Bank of the West thinks it has the magic formula to accomplish what other banks have long struggled to do: win the retirement and investment services business of mass-affluent customers.

Its secret ingredient? Treating the mass affluent like VIPs.

The mass-affluent are looking for "somebody to pull together something that is customized [and] has more of a concierge feel,” said Leslie Paladin, the leader of the bank’s new mass-affluent offering called Premier.

Introduced in July, the offering has attracted thousands of clients, 70% of which came from outside the bank.  "The launch went well beyond my expectations," Paladin said of the coordinated banking and investment services program for people with what she calls "working wealth."

Bank of the West is luring them with traditional banking incentives, such as preferred saving rates, lending discounts and fee waivers, as well as an annual mortgage assessment. More importantly, said Paladin, the offer is aligned with the bank's brokerage division, which has 80 financial advisors focused solely on mass-affluent customers or those with $75,000 to $250,000 in investible assets.

Premier clients meet with these advisors at least once annually for a "retirement checkup", said Dale Niemi, the leader of the bank's brokerage unit. They may meet as often as quarterly—either in person or by phone—depending on the complexity of the relationship, he said.

In addition, Premier clients have access to an online self-directed brokerage platform which, like many banks, links customers' banking and investment accounts. Premier customers benefit from online trading perks, including 15 online commission-free equity and ETF trades per month.

The 80 advisors in the brokerage unit's newly formed Retirement & Investments mass-affluent group view the mass-affluent as their "A-book clients," Niemi said. That mentality is an important distinction as "the mass affluent oftentimes end up in people's C books," he explained.

Niemi plans to double the number of Premier financial advisors in three years to 160 and is actively recruiting advisors, using the bank's in-house recruiters, external recruiters, LinkedIn and word-of-mouth. 

Niemi said it was too early to tell how many of the new Premier clients had initiated a brokerage relationship with Retirement & Investments. However, he said, "early indications suggest that Premier has improved Retirement & Investments' penetration significantly –almost double pre-Premier levels."

The bank's focus on the mass affluent is understandable given the size of the market.  About 13 million U.S. households are mass-affluent, or roughly 11% to 13% of the population, according to analyst estimates. At Bank of the West, they make up more than one in four customers.

In addition, the mass-affluent tend to be very loyal, according to Paladin. Bank of the West's mass-affluent customers have been with the bank for more than a decade. "They've been telling us for quite some time that they want to do more business with us," Paladin said.

Despite the size of the mass-affluent market, banks have not been terribly successful at capturing their investment business.  A handful of banks have done a good job attracting the investment assets of the younger population but they've failed to convince baby boomers to part with online brokerage firms like Schwab and Fidelity, which are popular among older investors, according to analysts.

"Success has been hard to come by due to banks' focus on attracting the assets of baby boomer clients," said Sophie Schmitt, a senior analyst with research and advisory firm Aite Group.  "While this is the big opportunity right now, baby boomers are unlikely to change their providers at this stage in their lives."

Schmitt noted that banks looking to serve the mass-affluent need to leverage their technology to deliver their service more cost effectively.  "For mass-affluent programs to be successful," she said, "you need to leverage digital channels more than in the past."

She also noted that providing a dedicated advisor as Bank of the West is trying to do didn't work well for the large brokerage firms or wirehouses, which also tried to pursue the mass-affluent but have now largely abandoned them. Having a dedicated advisor proved to be too expensive, she said. 

Still, Bank of the West is banking on personal service as the way to differentiate its Premier mass-affluent offer, particularly when compared to large banks. The mass affluent feel "glossed over" by institutions focusing on wealthier clients, Paladin said.  They complain that financial advisors don't care about them and that consolidating their banking and investment accounts makes no difference in how they are treated, she added, citing both internal and external research she had seen. 

"A lot of larger institutions—maybe even your primary bank—aren't paying attention to you because you only have $300,000, not $3 million, not $30 million," Paladin said.

Paladin's goal is to capture all of Bank of the West's mass-affluent customers. She declined to say exactly how many clients have already signed up for Premier, saying only that 70% of the "thousands" who have were from outside the bank.

"The influx of new customers to our Premier offering demonstrates that the mass affluent are searching for a more attentive, personalized retail alternative to big bank offerings," Paladin said.

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