Magazine article American Banker

Funds Guru Sees Brokerage as Key to Bank Survival

Magazine article American Banker

Funds Guru Sees Brokerage as Key to Bank Survival

Article excerpt

SAN DIEGO -- As banks move away from their traditional role of gathering deposits and making loans, their brokerage units are helping them blaze a path of the future.

That was the message mutual fund guru A. Michael Lipper delivered to 600 executives who attended the Bank Securities Association's annual convention here earlier this week.

Through their investment product activities, banks are beginning to develop the sales culture they need to compete with nonbank providers of financial services, said Mr. Lipper, president of Lipper Analytical Services Inc., Summit, N.J.

"You should be in the business even though you won't get 10% growth out of it," he said.

Nedd for Sales Skills

However, Mr. Lipper added, many banks are in the brokerage business for the wrong reasons. "You shouldn't be in it just to protect your customer lists," he said.

The banking industry is under such intense competitive pressure that in coming years, "some of the banks represented in the room will not be banks," Mr. Lipper predicted. But to transform themselves, banks need to learn some salesmanship.

Some observers challenged his prognostications.

Whether banks will become financial services companies is a "crystal ball" question, said Thomas E. Ryan 3d, business development manager for the bank services division at Keystone Distributors, Boston.

"banks will evolve, but I don't see them getting out [of banking] because of regulatory pressure," said Mr. Ryan, who is a former banker.

A Matter of Retention

Shifting his focus to the nuts and bolts of the mutual fund business, Mr. …

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