The Role of the Licensed Banker—Sales, Referrals or Both?

By Bruce Stava
President:  LicensedBanker.com

As hybrid bank investment programs become more common, utilizing a blended sales force of dedicated bank brokers combined with licensed bankers, management continues to grapple with the question of who sells what to whom.  As such programs evolve from the previous dedicated-only model, where the branch’s broker (when available) was responsible for all investment sales to branch customers, regardless of size or complexity of the trade, to a more diversified approach  including Licensed Bankers, conflicts regarding “ownership” of trades are to some degree inevitable.  It is critical for senior management to devise strategies and tactics that ensure that customer needs are being met, in a manner that is both profitable to the company and also keeps the Compliance Department comfortable!  For the purpose of this article, I am focusing on programs that provide their platform reps with both insurance and NASD licenses.  In a following article we will look at how to integrate an insurance-only platform most effectively.

One of the first issues that need to be addressed is the role of the licensed banker.  Is the LB expected to act as a gatekeeper for branch customers, meeting with them initially and performing some sort of profiling, and then either proceeding with a sales process themselves, or referring them on the branch FC when needed?  Or should the LB’s function be to act a licensed agent for the FC, able to have a securities-related conversation with a prospective customer and then set an appointment for qualified prospects with the FC?  There are several issues that can influence the choice of strategies.  What is the LB:FC ratio, including branch coverage?  What types of licenses are held by the LBs?  Is there branch manager support for allocating LB time to investment-related activities?  What is the culture of the bank’s brokerage program-does it support teaming FCs with LBs?  All of these questions will impact the choice of strategies chosen. 

In designing strategies management needs to keep in mind certain fundamental facts about the desired outcome.  First of all, it is not enough to merely transfer investment sales from the  FC to LB channel, although to some degree with certain products this transfer can result in significantly lower cost of sales.  Instead the ultimate outcome needs to be increased sales in both channels, with larger, more complex sales made in greater numbers by the FCs, and smaller, simpler trades by the LB.  In order for this to occur, a compensation plan must provide rewards to the LB in a way that encourages them to personally sell, and not simply refer everyone to the FC, while also rewarding the FC for LB success.  In addition, it is critical for the LB to have a profiling system that provides a consistent, measurable way for the LB to qualify a prospect as either a personal customer or a referral to the FC. (There must also be consequences for LBs who do not “follow the rules” about when to refer to the FC.)

When roles are properly defined, the licensed banker can not only serve as an active salesperson, but also as a “force multiplier” for the dedicated FCs, allowing the FC to cover more territory more effectively, by focusing on the appropriate customers.  One large bank program states that over 30% of brokerage accounts are less than $25,000, and account for about 1% of revenues currently.  These are the type of customers that LBs can be targeted toward, resulting in happier customers, relieved FCs, and  increased sales and referrals for the LBs,  Thoughtful decisions by management prior to deployment of a platform program can prevent, or at least minimize, conflict and dysfunction between sales channels, and greatly enhance investment program revenues over time.

 Bruce Stava is the President of LicensedBanker.com, the first website dedicated exclusively to providing Jobs, Tools and Resources to Platform Investment Representatives and Management.  Bruce can be contacted directly at (562) 438-5591, or by email at  bruce@licensedbanker.com.