A question of trust: what do our trust clients and prospects want? You may think you know the correct response when you market trust and private banking services. But do you really?

• Author: Diesel, Paul M.
• Position: Trust

Trust and private banking departments today are out of touch with what clients and prospects want. Undoubtedly, some of you consider this idea heresy. But hear me out.

Consider these three premises:

1. We are in the retail advice, counsel and personal attention business, not the whole-sale transaction business. But you'd never know it if you sat in on a typical budgeting session or management meeting. The focus is on volume, cost-cutting and usually technology. The product and its delivery, and advice and counsel--not to mention the improvement thereof--are seldom discussed.

   Yet if you question my contention that we are in the advice and counsel business, consider the matters on which we're sued: Late statements? Last year's technology? No. Poor or insufficient advice, counsel and personal attention. That's what our clients come to us for. But, too many of us don't know that's what we sell.

   To modify a lyric by the late John Denver, "Peace of mind is why I came here in the first place. Peace of mind is now the reason I must go." Please consider this scenario: A faintly entrusts its entire financial present and future to a private bank, frightened by how complicated navigating financial waters is, but hoping that professionals with time and expertise can take care of everything. Then, after the "honeymoon," telephone calls are not returned, sometimes for several days--unless the family initiates a call to the trust department. And then, one day they ask their investment counselor if they still held an issue that had fallen dramatically in recent weeks and the counselor replies, "I don't know." Then a statement arrives after a quarter during which they hadn't once heard from the bank, and there is a $4,000 fee. Clearly this was a very profitable relationship for the bank. It soon becomes a former relationship, Do you blame the family?

   On the other hand, let me submit to you that those clients who do enjoy the aforementioned peace of mind--the sense that they are "doing the right thing"--seldom care much about fees or even short-tern investment performance.

   You see, money is a frightening and emotional issue, a point demonstrated by the fact that the subject often makes its way into our pop culture. Henny Youngman once quipped, "I've got all money I'll ever need, if I die by four o'clock." And Jackie Mason echoed with, "I have enough money to last me the rest of my life, unless I buy something." Both elicit a kind of nervous laughter.

   But do we run our in recognition of that nervousness and need for hand-holding? Not often enough. Which leads to my second point.

2. Quarter-to-quarter earnings focus, with management compensation tied to current year's earnings, will doom the building of the franchise. We are in the business of developing long-term relationships based on confidence and trust between client and employee. That requires investment, the return on which will not be in the current fiscal year, not to mention current quarter.

   But what does any self-respecting division executive who wants a bonus and job longevity do every year? Raises the revenue goals and slashes expenses. Stated another way, executives on the basis of 10-or even five-year earnings, and watch the...