Since Howard Hammond joined Fifth Third Securities four years ago as president and CEO, hiring new advisors and management and shifting to a full service relationship-driven advisory model has been his top priorities. And it’s paying off-performance has improved over the last 18 months, with total revenue up 35% in 2010 from 2009.
Previously, Fifth Third's investment program was primarily platform driven and annuities made up 50% of sales. Now annuities (fixed and variable) make up 15% of sales, fixed income is 25%, insurance is 15%, trails are 14%, mutual funds 12%, managed money 10% and equities 9%.
“If you look at what we’ve tried to do over the last several years, converting from a platform-driven program to an advisor-driven program, it has made us a little different than most of our peers,” said Hammond in a phone interview on Thursday. “From the folks we’ve recruited to the product mix the firm has changed dramatically over the last several years.”
Instead of trying to sell a specific product to clients, says Hammond, Fifth Third advisors give clients what they want and need. While many firms have suffered since the financial downturn as distrust for the industry has made it harder to recruit and retain clients, Fifth Third has poured its resources into training the best sales managers and recruiting the best talent in the industry. Sixty six percent of the current sales force has been hired on since the beginning of 2007, the firm said.
Last month, it beefed up its sales team, hiring Michelle Griffith of Citibank to run eastern Chicago; former BankWest Investment Services program manager Bradley Grubb to manage western Ohio; and Britt Woods, an ex-National City advisor, to oversee Tennessee and Georgia.
Hammond was an advisor himself so he knows how to produce. He thinks the industry has done a poor job explaining how valuable advisors are in helping people retire with dignity and plan for their futures. “We derailed ourselves a bit in 2010 and the only way to win that back is one client at a time,” he said.
That is exactly what Fifth Third is doing. Since January 1, 2010 the bank has opened 11,000 net new accounts, said Hammond, which is over $830 million in net new assets.
Last month Standard and Poor's lifted its outlook on Fifth Third because of its improved asset quality. Analyst Daniel E Teclaw raised his outlook to “stable” from “negative.” He affirmed his “BBB” long-term counterparty credit rating and the “BBB+” ratings on its banking subsidiaries. The improved outlook came on the heels of Fifth Third’s quarterly earnings report, in which the bank reported a profit after three quarters of losses.
What does the future hold?
“We are going to try to build ourselves and continue to recruit great talent,” Hammond said. “Will strategic ETFs become a bigger part of the business a couple of years from now? Maybe. But more importantly the client, the firm and the individual employee need to win or you don’t have a sustainable business model.”