Should you offer financial planning services?

D.L. Evans Bank staff

The team at D.L. Evans Bank in Burley, Idaho, builds customer relationships through their financial planning services.

Offering financial planning services is one way to expand a community bank’s footprint and deepen customer relationships. We spoke with several banks about why and how they offer wealth management services to new and existing clients.

By William Atkinson

When it comes to financial planning, community banks may offer anything from standard financial planning to all its customers up to wealth portfolio management for its most affluent. In the end, though, a bank’s services in this area are more than just about managing a client’s assets and money. They are about the connections that community banks make with their customers that, ultimately, are rewarding for everyone.

Community banks tend to offer individual financial planning or wealth management services such as investment management, debt management and retirement planning. Many offer these services through third-party professionals. Others have their own professionals on staff. Whether outsourced or inhouse, financial planning services offer a multitude of benefits to the banks and customers involved.

Well-rounded client service

By adding financial planning services to their offerings, community banks provide an opportunity for customers to handle all their financial needs at one location—ultimately building loyalty.

D.L. Evans Bank, a $3 billion-asset community bank in Burley, Idaho, uses a third-party asset and wealth management (AWM) provider. “We began offering investment services in 1999, adding advisory services in 2006, in order to provide investment management expertise to our clients and maintain their relationships, and hopefully prevent them from going to competitors like Merrill Lynch, Edward Jones, etc., that were offering checking accounts and other banking services,” says Brenda Sanford, chief administrative officer. “We also needed to increase the number of products and services our customers keep with us in order to build loyalty and drive noninterest income.”

D.L. Evans offers full-service financial and wealth advisory services, including goal- and risk-based financial planning services. “We also have the options of third-party administration [TPA], advisor-directed or model-driven portfolios,” says Sanford. “We offer a full range of products and services, such as stocks, bonds, mutual funds, 401(k)s, SEPs, IRAs, advisory accounts/services and insurance solutions.”

Tenille Straley

Tenille L. Straley of First Federal Bank & Trust says the bank’s trust and investment department opened in 2008. Photo by Mandy Carroll-Beil

Another community bank that uses a third-party provider is $496 million-asset First Federal Bank & Trust in Sheridan, Wyo. While the third-party provider manages asset allocation and mutual funds, the community bank handles all customer interaction. The bank’s trust and investment department opened for business in 2008, because the bank wanted to provide a new service to its existing customers. According to Tenille L. Straley, senior vice president at the bank, First Federal offers an assortment of investment accounts, IRAs, and trust and estate administration as part of its AWM services.

Kevin Beckemeyer, president and CEO of $650 million-asset Legence Bank in Eldorado, Ill., says his community bank wanted to “provide a ‘one-stop shop’ for all their financial needs.”

Legence offers everything from 401(k) rollovers and traditional and Roth IRAs to employer-sponsored retirement plans and long-term care insurance through its third-party wealth management provider.

In Jasper, Ind., $515 million-asset Springs Valley Bank & Trust Company chose to develop its own financial advisory department. “We started offering trust/financial advisory services in the 1950s,” says Martin C. Kaiser, senior executive vice president and manager of $620 million-asset Financial Advisory Group. The Springs Valley Financial Advisory Group has a team of five advisors with more than 100 years of financial expertise, offering trust and brokerage services, investment management, estate planning and administration, and other services.

Curated experience, satisfied customers

According to Sanford, D.L. Evans customers prefer advisor-directed and brokerage for personal services, and TPA when they want their wealth management professionally managed and outsourced. Two prove to be First Federal customers’ favorites: successor trustee and estate administration, says Straley.

Beckemeyer says alternative fixed income with broker CDs are the most popular with Legence customers, and at Springs Valley, according to Kaiser, personal trust services are the Financial Advisory Group’s number one account type and revenue source. But in the end, community banks treat each client as an individual.

“[D.L. Evans] clients … appreciate the level of care we provide to them and the relationship,” says Sanford. “We are still big believers in individual relationships, rather than standardized product and service offerings.”

“I enjoy creating financial plans for our clients that meet their financial needs and optimize the investment risk, so they have a combined peace of mind that their investments will last their lifetime and that they are not taking any unnecessary risks.”
—Martin Kaiser, Springs Valley Bank & Trust

Customers appreciate the service they receive at First Federal. “Given the size of the department, we can offer a boutique experience,” Straley says. “Customers are able to speak with one of the two department employees when they call, and decisions are made locally. We are able to provide an efficient personalized experience.”

Beckemeyer says Legence Bank customers value the personal relationship with their financial advisor and the many years of expertise they can provide when recommending options.

Kaiser of Springs Valley Bank Company says that spending time with clients and beneficiaries to determine future goals, and then being able to help them be proactive with saving and estate planning to reach those goals, is the most satisfying part of his job.

“I enjoy creating financial plans for our clients that meet their financial needs and optimize the investment risk,” he says, “so they have a combined peace of mind that their investments will last their lifetime, and that they are not taking any unnecessary risks.”

Community banks’ plans for development of their financial advisory services run the gamut from marketing to technology. “We have an amazing website with lots of resources,” Beckemeyer says about Legence Bank. “We provide helpful articles with tips to our customers, we submit articles to local magazines as a financial resource, and we have marketing team members who talk with our customers and attend chamber meetings, along with other local community events.”

Springs Valley Bank & Trust Company’s Financial Advisory Group also publishes a quarterly newsletter, called Financial Advisory Group Insights. Examples of recent articles cover the topics of asset investment options, average market returns, considering the big picture during periods of market stress, market risk and reward, and periodic returns on investments.

Putting tech to work

At Springs Valley, technology is at the fore. “We continue to enhance our technology offerings,” Kaiser says. “We want to be able to meet and give our clients attention through the mediums in which they feel most comfortable. We also want to make sure that we are conveying thoughts and data in a clear, concise way that clients appreciate and understand.”

D.L. Evans plans to continue adding advisors to its program as it enters new markets. The program started in 1999 with only one financial advisor. The bank has four financial advisors, and will have a fifth after he receives his final licensing. It also has two full-time sales assistants and an operations coordinator, Sanford says. “Additionally, we are constantly reviewing new products and services to improve service levels. As a driver of fee income, the investment department will continue to be a contributor to the bank’s noninterest income.”

What can financial planning services involve?

Community banks’ offerings can range from annuities to trusts.

• Investment strategies
• Insurance solutions
• Cash flow and tax planning
• Wealth management
• Income distribution
• Consolidation of investment accounts
• Retirement planning
• Educational savings
• Employer-sponsored retirement plans
• Charitable giving strategies
• Trust and estate administration

The benefits of a third-party approach

Many community banks offer financial planning services through third-party professionals.

D.L. Evans Bank has a dual employment arrangement with Cetera Financial Services, LLC, a division of Cetera Financial Group, says Brenda Sanford, chief administrative officer for the Burley, Idaho, community bank.

“The financial advisors are employees of the bank, but are able to offer investment services through Cetera,” says Sanford. “By having a third party, our advisors can focus on developing more relationships and deepening existing client relationships, while Cetera manages much of the back office and administrative functions. It allows us to be much more efficient.”

First Federal Bank & Trust in Sheridan, Wyo., partners with an organization called SEI Investments. “We feel the level of expertise and research that comes from the relationship is unmatched,” says Tenille L. Straley, senior vice president of the community bank. “We have found that SEI is a strong choice for fiduciary investments.”

“We work with a larger brokerage firm [Infinex Financial Group] to provide more products and services to our customers, and with our partnership we are able to offer services that we would not otherwise have the licensing to provide,” says Kevin Beckemeyer, president and CEO of Legence Bank in Eldorado, Ill.

Getting the word out about financial planning

Brenda Sanford

Brenda Sanford

Marty Kasier

Martin Kaiser

Kevin Beckemeyer

Kevin Beckemeyer

Satisfied customers are happy customers, and happy customers give banks a good reputation by making recommendations to other people. As well as deepening existing relationships, offering full financial services can usher in new customers for community banks.

D.L. Evans Bank in Burley, Idaho, has discovered the best way to market and publicize its AWM services is through existing clients who refer their friends and family.

“Referrals from our bank personnel, including tellers and personal bankers, are a large resource for the department,” says Brenda Sanford, the community bank’s chief administrative officer. “We educate our bank staff about the investment department and what it offers, and how to recognize a referral.” The community bank has also traveled down traditional advertising avenues, such as radio, billboards, direct mailers and more. “Like most organizations, we are also now evaluating social media as a marketing tool,” she says.

The best publicity for First Federal Bank & Trust’s AWM services? Word of mouth and client experience with its services. “We have a number of customers who have named us in their planning documents after experiencing our approach to trust and estate administration,” says Tenille L. Straley, senior vice president at the Sheridan, Wyo., community bank. “In the past, we have also marketed to our local CPAs and attorneys.”

Springs Valley Bank & Trust Company’s Financial Advisory Group in Jasper, Ind., markets its AWM services through networking. “People recognize us in the community,” says Martin Kaiser, senior executive vice president. “We receive referrals from other local professionals, such as attorneys and accountants. We also get referrals from bank employees, as well as existing customers.”

Referrals have also been the most effective in garnering new business opportunities for Legence Bank in Eldorado, Ill. “Our happy customers share with their friends and family,” says Kevin Beckemeyer, president and CEO.

William Atkinson is a writer in Illinois.