Banks and credit unions have been disappointed in the performance of their fragmented approach to wealth management, capturing only a small share of their clients’ investable assets and losing market share to other providers of financial advice. Given the fragmented reporting structure, it is difficult to even measure how the entire institution is serving the financial needs of its customer or member households. Trust organizations tend to serve both individual and institutional clients, as do asset management units. Wealth management organizations often include retirement plan services, which is a B-to-B service.


As financial institutions focus on improving penetration of their mass affluent and higher net worth clients, it would be helpful to have industry benchmarks that measure how the entire institution is meeting the needs of these households. Some institutions are creating new structures that integrate wealth management products, sales forces, and middle and back offices. Enterprise-wide personal wealth management benchmarks would help assess whether these new structures improve on the existing delivery of personal wealth management and illuminate emerging best practices.


Cetera Financial Institutions commissioned Kehrer Bielan to develop benchmarks for asset and staff productivity for the financial advice activities provided to individuals and households, as opposed to institutions and businesses. The research required surveying executives whose responsibilities spanned all the potential business lines in the institution that provide advice to households, asking the respondent to break out the revenue, assets, and staffing of those activities.


Providing the data proved to be a heavy lift, because financial institutions generally do not structure their organizational reporting of wealth management to distinguish between personal and business customers. Fourteen firms made the effort to disaggregate revenue, assets, and staffing. Kehrer Bielan supplemented their efforts by pulling revenue and asset data from Call Reports.


The resulting benchmarks provide the bank securities and insurance community its first look at how the collective wealth management businesses in a bank or credit union serve the financial advice needs of their client households.


Asset Productivity. Overall personal wealth management revenue on assets was just 56 basis points. That is slightly lower than Kehrer Bielan has found for retail investment services. For example, the ROA in last year’s Annual Industry Checkup was 64 basis points, up from 57 basis points in 2017. The lower ROA for overall wealth management might reflect a somewhat higher proportion of dead assets—assets that do not generate revenue—in Trust portfolios.


Staff Productivity. To create the benchmark for business acquisition productivity, we divided personal wealth revenue in these institutions by the FTEs deployed in business acquisition—branch-based financial advisors, wealth advisors, and BDOs that call on individuals. For these institutions, the typical business development professional acquired $8.1 million in new assets during 2018.


Similarly, service staff covered $133 million in wealth management assets, on average. We were not able to develop a benchmark for the number of clients served, because few firms could provide us with the number of wealth management client households, as opposed to the number of wealth management accounts.


These benchmarks provide a starting place for creating a view of enterprise-wide personal wealth management in financial institutions. Going forward, Kehrer Bielan hopes to encourage more firms to see the value in these metrics and expand them to include staffing expenses as well as headcount.


More information about the benchmarks can be found in Benchmarking Wealth Management in Financial Institutions, which reports 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 14 institutions. The study is sponsored by Cetera Financial Institutions.


About Cetera Financial Group®
400 First St. South, Suite 300 St. Cloud, MN 56301

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.