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B of A: Face-to-Face Approach Appeals to Underserved Preferred Customers

Just like their peers in distress, borrowers with disposable income also favor one-on-one banking. Bank of America started implementing the face-to-face approach, so far deemed the most efficient foreclosure prevention tool in the market, to advise customers with $50,000 to $250,000 in “investable assets.” And it is working.

Referrals for mortgage loan products coming to mortgage specialists from B of A’s “specialty store” banking centers whose goal is to serve these customers’ banking and investment needs have doubled since the testing began in February. “They are seeing twice as many as they would be, compared to other banking centers,” B of A spokesperson Don Vecchiarello told this publication.

Keeping these customers satisfied matters beyond retention. In-house data show this customer group "is underserved" even though it represents 8 million B of A clients and is one of the fastest-growing segments in the financial services industry.

Most mortgage referrals coming from Specialty Stores are for refinances of which, "a vast majority" choose fixed rate programs.

Currently B of A is market testing five specialty stores in the Washington, D.C. area and another 11 in Los Angeles. Each Specialty Store has a dedicated mortgage expert who is part of the banking team and works directly with other B of A counterparts to provide a variety of banking and financial services to customers.

Distressed properties can be attractive to investors in some markets, but at this point B of A is not tracking such inquiries and is not able to quantify how many have been handled by these mortgage loan officers.

Time will tell whether preferred customers who during the initial six months have not shown much interest in real estate related investments will look into investment opportunities in the foreclosed property and mortgage-backed security markets, added Vecchiarello, but if they express interest experts will be available.

Last week the mega bank hired 40 financial solutions advisors who will offer specialized investment and banking guidance including mortgage banking and mortgage-backed security investment opportunities to customers in the Mid-Atlantic region, including Washington, D.C., Baltimore and Philadelphia. The plan is to increase the number of financial solutions advisors to a total of over 1,000 nationally by the end of 2011.

The immediate goal is to hire an additional 500 Merrill Edge financial solutions advisors in banking centers nationwide and operate about 600 call centers with 24/7 access by yearend.

Executives describe the new in-person attention approach as a way to differentiate the assistance given to these customers for all their financial needs, including housing and real estate investments.

To best meet the financial needs of preferred customers B of A is expanding its network of high tech “specialty stores” and is stepping up the hiring of Merrill Edge financial solutions advisors attached to the stores in designated B of A branches.

Merrill Edge FSAs can connect customers who are or want to become MBS investors with Merrill Lynch brokers who have the expertise to assist them with all types of investment banking, or use B of A’s “do it yourself “ investor component, Vecchiarello said. FSAs are Series 7 and Series 66 certified, so they are qualified to provide financial planning and other financial guidance. However, “they certainly do not specialize in MBS and there are no plans to have them specialized in that direction,” he said.

B of A’s subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc., which operates the brokerage advice service Merrill Edge Advisory Center and the Merrill Edge investing platform was launched in January.

Earlier this year B of A hired 1,000 small business bankers with local expertise including housing. The addition of 1,000 new financial solutions advisors by yearend, B of A said, will expand to over 2,000 the bank’s special advisory team dedicated to “the more complex needs” of both preferred customers and small businesses.

According to Tony Burns, the newly appointed supervisor of the FSA program who also is the Merrill Edge Mid-Atlantic regional sales manager, the new service strategy is based on “unrivaled insight” into the financial needs of its 8 million preferred customers.

The first Merrill Lynch preferred customer study shows up to 73% of these customers list among their top priorities access to banking and investing solutions. It equals 5.84 million of B of A’s 8 million preferred customers who may differ depending on a variety of personal factors but nonetheless are interested in investment solutions that may include both the primary and the secondary mortgage market.

B of A is trying to bring “the full power of the franchise to the customer” by integrating, among other services, the option to talk or videoconference one-on-one with mortgage loan specialists at the banking center and access the Merrill Lynch brokerage advice services, the spokesperson said.