Cross-Selling Bank Products Just Not Working Out For Wirehouse Reps Hot

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The banks have touted their ability to refer their customers to affiliated advisors as a gold mine for all parties.


But in practice, industry consultants at the Aite Group have discovered that even captive bank reps have trouble converting those relationships into actual producing accounts.


Out of the 75 advisors polled, a full 34% say they derived no revenue whatsoever from customers referred by the banking parent.


If anything, the money seems to flow the other way, since a significant percentage of these advisors' accounts are also customers of the bank.


The bankers didn't refer these accounts to the advisors, so the advisors must have cross-sold the bank's products to their existing clientele -- or else those clients simply decided on their own to both bank and invest with the institution.


This confirms what many A4A readers always knew: any benefits from the combination of wirehouse and bank have as yet been accidental at best, and they favor the bank, not the advisor.


Even among the 32% of advisors who say they earn more than 24% of their revenue from clients referred by the bank, those referrals are apparently not enough to sustain a strong practice on their own.


When the referral system works at all, 44% of the clients that wirehouse reps owned by a bank -- which sounds like all of them but Morgan Stanley -- work with do their banking elsewhere.


And these accounts tend to be generate less in commissions and fees than non-cross-sold relationships.


Aite notes that the banks are increasingly squeezing their captive advisors for revenue and the advisors themselves are pushing back:


"By cross-selling wealth management products to retail bank customers, banks have an opportunity to offset a portion of the revenue shortfall expected on the retail bank side in coming years. But not all bank financial advisors have bought into the benefits of leveraging internal partners and cross-selling non-investment solutions to deepen bank customer relationships."


In that kind of environment, independence is going to look sweeter and sweeter to many of these advisors.


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