First the good news about the wealth management fever that's sweeping the U.S. banking industry: there are real opportunities for banks that can adapt quickly.
Technological advances, along with a growing base of customers who want greater control over their assets, are allowing retail banks to serve middle-income investors who don't generate enough fees to attract interest from private banks or trust companies.
Now the bad news: competition is fierce. Banks entering or ramping up in the business are competing not just with other banks, but also brokerage houses, mutual fund firms and scores of independent financial advisors. Moreover, there's not much new business out there, so banks' only real chance to gain meaningful market share is to poach other firms' customers.
"This is all about stealing share now. It's not about telling people to bring money from your mattress," says Wayne Cutler, who runs the wealth management practice at Novantas, a consulting firm.
Another reason to proceed with caution is the public's jaundiced view of the banking industry. U.S. banks scored among the least trusted business sectors in recent research from public relations firm Edelman though financial advisors and asset managers did not score much higher.
Despite the hurdles, banks of all sizes are turning to wealth management for the reliable source of fee income at a time when loan demand is weak.
If they can overcome the perception that banks are not just places to park cash until it is needed, then there's real opportunity to gain a larger share of customers' business.
"You've got to give them a reason to give you more of their wallet," says Bryan Carson, a senior vice president at Huntington Bancshares.
The current focus of many banks mass-affluent is a segment that wouldn't have been of interest to many banks a generation ago. Their accounts were simply not big enough to justify heavy expenditures on employees who held face-to-face meetings.
That's changed rather dramatically in recent years as consumers have become more comfortable online.
"I don't think you can go to a meeting without hearing a banker talking about the mass affluent," says Howard Hammond, president of the securities and investment arm of Fifth Third Bancorp.
Fifth Third is courting the mass affluent with its Preferred Banking Program. The one-stop program offers banking perks such as waived ATM fees and credit card rewards that the bank uses to try to convince consumers to move their investment portfolios to Fifth Third.
Of course, many of those who are most technologically adept are young and don't have as much money to invest as their parents do.
High-income, digitally savvy investors in their 20s are far more distrustful of financial advisors than similar investors in the baby boom generation, according to a February survey from Accenture. The younger cohorts are also more likely to spend a lot of time doing their own research before making an investment decision.
"They're not sure whether advisors are really acting as they'd like, as a trusted financial advisor," says Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services.
Even though younger adults have fewer assets than their parents, there is still a large transfer of wealth between generations over the next couple of decades to consider. "If banks don't establish trust among young adults, "you may actually not be as relevant as they receive the assets," Pigliucci says.
It's not just young investors who want to take greater control over their own portfolios. There are more than 75 million digitally savvy, relatively high-income investors in the United States, and they have approximately $27 trillion in assets, according to Accenture.
More banks are starting to target those investors, and the adaptation is happening both in terms of the packages of products being offered and the way customers are able to manage their investments.
Other banks that are making big plays in wealth management include PNC Financial, which gets high marks from outside observers for its Virtual Wallet. That online product allows consumers to manage their short-term cash and their long-term investments in a combined way.
Large banks such as Wells Fargo, Bank of America, and JPMorgan Chase are also embracing the opportunities in wealth management.