Pub. 1 2010 Issue 2

www.wvbankers.org 22 Now More Than Ever… By Lee A. Sauvain Recently, a lot has been said about Main Street versus Wall Street. As we all know, our banks are located on Main Street, not on Wall Street. Where do most consumers turn for financial advice in times of uncertainty? F ortunately for us, the answer is obvi- ous — Main street. If you do not currently offer investment solutions to your customers, you are missing out. Right now, community banks are in a unique position to differentiate them- selves fromWall Street. As customers search for a safe haven, they are showing up in bank lobbies. As a result, some- times the most valuable commodity a bank can offer is peace of mind as con- sumers look to their bank for reassurance. Similarly, as financial news contin- ues to be daunting and confusing, customers are turning to their trusted financial advisor for help in inter- preting what the current investment climate means to them. In fact, many financial advisors in banks are actually seeing their client base increase during these difficult times. Many consumers are fearful and are turning to their bank looking for answers. Banks should take advantage of the opportunity to offer guidance to customers who are unsure about what to do during these volatile times. Now more than ever you should be offering investment solutions to your customers at your bank. The baby boomer group is just one opportunity for you to assist in this tumultuous time in the market, to have a greater ability to retain them as customers and gather a greater share of their assets. The Boomer Story No doubt, every financial institution is familiar with the “Boomer Opportu- nity”. This retirement opportunity will become critical to the banking industry. As traditional pension plans become increasingly scarce, doubts about social security increase, and reliance on defined contribution plans increases, re- tirement will become the most pressing financial priority of the mass affluent. Banks have not fared well in the retirement market recently. Accord- ing to a 2007 survey conducted by BAI Research and Mercatus LLC, the bank share in 1990 was 40% of the $3.9 trillion in retirement assets. In 2006, that share reduced to 10% of the $16.4 trillion in retirement assets, and in the lucrative rollover market, banks were capturing 18% of the rollovers while investment firms captured 67%. Interestingly, 50% of the mass afflu- ent consider banks suitable providers of retirement services, while only 15% of the mass affluent are actually using their bank as their primary provider of retirement services. The Value Of The Retirement Relationship Banks with the primary retirement relationship will end up with 46% of the customer’s wallet share, according to BAI Research and Mercatus LLC. However, banks without the retirement relationship will only have an 18% wal- let share. Remember, if just 15% of the mass affluent consider their bank to be their primary provider of retirement More — continued on page 24