In January, when we ran our Industry Outlook for 2010, “What Does the Future Hold?” we predicted, that the combination of low loan demand and new regulations limiting banks’ ability to collect unlimited fees and penalties on retail accounts, would cause banks to turn more attention to and pour more resources into their investment programs. That finally seems to be happening. Bank of America, JPMorgan Chase, PNC and other big banks are looking to offset losses in large part by investing more in businesses that don’t depend on lending, like investment advising.
This should be good news for bank advisors and it will drive bank efforts to cross-sell their services. Bank of America (BofA) and Wells Fargo, for example, are initiating efforts to tap their legions of depositors and mortgage holders for investment business. BofA CEO Brian Moynihan recently announced at an investor conference that Merrill Lynch is looking to expand its wealth management business in the $7 trillion that its affluent banking clients have at other institutions. For some brokers this is even going the other way. Many of them are offering retail banking services to their investment clients. Indeed, the percentage of Merrill's 15,000 financial advisers who sold four or more traditional banking products is 61%, and the number of traditional banking products sold to Merrill wealth-management clients is 171,690 year to date, up from 28,615 during the same period in 2009.
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