Your commercial and small business bankers love Vertical IQ for call preparation, but the value of Industry Intelligence reaches far beyond these groups. In this seven-part blog series, we will discuss how Industry Intelligence can be utilized by lines of business across your bank enterprise.

>> Related:
Part 1 of 7: Industry Intelligence Offers a Wealth of Treasury Management Insight

Part 2 of 7: Industry Intelligence Puts Card Services in Charge

Part 3 of 7: Credit Underwriting Can Connect the Dots with Industry Intelligence

wealth management and investments piggy bankBankers across your entire bank enterprise can benefit from the Industry Intelligence found on Vertical IQ. Your wealth management and investments team is no exception. You might be thinking, “But our wealth managers and investment experts are working with individuals, not with businesses. Why would they need Industry Intelligence?” I’m so glad you asked!

It’s safe to bet that a number of your wealth management and investment customers are business owners. Many have worked hard to build a successful company over the years and now are reaping the financial rewards of that hard work. When your wealth management and investment team has an understanding of that customer’s industry, it opens the door to even more value-added discussions, and potentially, a deepened banking relationship.

More tailored wealth and investments advice

Let’s say you have a wealth management or investment client who is in crop production; perhaps they own a successful third-generation oilseed and grain farm. Using Industry Intelligence, you can make a more personalized connection with this successful farmer. For instance, Industry Intelligence helps wealth and investment managers:

Save time on pre-call planning while gaining the ability to talk to business owners about their company.

While we may all appreciate the hard work that farmers put in to keep us fed, a lot of us don’t know a lot about how farms operate. If we look at the Industry Profile on Crop Production and review the “Industry Structure” chapter, we learn that 967,000 crop farms in the U.S. produce more than 421 million acres of commercial-scale grains, sugar, fruits, nuts, vegetables, and ornamental crops.

Turning to the “How Firms Operate” chapter of the profile, we learn that, except for the largest 10 percent of farms (those generating over $250,000 in revenue), the majority of farm household income comes from non-farm activities. The average annual income is $200,000 with about $126,000 from farm earnings and around $74,000 from non-farm activities, such as outside jobs and investments.

The net worth of farm households is around $1.5 million on average, with 68 percent of that worth in farm assets and 32 percent in non-farm assets, such as investments and non-farm real estate. According to the USDA, nearly 70 percent of farms carry debt of less than $10,000, but a very large farm can have debt ranging from $1 million to $3.5 million.

All of this information is useful for the wealth manager to know prior to speaking with this successful farmer client, and it can serve as a segue to initiate a conversation about savings and investment mix.

Relate to business owners’ challenges, instead of simply talking about products and services.

Business owners eat and breathe their business, and this is literally true of farmers! Even when things are going well, there are undoubtedly issues that are keeping them up at night, and it’s helpful for an investment manager to understand these forces.

For instance, looking at the “Credit Underwriting & Risks” chapter of the Crop Production Industry Profile, we learn that because of climate change, the number of forest fires and insect outbreaks are increasing, the growth of many crops and weeds is being stimulated, and the migration of many plant and animal species is changing the structure and composition of virtually every ecosystem.

It’s important for an investment advisor to know about this and other potential business risks. This enables them to help the farmer manage their investments and liquidity so when the company has an off year, they can navigate through it.

Talk about business valuations using industry comps to prepare for the sale of a business and the resulting wealth transfer.

Reviewing the “Industry Structure” chapter of the Industry Profile on Crop Production, we see that 98 percent of farms are family-owned and many have been for generations, just like this hypothetical client. Around 89 percent of family-owned farms are sole proprietorships.

We also learn from the “Credit Underwriting & Risks” chapter that 36 percent of the principal farm operators in the U.S. are at least 65 years old, and the average age for all principal operators is 58. Even though most farms are multi-generational family farms, and it is hoped the upcoming generations will replace them, concerns linger over younger generations leaving the industry for more lucrative careers.

This piece of Industry Intelligence is especially useful for an investment advisor to know. Then, taking a look at the “Business Valuation” chapter, that advisor can help the farmer talk about a succession plan for their business.

Engage on an ongoing basis with business owner-clients as part of their business development and retention process by sharing relevant industry news articles.

Wealth managers and investment advisors need to continuously nurture relationships, providing ongoing analysis and guidance to their clients. Industry Intelligence makes this quick and simple for clients who are also business owners.

For example, the advisor could print off and share the “Financial Benchmarks” chapter of the Industry Profile, offering this hypothetical farmer-client insights on how their financials stack up to competitors’. Another option would be to print and share a timely article from the “News” portion of the Industry Profile — highlighting a relevant point or two and including a note that the advisor will follow up to discuss.

And don’t forget: There are always cross-sell opportunities with wealth management and other areas of the bank! Why not share the “Capital Financing” chapter of the Industry Profile and add a note asking if the farmer is in need of a new piece of machinery — that you’d love to loop in a member of your bank’s equipment financing team to discuss making that happen.

Industry Intelligence captures the entire picture

Incorporating Industry Intelligence into your wealth management and investments processes is about more than creating warm fuzzies. It’s about showing your business owner-clients that you have a handle on their entire financial picture. You understand their business operations, challenges, trends, and benchmarks, which makes for more value-added discussions.

It’s also important to have access to Business Valuation data so you can advise the client prior to the sale of a business and the resulting wealth transfer.

Vertical IQ will empower your wealth management and investments team to close more deals, retain more business, and grow more relationships — while also saving time and effort. Ready to get started? Contact Vertical IQ today for a free demo!

 

Image credit: Damir Spanic via Unsplash

Subscribe to our blog: