Well Fargo's Private Bank Loads Up With Life Insurance

Feature Article - Autumn 2010 | By Andrew Singer

Robert Chewning, Wells Fargo Private Bank

— David Coggins, senior director of life insurance for the Mid-Atlantic and Carolinas regions. Earlier, Coggins was the director of insurance services for Fifth Third Bank (OH).

— Dennis Tygart, senior director of life insurance for the Southeast and Florida regions. Previously, he was managing director of wealth management for First National Bank (NE).

— Matt Curran, senior director of life insurance for the Northeast and PennDel regions. Earlier, Curran was the East Coast sales manager for Lincoln Financial Distributors' banking and brokerage division.

— Steve Matter, senior director of life insurance for the Western region. Previously, Matter was the national sales manager for Smith Barney's insurance group. Steve Matter, senior director of life insurance for the Western region. Previously, Matter was the national sales manager for Smith Barney's insurance group.

Insurance is a shelf product that is available to anybody. But it is not so easy to deliver an ‘outstanding client experience.’

Wells Fargo & Company, which calls itself a “nationwide, diversified, community-based financial services company,” now has $1.2 trillion in assets, the result of the megamerger of Wells Fargo & Co. (San Francisco) and Wachovia Corp. (Charlotte, NC). The two legacy banks—Wells Fargo and Wachovia—each had “well-defined insurance offerings in the wealth management space,” notes Chewning. Most of the 35 insurance specialists who work in the private bank came from the legacy banks, although a few have been hired since the merger. The senior directors in the four key markets were brought on board recently, however.

The new insurance group represents “the best of what we've seen in the West [e.g., Wells Fargo], and what we?ve seen in the East [Wachovia],” says Chewning.

The insurance specialists “cover the gamut,” working with “affluent clients” (less than $1 million in investable assets but more than $500,000, roughly speaking) as well as the ultra HNW or family office segment—families with $50 million or more in assets.

Between the “affluent” and the “ultra” HNW are the simple HNW, which Wells Fargo defines as having $1 million or more with the bank (excluding the primary mortgage). This often translates to about $5 million in net worth. The 35 insurance specialists work with them, too, often participating on private bank ‘teams’—alongside a private banker (lender), an investment manager, a broker, a trust officer, and a financial planner.

A new client relationship typically begins with a comprehensive fact-finding process : What is the client worrying about? What keeps him/her awake at night? “In many instances, we (insurance) get invited to the table,” says Chewning.

Financial planners are most likely to bring the insurance specialist into the case, says Chewning, at least with the high-net-worth clients.

Chewning's group spends a lot of time educating teammates on insurance. They tell them to look at insurance as a separate asset class. Insurance has special tax treatment, for instance. Chewning's specialists want their teammates to understand the ways that insurance can be incorporated into an overall plan; they teach them to look out for “red flags” that might signal a particular insurance need.

A client might have a large IRA, for instance, from which he or she is taking only minimum distributions, delaying pulling out income. Does that client realize that there will be a tax on those IRA gains upon his or her death? Private bankers often need to learn more about insurance as a wealth transfer vehicle. If the client doesn't need those IRA assets for future income, why not pull out some income, the specialist might suggest, and put those proceeds into an irrevocable life insurance trust?

With affluent clients (less than $1 million with the bank), it's often the financial advisors (brokers) who bring in the insurance specialist. Other times, it's the private banker (lender). When a client borrows money, the banker often learns about that client's overall financial well-being. In any event, the bank wants to have more than a lending relationship with its clients.

Insurance specialists often participate in joint sales calls. They also draw on their MGAs (managing general agents, i.e., wholesale insurance intermediaries) for assistance in complex cases.

The insurance specialist does not get involved in all team meetings. A meeting might be called for a client who needs to refinance a loan portfolio. (We don't get invited to that meeting—nor should we,) says Chewning.

Movement toward whole life insurance

Life insurance sales are often cyclical, notes Chewning, and he sees more movement toward whole life insurance these day

For many affluent customers (e.g., less than $1 million in investable assets), who are sitting on some extra cash—$50,000 or $80,000 that they aren't planning to spend—single premium life insurance contracts “are very popular now,” says Chewning.

In July, Wells Fargo Private Bank announced the leadership team of its newly established national life insurance business group. It has 35 life insurance specialists.

Many clients have found their net worth diminished as a result of the economic crisis, and they have to take on some more investment risk if they want to maintain their charitable trust, say, at the same level as in the past. Many are looking at ways to save money. Chewning's group “is doing a lot of work now reviewing [clients?] insurance portfolios.”

They don't say to clients: Here's a solution. Take it or leave it. Rather: Here's the problem. Here are three of four ideas.

The HNW client might then select one of the four?an intergenerational split-dollar insurance plan, say, or a second-to-die policy or some other survivorship policy.

New hiring

Does Chewning expect to hire more life insurance specialists? The current number of 35 is a “moving target,” he says. He may be looking for a specific skill in a particular market. In the West, for instance, Wells was looking recently for point-of-sale experience dealing with HNW clients. Can they work well in the HNW space and also work within Wells Fargo's “team model”?

Prior experience working in a bank environment is viewed as a plus, as is experience working at a large broker/dealer, where insurance specialists often have to interact with other team members. Independent brokers, by comparison, are often less well-suited to working on teams.

The new insurance group represents ‘the best of what we've seen in the West [e.g., Wells Fargo], and what we've seen in the East [Wachovia],’ says Chewning.

But jobs are tight these days. “When they hear about us, we get a few phone calls,” he says of the underemployed agents.

Some markets might have 10 private bankers (lenders) for every insurance specialist. In other areas, the ratio might be less severe. “The mix is different in each hub,” says Chewning.

Enhancing the client experience

In the end, “We [the insurance group] will be judged on the client's experience,” Chewning says. Insurance is a shelf product that is available to anybody. But it is not so easy to deliver an “outstanding client experience.” One often works with clients that have not had a good experience acquiring insurance in the past. Price quotations can be confusing, answering questions about medical history can be embarrassing, and there are often long periods of silence during the underwriting process—and underwriting can often stretch from weeks to months.

Through it all, says Chewning, the bank tries to keep clients informed. This isn't always easy—often clients are traveling, and “face time” with them is in short supply. So when they do make contact, his salespeople know they need to be clear and succinct.

Chewning says that there are really two “wins” for the bank when it comes to life insurance. First is the revenue that insurance sales generate. But there are also the future relationships. If, when a family “patriarch” dies, his will, trusts, and life insurance are all in order and the overall experience for the survivors has been positive, then the bank potentially has a client for another generation.

This is part of what Chewning means by a long-term approach.

Andrew Singer is editor-in-chief and publisher of Bank Insurance & Securities Marketing magazine. He can be reached at asinger@bisanet.org