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BirdsEye View

the path to trusted advisor redux

 Nick Miller is founder and President of Clarity Advantage, a boutique consulting firm that supports bank and banker efforts to attract and develop deeper relationships with small businesses through strategy, social media content, training, and coaching. His Weekly Sales Thought stories and a host of other articles and videos are available in Clarity’s Knowledge Center.

Many banks have pronounced: “We want our branches to be advice centers and our relationship bankers to be our clients’ trusted advisors, on equal footing with their CPAs and their attorneys, the third leg of the stool.” And, yet, after years of expressing this aspiration, most banks and bankers fall short. 

A recent Barlow Research Associates survey asked small business owners (sales <$2.5 million) where they go for business advice:

67% indicated that they go to their accountants 

42% percent go to their attorneys

27% turn to their bankers. 

If we bankers are part of the stool at all, we’re the short leg. 

One Barlow respondent said: “We use a financial advisor for investments, which are not held at our local bank. We use an IT advisor for security concerns. We have an in-house attorney for legal advice; she contacts outside counsel with expertise in specific concerns. It's hard to see where our banker would have something to offer that isn't covered by folks with more in-depth expertise in the field of concern.”

O U C H !! Not only does this owner not understand what her bankers COULD bring to the table. She doesn’t see ANY expertise that stands out. 

The Gap

So, why is that? Reasons could include:

Business model conflict – the basic banking business model is “scalable low-cost product distribution” rather than “advice”.  When we say, “we want to be trusted advisors,” we tend to think about client challenges in terms of “how many products we can offer” rather than product-agnostic expertise. 

Language – in an effort to put a good face on things (because some banks do not offer compelling value propositions), we conflate a term used to represent one thing (a broad counselor, a source of expertise) with another (product consultants in a team delivery model). We confuse “team service delivery” with “trust and advice”. 

Preparation – while bank leaders say they want their relationship bankers to advise, they’ve provided (for the most part) only rudimentary and occasional product and sales training with little or no depth on the financial and operational problems on which relationship bankers could advise or provide expertise (that’s left for the accountants or, possibly, the bank’s product specialists). Instead, they’ve hoped that individual bankers would educate themselves and rise to “full third leg” status. 

Barlow’s data, among others, shows that it’s not working. We’ve tended to look at the shortfall in reaching trusted advisor status as an “individual banker” failure or a training failure, but it doesn’t start there. It begins with unanswered questions about strategy. 

Frame the Strategic Response

When we ask retail, business banking, or small business banking business executives about the “expertise perception gap” and their “trusted advisor” aspirations, our first three questions are:

  • Which bankers are you considering as advisors? 
  • Which clients do you want your bankers to advise? 
  • On what issues do you want them to advise? 

More often than not, business-line heads offer unclear answers.

If we’re serious about relationship bankers or teams providing “trusted advice” as the third leg of the stool, we have to start with a clear strategy. Bankers serving any segments of the small business or business banking market can be advisors at many levels from simple (which checking account) to complex (best financing strategies or even valuation). The strategic decision each bank executive needs to make is:

“Where, along that continuum, do we want to play (to be the third leg) and how will we deliver advice?” 

In order to make the decision, bank executives need to ask themselves:

  • Which clients do we want to advise? [Probably not all of them.] 
  • On what issues do we want to advise or provide perspective or expertise? 
  • What’s the level of expertise needed for us to be credible and valuable?
  • What are the bank’s methods to identify issues and provide expertise or advice on the issues?
  • Which employees or teams will provide the expertise or advice and on which issues? [In other words, is the “trusted advisor” one individual, an assigned team, or ad hoc specialists?]
  • To what extent will we first or also deliver expertise or advice digitally (e.g., through resources in a Business Resource Center or client education courses) vs. through individuals or teams?
  • How will we describe our approach to clients and referral sources?
  • What is the relationship banker’s role in this process? 
    • What conversations do we expect them to facilitate? 
    • How deep into those conversations do we want them to go? 
    • What stories and information should they be able to represent?
    • What expertise or advice do we intend for the relationship bankers to share?
  • How do we want first and second level sales managers to lead and coach these efforts in the field?
  • How will we assess relationship banker and team performance – the activity and results in this model?
  • What skills training and resources do relationship bankers and experts need to fulfill their roles? 

Challenges with The Relationship Quarterback Model

“Well, those are complicated questions to answer and, besides, we don’t really want our relationship bankers to advise,” senior bankers often have replied. “The relationship bankers are the relationship quarterbacks. They are responsible for understanding the client's needs and introducing expert specialists as appropriate.”

OK. The quarterback model CAN work in advice settings. Professional services providers who have earned “advisor” status in one field based on their expertise use similar models to refer to others without diminishing their own advisory status – “That’s not my field of expertise and I have a colleague who…” 

In many banks, however, the quarterback model DOESN’T address the “expertise gap” that the Barlow respondent described, first, because their relationship bankers have not demonstrated credible expertise in any field and, second, because the quarterback model in practice looks like a “quick lateral pass” – one or two questions and a flip out to the specialist without either understanding the client’s needs or demonstrating expertise.

For example (with regards to retirement plans) the quick lateral might sound like: “Do you offer a retirement plan for your employees? How many employees? Great, I'd like to introduce you to my colleague in the investment services area to have a look at your plan, you know, a second pair of eyes, to see if there's something we might do to be helpful.”  

The Way Forward

Given multi-line financial institutions’ broad ranges of services, the product consultant  “quarterback model” with “team service delivery” is the right model for most.  So, let’s shift our positioning from “we want to be our clients’ trusted advisors” to the challenges we help clients address – “We assist our clients to address five issues…”

Then:

1. Decide whether you want to position ANY of your relationship bankers with expertise that clients would solicit from them personally (rather than from someone on the team) – which bankers, which clients, which client challenges, and which expertise? An example of this might be expertise in particular industries or particular client challenges. 

2. Determine for “generalist” relationship bankers how deep you want them to go into various conversations about clients’ opportunities and challenges so they are perceived, personally, as credible (“asked good questions, understood the issues, shared helpful perspective”) in addition to providing access to other team members. 

3. Educate sufficiently your relationship bankers and their managers on the process and content needed to engage clients in the chosen conversations and thoughtfully position both their business partners. 

If, for example, your bank wants to offer through internal business partners advice to business owners on retirement plans AND you want clients to perceive your generalist relationship bankers as knowledgeable business professionals, prepare your relationship bankers to ask more than two questions and lateral a name to a specialist. 

For example, define (e.g., story board) and prepare your relationship bankers to get into the issues through a five-to-ten-minute conversation with clients about retirement plans: “Do you offer a company retirement plan? What led you to do that? When you were thinking about the plan, what was important to you? What type did you choose? How do you participate? How many of your employees participate in the company plan? How did you choose your provider and administrator? What are your thoughts about them? How did you educate your employees? How has all of that been working? What are the uncertainties you feel about the plan at this point? What other retirement strategies are you using for yourself? You know, a number of our business owner clients have run into the following issues…….: where do you stand on those? … We’ve helped other clients with that challenge; let me tell you about one of them…” 

Then, prepare the relationship bankers to give warm and credible introductions to the colleagues who could help with the clients’ issues: Here’s the colleague, this is what she does, here’s how she does it, here’s an example of a similar situation she’s worked with, and these are the typical outcomes of her work. 

Strategy First, Then Training

To recap:

  • Many banks promote without clear strategies the idea “we’re our clients trusted advisors”. The term is more “marketing hype” than operational reality. 
  • As a result, business people turn to their lawyers and CPAs as business advisors far more than they turn to bankers. 
  • Given the breadth of banks’ product offerings and their  organizational design, business models and staffing,  the best alternative to “individuals as trusted advisors” is the “relationship quarterback” model.
  • In many banks, the relationship quarterback model falls short of both client and bank expectations because relationship bankers are not sufficiently proficient in their clients’ challenges and likely strategies to discover and address them.
  • To address these shortfalls, begin with a strategy that 
    • articulates the client “expertise expectations” you want to meet  
    • defines relationship bankers’ focus, process, competencies, resources, performance expectations, compensation, etc.  to meet those client  expertise expectations
  • Then, train, coach, and compensate your relationship bankers (and their managers and business partners)  to fulfill their roles in the strategy.