A new Cetera-sponsored study confirms the decades long shift back and forth in where the investment services business reports in the financial institution’s organizational structure.

According to the Annual Consumer Investments Study conducted for the Consumer Bankers Association by Kenneth Kehrer Associates, in 1995 only 29% of investment services units in financial institutions were housed in the retail or consumer bank. That share grew year after year, reaching a peak of 49% in 2007, according to BISA’s 2007 Industry Trends Report, also conducted by Kenneth Kehrer Associates. That year 28% of the investment services businesses were managed either by the Trust Department (4%) or were part of a wealth management structure (24%).

In the ensuing decade the investment services business was gradually shifted out of the retail bank into a wealth management structure. Today 62% of the investment services units in financial institutions are inside a wealth management structure, and only one-fifth report to the retail bank.

The other reporting structures observed in the study, largely among smaller banks and credit unions, are reporting to the Chairman (5%), CFO (3%), Chief Banking Officer (3%) or COO (2%)

When financial institutions first began offering investment service in the 1980s and early 1990s, management was uncertain about where to bolt on the business to the existing organization. Many institutions aligned investment services with its bond desk, while others put it in the insurance agency (because of the outsized role of annuity sales) or even in the mortgage company. But partly due to the prevalence of licensed platform banker investment representatives, and because most financial advisors sat in branch offices, more and more investment services units started reporting into the retail bank.

Now that financial institutions are looking to rationalize their delivery of wealth management services and realize some synergy between acquisition of financial advice clients and asset management, they are taking the first step toward integration by putting all their fragmented wealth management businesses into one structure.

The Cetera-sponsored study—Benchmarking Wealth Management in Financial Institutionsreports on two Kehrer Bielan surveys: a survey of how wealth management is structured in 102 banks and credit unions, and a survey of the executive responsible for enterprise-wide management of wealth management advice to households in 15 institutions.


About Cetera Financial Group®

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Cetera Financial Group (Cetera) is a leading financial advice firm. It empowers the delivery of an Advice-Centric Experience® to individuals, families and businesses across the country through independent financial advisors as well as trusted tax professionals and banks and credit unions.

Comprehensive services include: wealth management solutions, retirement plan solutions, advisory services, practice management support, innovative technology, marketing guidance, regulatory support, and market research.

Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC.