Aiming to reap more referrals for its advisers, Union Bank N.A., of California, has begun an effort to triple its staff of licensed bankers.
Union Bank’s licensed retail banking staff should double this year, to about 200, and increase to 325 within three years, said Steven Short, the chief executive officer of UnionBanc Investment Services, which is based in Los Angeles.
“We’re significantly expanding it,” he said. “As we continue to get much more of a sales focus in the retail bank, we see an untapped opportunity.”
Union Bank’s licensed banker program has two leaders: Casi Dileva, a licensed banker and life insurance program manager; and Jerry Mladenik, a licensed banker manager on the retail side. Both were hired in August. Dileva reports to Short. Mladenik reports to Michael Feldman, who manages Union Bank’s branch sales staff. His position, a built-in seat at the table for the retail bank, has been a key to the initiative’s progress so far, Short said.
“We’re not having to do all kinds of lobbying and negotiating in order to get buy-in [from the retail bank,]" he said.
Union Bank also plans to double to about 50 the number of licensees in its wealth market teams. The licensees will include wealth market executives, private bankers, trust officers, wealth planners, Highmark Portfolio Managers and UnionBanc Investment Services senior financial advisors, Short said.
The licensed bankers will not sell products; rather, they will be expected to make referrals to dedicated brokers, he said. Part of the rationale is to provide more coverage in cases where a branch does not have a dedicated broker.
“Our goal is to get more people out there trained better to help clients, and to bring more awareness to our brokerage operations,” he said. “Brokers are sometimes a bank’s best kept secret.”
Union Bank wants its retail bankers to have series 6 and 63 licenses as well as insurance licenses. It wants those in its wealth markets to get series 7, 63 and 66 licenses, as well as insurance licenses. Series 6 licensees are allowed to sell packaged investment products such as mutual funds; series 63 licensees can sell securities. Those with series 66 licenses can give financial advice and recommend specific investment products and strategies.
Asked why the bankers will be licensed rather than simply trained, Short said that earning licenses will make them better at meeting clients’ needs. In part, the licensing is for compensation purposes, he said. Licensed bankers are eligible for commission splits, rather than just nominal payment for referrals, said Michael White, president of research and consulting firm Michael White Associates.
A class of 11 Union Bank candidates is going through a five-week period of studying and testing right now; the bank expects a pass ratio of at least 90%, Short said. Bankers often spend months studying for their licenses when they are left to do it in their spare time, he said. The fact that Union Bank is pulling bankers aside for the training reflects the retail bank’s “strong commitment” to the licensing effort, he said.
White agreed. “It sounds like they’re making a committed effort to a program that had just kind of sat there inactively,” he said.
Union Bank has about $10 billion of assets under management between its broker-dealer, its wealth management unit and its institutional brokerage business. But as it undertakes its licensed banker expansion, the bank is not using asset growth as a goal.
A focus on increasing the number of referrals is more important, since market conditions skew the amount of the bank’s assets under management, Short said.
“We look at this as a referral driver,” he said. “The goal is to get more at-bats.”
Licensed bankers will have to meet minimum expectations to remain active, he added.
One reason that Union Bank won’t allow its platform reps to sell investment and insurance products is that it wants to avoid creating competition between them and the brokerage force. Sticking to a referral-only approach also keeps the bankers on safer ground when it comes to regulatory issues, Short said.
The referral-only approach seems to be in tune with the times, noted Short. “There’s been less emphasis on that group selling, for sure,” he said.