Scrambling to plug revenue holes created by crackdowns on credit card fees and falling brokerage commissions, big U.S. banks are pushing a strategy they’ve tried with limited success in the past – cross-selling products.

They are inducing their stockbrokers to push mortgages, other loans and insurance to wealthy investors, while pressuring their lending officers to market investment products to yield-hungry customers.

Executives at Reuters Global Wealth Management Summit last week said cross-marketing is more important than ever before. New regulations have limited banking fees and a lingering distrust of the financial services industry has dented commissions.

When asked for his major strategic focus, Greg Fleming, president of Morgan Stanley’s wealth management division, replied, “Banking and lending – one of our newest significant growth initiatives.”

More than half of Morgan Stanley’s 16,000 brokers have marketed loans to their clients, he said, and loan balances should surge as the company builds its deposit base to fund them. The investment bank converted to a commercial bank holding company during the financial crisis, and expects to be among the top 15 U.S. banks by deposits when it completes its acquisition of Citigroup’s Smith Barney brokerage.

At rival Merrill Lynch, which Bank of America bought in 2009, more than half of the firm’s almost 15,000 brokers have helped sell a mortgage this year, a bank spokeswoman said.


Many brokers say they are uncomfortable peddling unfamiliar products; some actively resist. And one regulator said the stories he hears about inducements to cross-sell some investment products raises concern.

But brokerage executives insist that their strategies are responsive to client needs. They cite internal studies showing that wealthy clients want their stockbrokers to supplement traditional investment sales with loans, insurance, estate planning and investment banking referrals.

“Investment performance is way down on the list of things that clients want,” said Robert Mulholland, who oversees management and strategy for the 7,000 or so brokers at UBS AG’s Wealth Management Americas division. “The harder thing is to get (brokers) to want to sell them what they need.”

Like other banks, UBS has moved top investment banking and asset management executives into its wealth management division to help build bridges across the global enterprise. Morgan Stanley has deputized more than 150 private banking experts to work with its brokers and moved its middle-market capital markets business to the wealth management division.

At Wells Fargo & Co. investment assets referred to the Wealth, Brokerage and Retirement division by bankers soared 25 percent in the first four months of 2013 from a year earlier, said David Carroll, head of the division and its 15,000 brokers.

“It’s a big number that we have not released,” Carroll told Reuters. “It’s denominated in billions of dollars.

Measured by revenue, about 10 percent of the $1.2 billion that Carroll’s group generated in both 2011 and 2012 came from internal referrals at Wells Fargo, the No. 4 U.S. bank by assets.

Merrill Lynch’s brokerage clients want cash management services, loans and other products that advisers are promoting to them, said John Thiel, Merrill’s head of wealth management and strategy.

“They say, ‘Yeah, we’d rather do that with you,” Thiel told Reuters. “They can clear up problems with just one phone call.”

To be sure, brokerage executives have good reason to be enthusiastic because their pay is now tied more closely to the success of all parts of the banks rather than just the success of a single broker-dealer operation.

The renewed sales efforts make strategic sense, consultants add, though they warn that cross-marketing remains a near-Sisyphean challenge for banks.

“What you see today are pockets of excellence, but the holistic engine of cross-marketing and selling is not really working,” said Sandra Nudelman, associate principal in the banking practice at McKinsey & Co. “There really aren’t any big banks that are doing it well.”

The problem is both organizational and cultural. Since the financial crisis, wealth managers like to say that clients are more loyal to advisers than the firms. Cross-selling, however, has much more to do with the company’s goals.

“Loans, 401(k)s, mortgages, cash management services and services like trust and estates and farm and real estate management all serve to cement the client to the firm at the expense of the adviser,” said Brad Hintz, a brokerage industry analyst at Sandford C. Bernstein who once worked at Morgan Stanley and Lehman Brothers. “Financial advisers know that their personal linkage with a client is weakened as the relationship becomes more institutional.”


Few brokers have illusions about the new strategies.

“It makes the clients stickier, and sometimes it’s a good business practice to be able to offer them things you didn’t have before,” said John Waszolek, a 39-year brokerage veteran who has worked at Merrill, UBS and Morgan Stanley.

Waszolek, who now runs a team with some $20 million of client assets at Raymond James & Associates in Scottsdale, Arizona, said he understands what “headquarters” wants but the challenge for brokers to “focus on offering only what your client needs.”

Other veteran brokers said they resist cross-sales because they don’t want to “throw clients over the wall” to unknown colleagues who may offer poor service or steal the referral.

A broker at a large bank-owned company said two clients walked away from refinancing a mortgage because of long processing delays. Another said he referred a client to an outside bank that was offering better rates. A third said referrals create headaches, like having to explain why his quote might be higher than what lenders at the bank later offer.

These brokers spoke on condition of anonymity because they are not authorized to speak to the press.

(For more summit stories see ) (Additional reporting by Peter Rudegeair and Ashley Lau; Editing by Frank McGurty, Lauren Young and L Gevirtz)