By Karen Kroll
The marketing of wealth management is changing. Wealth management itself is more complex, the number of generations that can use wealth management services is growing and the range of competitors is expanding.
Dave Coffaro, principal with Strategic Advisory Consulting Group, recently met with a young tech millionaire in Silicon Valley. The potential client skateboarded to the meeting, at which everyone else was in suits and ties. His comment, as Coffaro recalls: “All I want is a text when something is up. I don’t need to meet with all of you unless something needs my attention.”
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“Banks have to make conscious decisions about how best to offer their services and how to market,” Coffaro says. Traditionally, many would segment clients based on asset levels. That approach is losing relevance as other dimensions, such as generation and culture, are exerting greater influences on people’s thoughts about wealth, he adds.
One bank that’s combining both innovation and tradition to successfully market its wealth management services is First Security Bank and Trust, based in Charles City, Iowa. Over the past 28 years, assets under management have grown from zero to $240 million, says David Jarvill, CFP and wealth management adviser.
“We’re trying to be forward looking in what we’re doing,” Jarvill says. To that end, First Security uses multiple approaches to attracting clients, including both traditional and newer media.
New approach needed
Several converging factors highlight the need for multiple and new approaches. Banks, like all businesses, need to meet clients in ways in which clients prefer to engage. While many still consume traditional media such as radio, most also are online and engaged in social media.
By 2025, banks will be working with five generations of wealth owners, from members of the silent generation to those in Gen Z, according to The Changing Face of Wealth Management, a recent study by the American Bankers Association. Attitudes toward wealth often vary between these groups. For instance, many younger investors have less trust in financial institutions. In some ways, their attitudes are similar to individuals who lived during the Great Depression, the study notes.
Banks also face increasing competition from nonbank entities, such as registered investment advisers. This is occurring just as bank clients are asking for fee reductions. Some potential clients view banks as technology laggards that lack the data aggregation and interface tools that can provide them a holistic view of their financial health, the study noted.
Adding yet more pressure, bank management often is looking to wealth management and other areas that can generate fee income and help compensate for the decline in net interest margin. Between 2010 and 2020, it dropped from about 3.7 percent to 2.8 percent, according to the Federal Reserve.
The opportunity
While the challenges are daunting, the opportunity is considerable. In 2018, research firm Cerulli Associates estimated a wealth transfer of about $68 trillion over the next 25 years from older households to their younger heirs and charities. This provides banks with an opportunity to gain new business, Coffaro notes. The converse of the transfer is that those who don’t reach out risk losing relationships as wealth passes from one generation to the next.
At First Security, Jarvill and his team have been working for several years on new ways to engage wealth management clients. When it came to social media platforms like Facebook and Twitter, Jarvill notes that he initially wasn’t enthusiastic. Over time, he began to realize the power of these platforms.
A turning point occurred when the brokerage firm with which First Security had been working was sold, and the bank needed to find a new partner. Ultimately, the bank partnered with Infinex Financial Group, which is owned by a group of about 40 banks. Infinex also had staff who were fluent in social media marketing and could offer programs and content. That meant less content for First Security to create on its own.
While First Security Bank overall engages on multiple social media platforms, Jarvill has kept his focus on LinkedIn, given its more professional tone. The platform offers several benefits over traditional media, he adds. “It allows us to tell our story in our own words,” Jarvill says, and talk directly to clients and prospects, including those who’ve moved away from Iowa. He’s also able to incorporate a range of media in his LinkedIn posts, including blog posts, video clips and links to radio ads.
Almost all prospective clients, and particularly younger ones, will conduct an internet search before connecting with the bank or Jarvill, says Matt Bradley, first VP with First Security. “A robust LinkedIn presence is key” to demonstrating one’s expertise, he says.
Jarvill sends clients monthly emails that cover a range of subjects, such as retirement planning or organizing one’s finances. These take a friendly tone. “It’s like you’re talking to someone at the coffee shop,” he says. A quarterly newsletter, which is printed and mailed, recaps market movements.
While these initiatives help keep First Security’s name in front of clients, Jarvill takes care not to overdo it, he says, and focuses on quality over quantity. That way, when people check their inboxes, they’re more likely to read the information.
Along with social media, Jarvill continues to use standard marketing tools. One is simply meeting with clients and prospects. “As a community bank, it doesn’t matter where it is, we’ll come to you,” he adds.
First Security also reaches clients through radio ads. While conventional wisdom says radio audiences skew older, that’s not always so. First Security times some ads so they run near the broadcasts of the popular financial advice radio host Dave Ramsey. “We hit a group of people that’s interested in the philosophy of financial planning,” he says.
The radio ads also help reinforce Jarvill’s expertise. “They’re heavy on who we are and how we can help solve problems,” he says. Ads that run in the spring might discuss IRA contributions and saving for retirement. In early summer, the focus often shifts to college savings plans, and in the fall, to long-term care options.
The ads are produced in-house, using Bradley’s skills in electronic media, as well a desktop computer and some simple software. The overall investment is minimal, Bradley notes.
Navigating COVID-19
During the COVID-19 pandemic, in-person meetings with clients shifted to a virtual format. During these, Jarvill focused on listening more than talking, and learning how customers were being impacted. He also quickly became familiar with the range of resources available through the bank.
Armed with this knowledge, Jarvill could match clients with experts who could help address their challenges. For instance, one customer owned a high-end dance school and needed help when stay-at-home orders went into effect. Jarvill was able to connect her with a loan officer for a Paycheck Protection Program loan, even though she didn’t have a lending relationship with the bank at the time.
By helping clients, Jarvill and his team also helped grow business and provide decent fee income without, for instance, simply raising NSF fees—a tactic that may leave clients with a negative impression.
Because First Security’s market isn’t growing from a demographic standpoint, growing the bank requires Jarvill and his colleagues to both retain relationships and increase those relationships’ stickiness. Along with wealth management services, they’ll try to capture checking, lending and other banking business. “If you have four or five of those relationships, you turn a customer into a client. With clients, you can help solve problems,” Jarvill says. In contrast, with customers, you might not even learn what the problem is, he adds.
As the past year has shown, successfully marketing wealth management, like any endeavor, requires changing with the larger business environment. A few years ago, “I thought what had made me successful would continue to make me successful,” Jarvill says. “I was fortunate to be around people who said, ‘We can do it a different way.’”
Karen M. Kroll is a business and financial services writer and content marketer based in Minnesota.
