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Establishing a Financial Planning Offering: A How-to Guide for Banks

By Jay McAnelly

As customers save for children’s college expenses, prepare for retirement and manage their finances through other life stages, there is a real opportunity for community banks to help them reach their financial goals. In fact, a recent study from J.D. Power reveals that 78 percent of U.S. retail bank customers are interested in receiving financial advice or guidance from their bank. Community banks can position themselves to meet this need by making financial planning a part of their offering. In addition to driving customer satisfaction and loyalty, it can also create new sources of revenue and growth. If you’re a community bank leader contemplating ways to build out a financial planning capability for your customers, here are three strategies to get started.

Deliver personalized advice

Successful community bankers know their customers well. You might be able to list their kids’ names by heart – or perhaps you sponsor their favorite charitable events. But how familiar are you with their hopes and dreams for the future? And do you know if their finances are on track to meet those aspirations?

If you’re looking to establish a financial planning offering at your bank, these are the types of questions you should be asking yourself. Financial planning is rooted in knowing customers really well.

Beyond transactional interactions, you need to understand their total financial picture as it exists today – incomes, investments, debts, risk tolerances, time horizons and all the rest – and where they’re hoping to be 5, 10, 20, 30 or more years from now.

With this knowledge, you’ll be well positioned to offer advice and solutions tailored to your customers’ needs and guide them each step of the way as they work toward their goals. As you’d expect, a “one and done” approach won’t be sufficient. Customers’ priorities will naturally change as their lives evolve, so it is essential to be in regular contact and keep the conversation going over time.

Streamline the process with digital solutions

Interacting digitally is table stakes in today’s world. Amazon, Google, Netflix and car sharing apps have raised the bar when it comes to delivering compelling customer experiences. People expect convenience, ease and accessibility in all aspects of their lives, including their interactions with financial institutions. Banks need to offer digital capabilities that allow customers to see their progress toward their goals as well as track the performance of investments and solutions they own – at any time, from anyplace and on any device. As you build out your financial planning capabilities, consider adding account aggregation software that will enable you to get a comprehensive view of your customers’ full financial picture.

A huge benefit of digital tools is that they enable banks to streamline the financial planning process by making it easy for customers to work with an advisor, access accounts, review plans and make changes online. Undoubtedly, this is a more efficient way to operate than in the past.

Leverage a bank partner

If your bank lacks the in-house knowledge, investment advisors, technology and solutions to establish a financial planning offering on your own, you may find the task in front of you daunting. But you don’t need to go it alone. Partnering with a broker-dealer that specializes in the financial planning space may be an ideal option for ramping up efficiently and effectively.

The process typically starts by interviewing potential partners. Look for one that is a fit culturally with your bank. This is critical. Find a partner that will help ensure your customers will enjoy a consistent experience across your existing and expanded offerings.

The cost associated with launching a joint venture is another essential consideration. You’ll want to do a full financial analysis to gauge whether the partnership makes sense economically. But just as important as the price of doing business together is the value that you can drive together. Not all broker dealers are the same, and some will help you drive revenue more than others.  Asking the following questions may help you evaluate potential partners: What is their value proposition? What is their expertise, and what kind of client experience do they deliver? Will they help your bank recruit quality talent?

The key is to work with an institution that can help you derive value from financial planning while providing standout service and value to the customers with whom you’ve worked so hard to earn their loyalty.

Establishing a financial planning offering may seem like a huge undertaking, but banks that rise to the occasion have a chance to make meaningful difference in the lives of their customers while strategically growing their business. With individuals, families and small businesses increasingly looking for financial advice, now is the time to seize the opportunity.

Jay McAnelly is group vice president, Ameriprise Financial Institutions Group.

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