There's a change going on. Growth in the bank channel has been almost nonexistent for years. While some data suggests that banks have recently shown marginally more interest in establishing new investment programs, the fact remains that many of the existing programs in the industry are operating significantly below their income potential. What's the problem and how can we change this trend with so much opportunity on the horizon?

Plenty of numbers get tossed around when discussing investment programs: assets under management, gross revenues, assets per advisor. But one number that seems to get lost sometimes — and the one that carries the largest weight — is net income to the bank.

There was a story about a wirehouse advisor who had an appointment with a client who had lost money on his account. Once the client left the office, the broker turned to his assistant and said, "The wirehouse made money and I made money. Two out of three isn't bad."

So it is with bank investment programs. The TPM receives its haircut off the top, the advisor gets a commission/salary and the bank receives what's left (if anything). It's no secret that the investment program in many community banks contribute little to the bank's bottom line, yet require high-paid personnel, additional regulatory requirements and a share in the bank's operational resources, such as IT and human resources.

We can argue that the more products a bank customer has at that institution the "stickier" the relationship, but in the end, the board and shareholders need to see positive financial results.

What follows are seven ideas to assist bank managers, investment program directors and bank investment consultants to improve and streamline their programs while increasing the bottom line.

1. Aim for the 30% solution. A good benchmark for a bank program's profitability is 30% of revenue.

Some programs may decide to go higher or lower (particularly if expanding). If your program is consistently netting less that 20%, a decision should be made to reevaluate the current mode of operation. Say the department gross is $2 million and $200,000 falls to the bottom line. Ask yourself, how much risk is involved in achieving that 10% net? Are the potential risks to reputation ("but I didn't think that bond prices could fall!"), the regulatory requirements and potential liability worth it? Maybe, but establishing net income guideposts and the conviction to stick within those priorities keep the ratios in check and the earnings improving.

2. Multiple referral sources. Yes, banks can make wonderful referral sources, but why stop there? Look outside the bank to build your client base and open multiple channels. The ultimate goal for any advisor is to fill their book of business from current client referrals.

Bring business into the bank and refer like crazy. Make a game out of it. Look for every opportunity to introduce and refer within your total professional network and watch the referrals come back to you. Bank reps using a financial planning system have multiple ways to refer CPAs, attorneys, mortgages, credit cards.

3. The CD list. This is one of the most misunderstood tools within the bank. Yes, some CDs can be converted, but the real money is held somewhere else. If a $100,000 CD represents 10% of the investable assets, where is the rest being held? The CD is most likely a client's conservative asset and only a portion of their portfolio. Look beyond the obvious. Don't just sell the conversion, build the relationship. Also, don't sell new advisors on access to the bank's CD list. This is a surefire way to alienate older bankers.

4. Are more reps better? Not necessarily. Forget the rule of thumb. One rep for X number of assets held by the bank misses key subjective elements, mainly the skill, motivation, experience and assertiveness of the advisor. Strive to achieve leverage and capacity from current reps and add reps once the current reps are maxed out in their ability to take on more business.

Ideally, the goal is to strategically place the right number of reps in the proper locations, but banks should not sacrifice quality for quantity. The investment program is made or broken on the skill and ability of the bank advisors and the hiring process should be tailored accordingly. Think highly self-motivated with a track record to back it up. When it comes to hiring bank advisors, you might have to kiss a few frogs to get the right prince or princess. Take the time up front and it will save you from disappointment later.

5. Learn how banks operate. What's the jargon? Where is the bank's bread buttered? What specific types of loans and deposits do they need and how can you help find them? Being able to communicate in the banking world cannot be overstated. One of the best schools I attended while working at a bank was the Western States School of Banking. Getting a bank education positions you as one of the "team" with a greater understanding of where the pain points lie and what opportunities exist. Communication between banks and investment consultants is an ongoing problem that can be remedied with a little effort. Always look for the win-win.

6. Tracking the numbers. Everything within the investment program needs to be tracked: income, expenses, assets under management and most important, net income to the bank. Ensure that everyone in the program knows how they fit in and what effect they have on the numbers. Regardless of whether the numbers are good, bad or ugly, they should be transparent to everyone involved.

7. Give it time. If we expect it to take three to five years for new advisors to get their feet on the ground in this business, we should anticipate the same for a new investment department. If the department is older than five years and still sputtering along, it's time to take a fresh approach and reevaluate the program. Investment programs can become great non-interest income sources while strengthening current banking relationships.

What is the net income at your institution? Have the promises and expectations for a successful program been met? It's a tough time for banks, particularly community banks with ever increasing and costly regulatory requirements. The opportunities for investment programs have never been greater. It's time to make a real impact. It's time to go three for three.

John Brunett, CFP, is the Chief Trust and Investment Officer at Los Alamos National Bank.