Arvest Bank has the strongest brokerage unit in the southwest, according to one industry benchmark.
The Bentonville, Ark.-based bank generated $25 million in brokerage revenue last year, beating 133 banks in the region, according to a report from Michael White Associates, a consulting and research firm based in Radnor, Pa. Banks in the southwest-defined in the report as Arkansas, Arizona, Louisiana, New Mexico Oklahoma and Texas-produced $814,000 on average.
Arvest's brokerage unit has been on a tear in recent years. From 2009 to 2012, the unit grew its fee and commission income at an average compound annual rate of 13.4%, while rivals saw their income shrink 6.1%, according to Michael White, president of Michael White Associates.
Jim King, president and CEO of Arvest Asset Management, the bank's wealth management business, attributes the unit's success to an increase in fee-based business. Of the $4.5 billion the unit has in assets under management, almost $1 billion are in investment advisory fee-based accounts, up substantially from 2003, when King joined Arvest Bank.
"Ten years ago, we had zero fee-based business. We didn't even offer traditional investment advisory fee-based accounts," King said.
Bank management's support for the wealth management business, which includes the brokerage unit as well as the insurance and trust units King oversees, also played a big role in Arvest Asset Management's success, said King.
"Our bank ownership embraces us better than any I've seen," he said.
Another significant factor contributing to the wealth management division's overall success has to do with the fact that the bank's brokerage and trust units are integrated. "Our brokerage and trust groups report up to the same manager and the coordination and integration of those two groups has been a major focus of bank senior management since we put these two groups together," King said.
The two groups, which were integrated about 15 years ago, were the lead revenue generators for the division. In 2012, Arvest Asset Management generated $44 million in income. The brokerage and insurance units contributed $26 million, while the trust unit contributed $18 million.
King hopes to build on the division's success by increasing its wealth penetration rate. Currently 4% of its banking customers also have an investment product with the bank. King would like to improve that substantially, he said, by focusing on mass and mass-affluent retail bank customers.
To that end, King plans to hire advisors "whose sole task will be to focus on retail bank referrals." He is still evaluating how many new advisors Arvest will need. The brokerage unit currently employs about 75 advisors.
King also plans to launch a licensed bank associate program to help boost the wealth penetration rate. He aims to have the program up and running by the end of the year. Eventually, he hopes to have over 200 licensed bank associates.