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Banks try to capitalize on managing your money

| Saturday, June 8, 2013, 9:00 p.m.
Heidi Murrin | Tribune-Review
Estate planning and elder law attorney Albert Nelson poses for a photo in his Mt. Washington office on Wednesday, June 5, 2013. Nelson says he’s “comfortable” with banks cross-selling wealth management services, and recently he was offered advice by his bank.

Banks don't want your deposits as much as they want your wealth management business these days — and they are gearing up to get it.

In recent months, many banks in this region and elsewhere have been hiring sales personnel, financial advisers, portfolio managers and others to ramp up wealth management. It generates fee revenue at a time when light loan demand and very low interest rates have dampened banks' income from lending and investing.

For example, FNB Corp., the parent of First National Bank, has added 22 people in wealth management since the beginning of 2012. They even include seasoned employees hired away from other banks.

“We've been adding to our wealth management operation. We've hired across the board,” said Vincent Delie Jr., CEO of FNB.

“The interest-rate environment is not good, and loan demand is definitely not what it used to be,” said Delie. But wealth management “has been a very good business for us,” he said.

Banks are beefing up their wealth management operations at a time many Americans are growing richer because of the bull market on Wall Street and as housing prices recover.

Household wealth jumped $3 trillion to $70 trillion in the January-March quarter this year, the Federal Reserve said on Thursday. That topped the peak of $68 trillion in the third quarter of 2007, just before the recession began. Average household wealth, adjusted for inflation, was $539,500 at the end of last year.

“Banks are looking for fee income, and they are capitalizing on trends,” said Nancy Bush, an analyst for SNL Financial. Fee income helped drive U.S. bank earnings to a high of $40.3 billion in the first quarter, said the Federal Deposit Insurance Corp..

The stock market in recent months has rebounded to above pre-2008 crash levels, and about 8,000 Americans turn 65 each day. So, many baby boomers, whose investments suffered during the financial crisis, are emboldened to re-enter the market as they try to fatten their portfolios enough to retire.

Albert Nelson, 60, an estate planning and elder law attorney, says he wants to spend more time traveling.

“I hope to go into semi-retirement in the next year or two,” said Nelson, of Mt. Washington. He wants his cash to earn more than the paltry interest (below 1 percent) that certificates of deposit pay these days.

“I was offered advice from my bank recently when I was at the branch,” said Nelson. He already has a financial adviser but would otherwise have accepted the offer because he's “comfortable” with banks cross-selling wealth management.

Many boomers who were emboldened to trade on their own during the last bull market now are skittish about managing their portfolios as a result of being burned when the tech and housing bubbles burst and the stock market collapsed. Banks are betting that those investors, chastened by their do-it-yourself losses, will seek professional expertise from their local bank.

“It's a natural opportunity for banks to tell customers they can do more than a savings account and to offer an investment account,” said Tom Nist, finance and investment management professor at Duquesne University.

With the stock market around record highs, some experts worry that investors — especially those playing catch-up with their nest eggs — might be lured into investments that could blow up in their faces. Recall the boom/busts of the dot.coms in the 1990s and of the real estate and mortgage-backed securities markets less than 10 years ago.

“Investors hurt badly in the 2008 and 2000 market crashes need to make up that income,” especially if they are near retirement, said Andrew Stoltmann, a Chicago attorney who has handled nearly 1,000 investors in securities lawsuits.

“But banks definitely have fewer investor claims against them than brokerage firms,” he said.

Banks are counting on a quiet history of managing money, said Nist.

“Banks always were in wealth management with trust departments and institutional relationships, like pension funds,” he said.

In addition, the largest U.S. banks have acquired major brokerage firms over the years. That includes deals borne of the 2008-09 financial crisis, such as Bank of America acquiring Merrill Lynch, and Wells Fargo acquiring Wachovia Securities.

In Pittsburgh, the former Mellon Bank Corp. acquired the mutual fund giant Dreyfus Corp. in 1994. Seven years later, Mellon sold its retail bank to focus on investment management and administration, then merged with Bank of New York Co.

Now known as Bank of New York Mellon Corp., the bank said in late May that it would hire about 100 people, particularly sales people, in wealth management during the next 18 months. It currently employs about 1,900 workers in that business. BNY Mellon wants to have a wealth management beachhead in America's top-25 markets and has two offices in the Pittsburgh area.

First Commonwealth Financial of Indiana, Pa., has placed “licensed bankers,” who sell life insurance and annuities in 65 of its 110 branches, including more than 60 in the Pittsburgh area. Ten of those bankers are licensed to sell mutual funds and other securities, and the bank will double their numbers to 20 or 25 “in the coming months,” said Mark Ganung, senior vice president of wealth services for First Commonwealth Advisors.

“Wealth management has become very competitive,” said Ganung.

PNC Bank debuted a twist on it wealth management services in March, opening its first “investment and retirement planning center” in Mt. Lebanon. The prototype office is meant to serve the “mass affluent,” or those with $100,000 to $1 million to invest.

Citizens Bank expanded its wealth management reach in the Pittsburgh region by starting Premier Banking here in April. The business targets people with $500,000 to $2 million in investment assets and provides clients with a “concierge” for personalized service. The bank recently hired 10 personal bankers who will cover 35 of Citizens' 132 branches in Western Pennsylvania.

“We want to have as many people as we need,” said Mike Millard, CEO of Citizens Wealth Management. The bank plans to expand Premier Banking throughout its 12-state retail footprint by late 2015.

“Banks realize you can't be a full-service financial institution these days without having wealth management,” said analyst Bush.

The Associated Press contributed to this report. Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at

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