Banks closing in on insurance business

(March 31, 2005) The big banks want an even larger chunk of client assets. And they’re looking at products like insurance and mutual funds to drive future growth.

At a meeting on Wednesday in Montreal, banking executives spent the day talking up performance and explaining how they plan to capture more customer wallet share.

Insurance sales in particular appear to be the brass ring that executives are going for. Their moves to access this market and the huge number of cross-selling opportunities generated by existing client databases are sure to infuriate at least a few people in the industry.

Banks are not currently allowed to sell insurance products in their branches. Despite this, executives gathered at the National Bank Financial Services Conference told delegates that at their companies, TD Bank and RBC among them, insurance sales are a major focus. RBC plans to open insurance branches adjacent to existing bank branches to get around the federal Bank Act rules.

In other areas, RBC plans to increase the number of branch staff to sell more mutual funds. “We have in particular, been aggressively growing products such as credit cards and mutual funds which are not subject to margin compression,” says president and chief executive officer, Gordon Nixon. In February, RBC Asset Management had the second highest number of assets in Canada according to IFIC, second only to IGM Financial. “As the second largest mutual fund company in Canada, we would like to keep narrowing the significant gap with the largest provider,” says Nixon.

TD and BMO are both focusing on their U.S. brokerage operations. In his presentation, BMO chief executive Tony Comper also told delegates that the bank is “coordinating and intensifying efforts” to gain better cross-business referrals.

CIBC is working hard to develop the quality of their advisory force. The company has more than 2,600 accredited IDA advisors, up from 700 advisors five years ago. More than 60% of the company’s advisors hold the CFP designation. “Our focus moving forward will be to extend our advantage through furthering our leadership in accreditation and experience, rather than increasing the number of advisors,” says chief executive John Hunkin.

Scotiabank meanwhile is actively pursuing the high net worth set. In addition to creating new premium services for ScotiaMcLeod clients, the company’s private client group is working hard in trusts and foundations to attract a more philanthropic client base and increase the company’s share of high net worth clients.

Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com