Urca (Or How One Bank's Wealth Management Strategy Is Completely Backwards)

The title of this post could probably win the award for the most SEO-unfriendly blog post title. Ever. Nobody searching on Google is going to find this post, let alone click on it.

Unfortunately, it’s the only title I can think of. Mostly because it’s the most appropriate title I can think of.

If you’re wondering — and I know you are — Urca is Acru backwards.

And now you’re thinking: “Aha! That clears it up. Not.”

According to Financial Brand, Acru is:

First Cherokee State Bank’s new sub-brand created around its wealth-management division, described as “a revolutionary new retail concept where wealth strategists give away financial wisdom at no charge.”

At the risk of quoting too much from the Financial Brand article, the following caught my attention:

  • “Our community space design is intended to be as comfortable as your own living room — great coffee included,” it says on the Acru website.
  • “We want you to come in and stay for a while.”  “Everything Acru does starts with a conversation,” bank spokesman Rob Kremer explained. “We believe coffee houses facilitate conversation.”
  • “The goal at Acru is to remove the transactional element from financial services and create a more interactive, relational environment,” added [Acru CEO Matt] Hames.

So why did I title this post Urca? Because Acru’s strategy is completely backwards:

1. Advice shouldn’t be free. One of the biggest problems in the retail banking industry today is the misalignment between what consumers pay for and the value they get (at least, their perceived value). People don’t like paying $5 month for the “privilege” of writing checks or using a debit card, and they certainly don’t think it’s fair that they have to pay $35 each time they overdraw on their account. It’s analogous to the $100 doctor’s visit that lasts for 5 minutes: You’re not paying for her time — you’re paying for her expertise to make a diagnosis and write a prescription. If a bank wants to get radical, it should charge for advice and give away the transactional stuff.

2. Most people don’t need wealth management advice. Is there a shortage of qualified wealth management advisors in Georgia? If there is, shame on all the existing providers of wealth management services (Merrill, Schwab, etc.) who have overlooked the opportunity. The mass market doesn’t need wealth management advice — it needs everyday financial management advice.

3. Physical location doesn’t matter. Coffee houses facilitate conversations? REALLY? Most of the coffee shops I go into are populated with geeks with their laptops plugged in, silently working away. People don’t want to go somewhere to get financial advice. They want it in the moment: At the point of transaction (when they’re at Best Buy ready to drop a grand on a HDTV) or at the point of decision (when they’re reviewing their finances at home at 9pm on a Thursday night). Acru’s wealth advisors are available from 9 to 5, Monday thru Friday. That’s when I’m working. What’s the rest of the wealth management advice-needing population doing those hours?

I’m willing to bet that Acru will generate more profits from selling coffee than it will from selling wealth management services. Any strategy that centers on getting customers to come to you is completely backwards from the convenience and value that consumers want from their financial services experience. 

5 thoughts on “Urca (Or How One Bank's Wealth Management Strategy Is Completely Backwards)

  1. Building a community for that makes sense if there is no geographical boundary at play. But let’s be honest — this is Woodstock, Georgia.

    I am not even going to get into the demographic game of “How many Woodstockians are on the internet,” because that’s beside the point. If 100% of Woodstock was on the internet, or even 100% of Woodstock’s “investor class,” then it’s still an uphill proposition, because you’re spending a LOT of your time dealing with people who will never make you a dime.

    The irony is that if the ACRU team did the very same things, only as an effort to brand themselves as thought leaders and subject-matter experts, then it would be okay. What they’ve written sounds either disingenuous or misguided.

  2. “…you’re spending a LOT of your time dealing with people who will never make you a dime.” NAILED IT. Everybody knocks managing by spreadsheet, but I’d love to see the spreadsheet that said this was going to be profitable.

  3. Ron, you misinterpreted the Acru strategy. Their strategy is not to launch a stand-alone wealth management experiment — profitable or otherwise. They wanted to rename and rebrand the bank and felt this was a less disruptive way to do it. They are going to let the community grow accustomed to seeing the Acru brand before pulling the plug on the First Cherokee brand. If you want to attack the business case, then you should ask whether using Acru to slowly rebrand First Cherokee will pay off, not whether Acru will or won’t make money, because “creating a profitable business unit” wasn’t their primary objective.

  4. Ron: I completely agree with your statement, “Any strategy that centers on getting customers to come to you is completely backwards from the convenience and value that consumers want from their financial services experience.”

    I believe there is value for Acru to focus on enhancing their customer experience. It’s also very “Diddy” (is that his current name?) of them to go through a re-branding process after the economic downturn. I think the coffee shop approach is interesting because it seems to be thought of as “important” for establishing relationships. However, there are two reasons I struggle with this approach. First, a person’s finances is a very personal subject. From you post, I didn’t get the impression there were offices in the newly designed space. I think these conversations are to be kept private, in an office, with a door. Second, consumers are more interested in using self-service channels (such as online) to research new products. This is true across industries. Retailers have to educate employees more now than ever on product details. When a consumer actually comes into the store (branch) they have already done the product research, narrowing down their options. They just need to touch the item or ask for a recommendation from the clerk (customer service rep) before making a purchase decision. I did this recently when choosing a new heart rate monitor/GPS watch. I wouldn’t want to spend a couple hours in a coffee shop learning about all the different watches. Did Acru also redesign their online experience to educate customers about wealth management? This would be a low-cost option that is also convenient to their customers. They would have to make their own coffee though.

  5. Ron:
    Thanks for continuing the conversation. I thought you’d like to hear from us directly and we certainly welcome more conversation/feedback from here.

    I’ll reference the three main points you made by number:
    1. We think Ben Franklin had the right idea here. He said ‘the door to wisdom is never shut’ and we think an open door policy to real financial wisdom is a novel idea in an industry where often times you must have a minimum net worth before you can speak to a qualified advisor.

    2. We define wealth by how you live your life, not your net worth. Living a wealthy life is completely dependent on the individual’s definition of wealth and not ours or yours. Applying a strategy to ensure a wealthy life, regardless of how our clients define wealth, is our primary goal. Thus I think we are closer to your ‘everyday financial management advice’ than you first thought.

    3. We’re committed to investing in the people, businesses, and communities we serve. The community of Woodstock was yearning for a local coffee house to move into downtown. The rent rates prevented Woodstock from having a third place to gather as a community. We are proud to bring live music 3+ nights per week, a place where business can be done, and we’re even ok with geeks putting their heads down into a laptop for hours at a time. We’re not here to tackle everyone who comes into the door to sell them a product. Acru is prepared to help when you need it.

    Starting locally aligns with we value as a company. Treating finance as a transaction is something we’ll let others chase in a Best Buy environment. We’re always available via twitter, facebook, phone, and email and our physical location is just one of the ways we meet our customers where they are.

    I look forward to the replies.

    – Brad

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