Magazine article American Banker

Plan B Pays off for Banks Targeting Affluent Clients

Magazine article American Banker

Plan B Pays off for Banks Targeting Affluent Clients

Article excerpt

Banks that have shaken up their approach to targeting wealthy clients are reaping benefits.

For some banks, streamlining the services they offer the affluent-trust, investment management, and private banking-into one group has spurred gains. For others, simply changing the target customer and redoing the menu product has helped.

National City Corp., based in Cleveland, took a cue from peers around the country in April 1996 when it created a private client group, rather than watch different departments chase the same clients.

"I'm not trying to be pejorative to the trust world, but it was time for a change, and we made that change," said Jeffrey M. Biggar, executive vice president of National City's private client group.

Since its formation, the group has had annual growth rates of 20% in revenues, 30% in net income, 28% in assets under administration, 22% in loans, and 21% in deposits, according to National City.

"In the old world, we were seeing nominal growth in trust revenues and trust assets under management," Mr. Biggar said. "They were selling at the tail end of a life cycle and not gearing up to sell to the emerging affluent."

The clientele has changed too. Most account sizes range from $750,000 to $1 million, up from $250,000 to $500,000 in 1997, Mr. Biggar said. Total assets under management for private clients is $33 billion, compared with $18 billion in 1997.

New York-based Bessemer Trust Co. has taken a different tack by targeting younger, newly affluent customers.

Eighty-five percent of new clients are the first generation in their families to be wealthy. …

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