upstream with a host of high-end services.

But a new study suggests banks aren’t doing a great job luring more high-net-worth investors into the fold. Independent research group Market Strategies International published its latest study Tuesday delving into customer sentiment at major banks and super-regionals relating to wealth management products and services.

The report, part of a series produced by analysts at its Cogent unit, ranks leading banks and their forays into wealth management.

“We took a deep dive into what a primary bank customer with at least $100,000 of investable assets sees with regards to aligned wealth management service platforms,” says Julia Johnston-Ketterer, a senior director at Market Strategies and author of the report.

To get such a view, her team of analysts surveyed 4,400 affluent investors currently doing business with a mix of national and super-regionals about their attitudes towards wealth management offerings through their banks.

“We tried to get a good cross-section of survey participants by referencing that group against broader demographic data from the U.S. census,” Johnston-Ketterer says. “From there, we identified a highly representative group of investors with a primary banking relationship.”

Participants included both wealth management users and those not yet signed up for those services, notes Mike Berinato, head of Market Strategies’ banking research sector. “We discovered that very few affluent investors use their primary bank for basic wealth management services like holding assets in IRAs or taxable accounts,” he says.

Fewer than 20% of affluent investors surveyed indicated they're willing to consider their primary bank for wealth management products and services, according to Cogent.

“Fewer than that – about 6% – are actually using their primary bank’s wealth services in some capacity,” wealth analyst Johnston-Ketterer says.

But some banks are cross-selling better than others, Berinato adds. “Based on how many investors told us they’d consider their primary bank for financial planning and related products, we came up with a ranking system,” he says.

In terms of individual retirement accounts, the survey results show three banks in particular are “clearly in the top tier” of catching the attention of affluent banking customers for wealth management, Johnston-Ketterer says. Those are Citibank, Huntington Bank and Ally Bank, she adds.

“While Citibank has a much larger market presence, these two smaller banks – Huntington is a brick-and-mortar competitor while Ally is online – are doing a good job of building a digital presence,” Berinato says.

In fact, Huntington and Ally stand out in their messaging to influence their own customers to try more products and services that can lead to wealth management service adoption, he adds.

“These two banks, along with Citigroup, were all pretty close – and well above the rest – in receiving relatively high levels of consideration for IRAs and related products,” Berinato says.

Also ranking in the top five for consideration by higher-end banking customers, he points out, are Bank of America and SunTrust.

“Both are doing okay, but we find that overall consideration by their respective customers tends to fall slightly below the first-tier players,” Berinato says. “They definitely do, however, look to be leaders of a larger second-tier of competitors.”

Another key component of the Cogent report looks at wealth sentiment by bank customers using taxable accounts. Ally, Huntington and BofA topped that field, according to the survey. “The second tier gets crowded, so these are the three that really stand out for leading taxable brokerage account customers to consider wealth-related services,” Berinato says.

More than two dozen different banks were studied. That included a predetermined list by Cogent’s analysts as well as write-in candidates from banking customers who participated in the survey, according to Berinato. No banks or wealth management firms – or any other outsiders – sponsored the research, he adds.

“Banks are continually striving to gain a bigger share of their affluent customers’ wallets,” Berinato says. “But they’re facing an uphill battle – investors aren’t convinced that banks have enough investment expertise. And most investors seem to be very reluctant to put their investment eggs into one basket.”