Banking Industry Extends Personalized Service to More Clients

Article excerpt

MINNEAPOLIS -- John Hagen is well-to-do, but he never thought of himself as rich. So when the telecommunications executive returned home from having heart surgery last March, he was surprised to receive visits from a Norwest private banker to help with his financial affairs.

"I've been working and dealing with banks for 40 years, and I've never had any service that approached this," he said.

While Hagen, 61, may not be as wealthy as your typical professional ball player, he is well off enough to qualify for special attention from Norwest and a growing list of U.S. banks. That's because banks are now extending to a wider group of customers the kind of personalized service that in the past was reserved only for their wealthiest clients. To qualify for private banking at Norwest, for example, clients need only have $1 million in assets to invest, loans of at least $250,000, or trade an average of $500,000 in securities a year. "The banking industry is really changing its focus," said Lucy Stoffels, whose title is affluent marketing manager for private client services at Minneapolis-based Norwest. "Banks have the credit and deposit business, and are looking to the future." Her department, created in April, provides investment management to its Minnesota customers. Banks have historically provided customized services to the wealthiest 5 percent of their customers, but are expanding that to the top 20 percent, said Fred Cummings, a bank analyst at McDonald & Co. Investments in Cleveland. BankAmerica, the third-largest U.S. bank, recently created a group called "financial relationship management" to direct special services to customers with balances of at least $75,000. The bank hired about 400 officers, and transferred another 1,000 executives into a division that provides estate planning, insurance, and deposit products -- a range of offerings and personal attention that's unavailable to traditional retail customers. "For a client preparing to retire, the bank would historically want to make sure they had a checking account with the right direct deposit and maybe a safety deposit box," said Kim Burdick, who heads BankAmerica's relationship management in Southern California. "Now, we take a much more complete look in terms of expanding the services into long-term disability insurance and investments." Analysts say banks are starting these programs to fend off competition for their well-heeled clients. "The traditional high-net-worth marketplace is at risk" as discount brokerages and mutual fund companies pursue those clients, said Kurt Reisenberg, a consultant at VIP Forum, a division of the Washington-based Advisory Board, an industry research and consulting concern. …

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