With plans brewing to swell its advisor ranks by hundreds, PNC Bank is rolling out a new offering for clients who are just coming into wealth.
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The bank’s new PNC Premier Client division, announced this week, will provide teams including a financial advisor and personal banker to mass affluent and “emerging affluent” investors and savers, which the bank defines as people with between $100,000 and $3 million in assets. As part of the same plan, Pittsburgh-based PNC will convert 200 of its more than 2,000 branches into what it calls Premier Branches by the end of 2027.
Rich Guerrini, the president and CEO of PNC Wealth Management, said in an interview Thursday that the new offering is aimed squarely at clients who don’t qualify to work with its private bank, which typically works with clients with more than $3 million in assets.
Guerrini called mass affluent investors “in our opinion, the fastest-growing and probably most-underserved opportunity inside of financial services and banking.”
“We know that the client needs and insists on having personalized advice complemented by digital products and services and conveniences,” he said. “And we know they want the ease of somewhat of a one-stop shop and make sure that they can easily get to the individual that can serve them.”
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PNC plans to add hundreds of advisors
The Premier Client division follows PNC’s decision last fall to change the name of its brokerage division from PNC Investments to PNC Wealth Management as part of a broader investment in the firm’s wealth business, which has roughly $95 billion under management. Guerrini said PNC plans to add between 300 and 500 advisors to its current headcount of roughly 900 over the next few years.
The newcomers will come from both recruiting external advisors and cultivating talent internally, Guerrini said.
“We have the process in place to help them get licensed, to develop their skill set, to start to build that acumen,” he said.
Many of those advisors will eventually be working in the firm’s refurbished Premier Branches alongside personal bankers.
“We want to go and add a lot of additional financial advisors to make sure that we’re able to deliver on this banking and investing idea at any branch or any point that you would enter the PNC business,” Guerrini said.
PNC is far from the only firm that sees business prospects in a convergence of banking and wealth management. While banks have been adding more financial planning and related services, long-established wealth managers like Edward Jones have been branching out into banking products like checking accounts and credit cards.
Firms with origins in both banking and wealth management recognize advantages to such convergence. For one, it provides them with new lines of revenue. Second, it makes it less likely their customers will have to go elsewhere for basic financial services.
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Banks need a sound wealth management footing
For banks, doubling down on wealth management could be a matter of survival, William Trout of the technology data firm Datos Insights wrote in a LinkedIn post on Wednesday. Trout, who is director of securities and investments at Datos, said banks have become too reliant on unpopular sources of income like fees charged to customers who overdraft their checking accounts.
Adjusting their businesses so they secure at least 30% of their revenue from wealth management will reap multiple benefits. Along with a steady source of income from asset-management fees, banks will have better relationships with their customers from the mutually beneficial activity of tending to their wealth, Trout wrote.
When financial advisors succeed, their clients’ assets increase in value. That, in turn, generates more wealth management fees for the firm.
“The banks that figure this out will have fundamentally stronger balance sheets,” Trout wrote. “The ones that don’t will keep subsidizing their business with fees customers despise — until digital competitors eliminate them entirely.”
Trout also touched on another advantage often touted for bank-wealth management: the ability to cross-sell bank products to wealth clients and vice versa. Banks should particularly try to interest their commercial and small-business clients in wealth services, according to Trout.
“Banks that generate significant fee income from wealth management command higher market multiples — similar to RIAs,” he wrote. “Yet most banks still treat wealth management as an afterthought, riding on retail banking technology rails with leadership that comes from the lending side.”
PNC, ranked by American Banker as the eighth largest U.S. bank by assets, has not missed the message about cross-selling. Its plans for its new Premier Client offering call for bringing together “savings, borrowing, spending, insurance and investing needs into one thoughtfully constructed plan.”
PNC’s digital gateway to young clients
Guerrini said Thursday that PNC is developing various products and services intended specifically for mass affluent clients, including “lines of credit, certainly, to reward opportunities … rate opportunities, fee opportunities,” he said.
Guerrini said he thinks banking and investing services are still seen as totally separate businesses in the financial services industry.
“But we feel that these solutions can be offered together,” he said. “We think our clients think about financial solutions as one. Certainly there are clients who think about checking accounts and clients who think about investing. But we would love them to think about those solutions collectively.”
PNC is also making it easier for clients to access its services digitally. In January, it announced its customers could open online brokerage accounts through their online banking accounts.
Guerrini said he thinks strong digital offerings are particularly important for young clients.
“Many first-time investors are going to leverage technology probably as their first step for investing,” he said.
After those relationships have been established, Guerrini said, PNC wants to make sure, “We have products that are tailored for you, and as you grow with us, we’re going to be able to work with you through our continuum and continue to offer new products, new services as your needs get more sophisticated, and certainly as clients grow and gain influence.”
