August 10, 2009

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Fiscally Fit

Private Banking Keeps Your Plan in Place

By Spencer Sutherland

August 10, 2009

ATMs. Phone transfers. Online banking. For years, banks have worked tirelessly to help clients bank without having to enter their buildings. Though these services have made accessing and managing funds more convenient, in times of economic trouble, concerned investors want a more personal touch. Banks throughout the state are offering private banking as a way for clients to get the attention they need. Through private banking, individuals with approximately a $2 million net worth or $300,000 annual income can have their financial institution’s undivided attention. Senior Vice President of Private Banking at Zions Bank, Susan Speer, explains Zions’ private client service mantra. “We offer superior service. Our phones never go to voicemail; a human always answers the phone.” With 20 private bankers, Zions boasts the largest private banking corps in the state. Speer says her private banking managers look out for their clients, wherever they may be. “If a client is going on a trip, we get foreign currency for them. We monitor their credit card while they’re away to make sure everything looks legitimate. We’ve even had private bankers meet clients at the airport if they’ve forgotten something.” The One-Stop Shop While the concierge-like service is certainly appreciated, the convenient access to weightier financial services is the real selling point. For Key Bank, the goal is to become a one-stop shop for their wealthy customers. “Our approach is ‘advise-centric,’” says Rick Gross, Key Bank senior vice president. “We offer expert advice in a number of areas that the wealthy are typically engaged in—financial planning, estate and business estate planning, insurance needs and more traditional bank products.” While an in-dependent financial planner could certainly advise on any of these topics, a brick-and-mortar financial institution helps an individual carry out the advice, Gross says. “We’ve married the solution with the advice. When it comes to areas of investment management, trust powers, etc., we can take care of it without having to refer it to another source. It’s all in house.” Pain-Free Lending The core of any private banking department is lending. Rather than apply for a loan with a random loan officer, private banking clients work through the process with their personal banker. “When it comes to a privately-owned or closely held business, we can take care of the lending process right through private banking,” Gross says. There are certain instants, such as an asset-based loan involving inventory or accounts receivable, when a more specialized loan expert is consulted, but the private banker is still there every step of the way. “The client remains a private banking client, we just bring an additional resource to the team that’s a better fit for the situation,” Gross adds. The loan process is also a valuable marketing tool for the financial institution itself. Not just anyone can walk into a bank and sign up for a private banking account. The programs are almost entirely referral-based, with many of the referrals coming through satisfied customers. “Because we’re so heavily regulated for anti-money laundering, we really need to know who our clients are,” says Speer. At the end of a loan, she says she wants clients to feel that they were treated fairly and that they understand the rates and the associated fees. More importantly, she hopes “the experience was so good that they refer a friend to us.” Risk vs. Reality Along with lending and investing responsibilities, private bankers have learned to offer another service during this recession: a listening ear. “We have to be very close to our clients during a time like this,” Gross says. “In addition to their portfolio, we try to gauge their emotions. Are they comfortable? Are they fearful? We sit down and talk to them about their emotions, about their current situation and their long- and short-term goals so we can make any adjustments.” Gross explains that though clients understand the risks inherit with investing, the reality of losing money is still a tough pill to swallow. “For years, all of us in the investment world have talked to our clients about risk tolerance,” Gross says. “When we have the initial interview with a client, we do a risk profile. We ask, ‘What if you woke up one day and your portfolio was down 30 percent? Would you be inclined to panic, sell or stay the course?’ Prior to last year, it was very typical for a client to say ‘I’m not adverse to that level of risk.’” For many clients, that hypothetical has become a reality. “What we’ve found is that if you look across the board, what people thought their risk tolerance was, was actually much higher than it actually was.” The result, Gross says, is that over the past six to nine months investors have looked to more secure municipal bonds and liquid assets rather than equities. The Comfort of Having a Plan Fortunately, it seems there is a light at the end of the tunnel, especially for those who mapped out a plan before the recession hit. “Our clients have been in a much better place emotionally than those who didn’t have a plan in place,” Gross says. “When you’ve laid out a course, you can see if you want to stay on it or navigate away from it.” Gross has also found that when most clients meet with their banker to discuss their current situation and their long-term outlook, clients find that things are not as bad as they seem. “Clients were hearing what the media was saying and getting caught up in the hysteria, but when we sat down with them and said ‘here are your goals and here’s what needs to be done,’ it wasn’t as doom-and-gloom as they thought. There was a sense of relief.” But what if you don’t have a solid plan? “It’s a great time to reach out to your financial planner,” Gross advises. “Going forward, make sure that you have a plan in place and be willing to make adjustments based on market conditions. The people who have taken the time and worked closely with their advisor, especially during the planning process, are much further ahead than those who don’t.”
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