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Forging a Working Relationship With Bankers

Learn what a bank needs and wants from an advisor—plus tips on splitting commissions.

By Timothy J. O’Connor, CLU, ChFC

Banking, just like insurance and financial services, is a relationship business. The banker is in a position to ask clients questions about insurance, wills, trusts and business arrangements. Many bankers are in the unique position to motivate this type of essential planning, but they usually don’t have the knowledge to get it implemented.

We in the life insurance and financial services industry, however, do have this knowledge. An alliance between bank and advisor can benefit both parties. After all, bankers are not insurance experts. And, despite their banking experience, they often are not financial-planning experts. Many bankers, finding themselves suddenly in charge of an insurance section, are overwhelmed. They are looking for someone that is ready, willing and able to help them succeed at the business. As advisors, we are perfectly positioned to be that person.

A working relationship
It’s important to understand what the bank wants and needs from a relationship with an advisor. After all, the advisor will need to sell the bank on exactly why their relationship will be beneficial to both parties.

Quick Tips: Splitting the Commission

I use Norman Levine’s (32-year MDRT member) “five 20s” formula for splitting commissions: 20 percent for the lead, 20 percent for the opening and interview, 20 percent for computer work, 20 percent for the closing and 20 percent for ongoing service.

The bank has the client and the appointment, and that’s worth 20 percent. They were going to be involved in some of the ongoing service, and if they gave me an office space to use, and set the appointment, it seemed to me that a 60/40 split should be equitable. I take 60 percent; they take 40 percent.

First, in today’s marketplace banks may feel as though they are losing money. With lower interest rates, less money is being invested in certificates of deposit and more into higher-earning mutual funds and/or annuities and tax-favored vehicles. Many bankers feel that if they could get a commission on that money as it left, and know where and how the money was invested, they would have an opportunity to win the money back at a later time. To do this, they needed to be involved in the sales process.

Second, as margins are shrinking in banks, more bankers are paying attention to fee income. Bankers understand the concept of not reinventing the wheel. Most are not eager to start their insurance operations from scratch, preferring to buy experience by buying insurance agencies or establishing joint ventures. This is where the advisor enters the picture.

Once you have established a formal relationship with a bank, you must establish a good working relationship with your bankers. There is a misconception that if you work with a bank agency, or if you work in a bank, the bank will automatically feed you leads, and all you do is sit in the back room and write applications.

That doesn’t happen. Bankers will only deal with you if they believe you are bringing something to the table that is unique in the marketplace. Bankers are looking for some trait, quality or value you bring that will help them foster a better relationship—and more business—with the client.

The banker fiercely guards his or her client relationships and will not bring you into the relationship mix with his client unless he feels several things:

  • That you know what you are doing
  • That you are not there just to make a sale
  • That you are there to take care of his customer the best way you know how
  • That when you are done, the customer believes that the banker is a hero for bringing you to the table

Make sure you meet these criteria, and your relationship with your bankers will be a solid and profitable one.

Editor’s note: If you’ve ever considered working for a bank, click on “Banking on Clients” to find out about one advisor who does, the pros and cons of the set-up, and the simple formula for determining if this is the right move for you money-wise.

This is from a speech given at the 2004 Million Dollar Round Table annual meeting. Used with permission. All rights reserved. For more information go to

Timothy J. O’Connor, CLU, ChFC, of O’Connor & Associates Inc., is a 17-year MDRT member and member of NAIFA-Grand Island (Neb.). He specializes in business continuation and estate planning for closely held businesses. Contact him at 308-381-2303.

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