Estate Planning Opportunity Seen for Banks

Article excerpt

Banks are assiduous in their pursuit of high-net-worth people's assets, but The Phoenix Cos. annual survey of wealthy people has found only 4% saying they had turned to their bank for estate planning -- a big missed opportunity, according to the insurer.

Phoenix is pressing a search for bank partners that will distribute its life insurance and annuities to customers planning their estates and has signed up a few.

One analyst agrees there is an opportunity for banks in estate planning, but others say, in effect, that banks are simply not in the running with wire houses for this business, as evidenced by the Phoenix survey.

A trust executive at Huntington Bancshares in Columbus, Ohio, however, says he has encountered few customers who even talked to a wire house before coming to his bank.

Phoenix's bank partners contribute a minuscule part of its estate planning business. Major wire houses do much of the estate planning business in the industry and at Phoenix, the insurer says.

Is the 4% number in Phoenix's 2003 survey of about 1,500 wealthy people "awful, or is it a great opportunity? I guess it depends on how you look at it," said Walter Zultowski, a senior vice president, marketing and market research, at the insurer. "The opportunity is there. In the survey, 25% said they are at least somewhat interested in estate planning through banks."

According to Phoenix, 43% of wealthy people today consider themselves more savers than investors, and 57% say their years of lavish spending are far behind them. Meanwhile, 58% said it is more important to preserve their capital, even if this means accepting lower returns. In other words, the volatile markets of recent years have turned aggressive investors into tame, estate-planning, eager clients, Mr. Zultowski said.

"Estate planning is really no more than examining the balance sheet of the client, and banks are ideally suited to do this," said Stephen Gresham, executive vice president and chief sales and marketing officer for Phoenix Investment Partners, the insurer's asset management subsidiary. "Just make sure the assets outweigh the liabilities. With estate values come estate taxes. With investment accounts come capital gains taxes and income taxes. There are long-term-care needs. It's a delicate balance, but banks can be a part of the solution."

We already are, says Bruce Ross, the executive vice president of trust management in the private financial group at Huntington Bancshares Inc.

"From my experience, hands down, most experienced trust officers at banks are way more knowledgeable than the average investment rep at a wire house," Mr. Ross said. "The poll numbers are fascinating because, at least in the Midwest, I don't know anyone that thinks the wire houses are the best source of estate planning. The Merrill Lynch contact is usually a broker with some idea, but rarely do they know all the techniques.

"I can't remember more than once in the last five years that someone talked to the wire houses before they talked to us, and people are a whole lot smarter in the planning process than they used to be. They will shop around," he said.

Mr. Ross added that perhaps wire houses are bigger in estate planning than banks because of successful advertising campaigns.

"It's interesting to see bank ads because they say we do insurance, investments, planning, but there is no real description on what planning can include," he said. …