Pub. 2 2011 Issue 2

www.wvbankers.org 16 S tructural changes in the banking in- dustry initiated by consumer demand and convergence of financial services have forever changed the face of commu- nity banking. In the past two and a half decades, the banking industry’s share of total U.S. household financial assets fell 44 percent to 12.4 percent, while the share of mutual funds increased 16 times to 11.4 percent . This fact, coupled with the ever increasing commoditization of traditional banking products and banking services offered by non-bank competitors pose a real threat to a community bank that is not able to address wealth management needs. Now, nearly every large bank in the world offers some semblance of what they refer to as Wealth Management as part of their Private Banking platform. They provide very sophisticated services for their most wealthy customers. In fact, wealth management services are reportedly being provided by 83% of large Key factors for the choice of a community bank to offer wealth management services are still discretion and safety, image and reputation, service quality and perfor- mance. Many clients still have classic needs from the financial planning and investment management perspective. However, customer expectations of wealth management services are changing. “Client experience” has become a dif- ferentiator for success, and requires a new generation of relationship managers who embody not only competence but encour- age trust and confidence. To illustrate the impact of true wealth management services, delivered by a highly professional relationship manager, let me introduce you to Gerald Friedel, Vice Presi- dent of Wealth Management at Itasca Bank & Trust in Itasca, Illinois. In 2000, Itasca Bank & Trust established a wealth manage- ment programworking in connection with Money Concepts International, Inc. Gerry, who had been a lending Vice President and Bank President Jack Mensching, intro- duced the concepts of Wealth Management services to the bank and Gerry built the program from scratch. The philosophy of Itasca Bank was to offer valuable ser- vices targeting their best customers with a commitment to take all comers. Offering the customer a truly unique and holistic experience was to be the approach with an emphasis on gathering assets and fee based services. A unique client experience customized to each individual is deliv- ered through their systematic process of services, communications, and experiences that make the client feel appreciated or spe- cial as well as building greater confidence in achieving their life goals. Since the launch of the Itasca Bank & Trust wealth management program; the bank has achieved or exceeded every initial goal it set for itself though they raise the bar each year. Customer loyalty has increased, revenues are growing at a rate of 35.31% annually, and over 70% of their new clients come from referrals. In addition, they have developed a book of business totaling more banks, 63% of medium-sized banks, and 49% of small banks. However, many of these organizations count offering invest- ment products or access to online financial planning calculators as their source for wealth management services. However, to compete in this space, a community bank must offer real and practical wealth man- agement solutions. So what is wealth management and what impact can it have on community bank- ing? Wealth management is a specialty of financial planning. The wealth man- ager’s focus is the client and his efforts are devoted to helping clients achieve life goals through the proper management of their financial resources. The practice of wealth management is holistic and individually customized. Success is not measured by investment performance relative to other managers, but rather by the client’s success in meeting life goals. Holistic Wealth Management By Barry L. Dayley, CFP®, RFC®  Holistic Wealth Management — continued on page 26