Arvest lowers net worth targets as baby boomers seek financial advice

When Arvest Bank Springfield President Brad Crain had lunch with financial adviser Tracy Barnas last October, he wanted to hire her.

“I told her if not, she had to help me ID the right talent,” Crain said of the Lowell, Ark.-based bank’s efforts to grow its asset management business.

On Jan. 1, Arvest revamped the division changing from Arvest Asset Management to Arvest Wealth Management. The 280 associates manage more than $9 billion in assets across the bank’s four-state footprint. Managing roughly $1.5 billion locally, Springfield wasn’t part of the initial rollout.

“It’s something we’ve been planning for the last year, but we weren’t ready at the start of the year. We didn’t have the infrastructure and team in place,” Crain said.

Fast forward a few months and Arvest’s wooing of Barnas paid off. The 30-year banking veteran and longtime UMB Bank regional manager joined the Arvest Wealth Management team May 2.

“Arvest continued to impress me over those six-plus months,” she said. “You can only fit the pieces of the puzzle together for so long before the picture becomes crystal clear.”

The local effort is indicative of a national trend, said Edward Jones financial adviser Weston Kissee.

“There are 10,000 baby boomers hitting every day and that will continue for the next 15 years,” he said. “The industry needs advisers, and there will be enough pie to go around.”

New staff, new direction
Barnas is one of four new hires for the local Arvest division, doubling the wealth management staff in a matter of months.

As regional manager over Springfield, Joplin and north-central Arkansas, Barnas oversees a team of 13, including fellow new hires Sarah Russell, Rhonda Sorensen and Jennifer Melton. Randal Lyons, Ben Hughes, Robin Cole and Sheila Rehagen round out the tri-state team. Overseeing a smaller footprint than when at UMB – where she launched private wealth management into Omaha, Neb., and Oklahoma City, while expanding its presence in Kansas and greater Missouri – Barnas said the Springfield market is poised for growth.

“The large banks are going after those ultra high net worth individuals, which in our business is $5 million to $10 million and up,” she said. “But that’s not the average demographic here in Springfield.”

Barnas said her goal is growth though assisting the mass affluent segment.

“There are so many normal, average people out there that need financial advice,” she said. “People who have saved all their life and have acquired $500,000, maybe $1 million, for retirement and just need solid financial solutions.”

She classifies the client base into three phases: those accumulating, those in preservation mode and those distributing. As the asset base grows, Barnas hopes to flesh out her team but said the timing is very fluid.

“That could be one, three, five years down the road,” she said. “It’s all about balance – the chicken and the egg – what comes first, resources or revenue?”

Boomer trends
If Kissee’s predictions are correct, the revenue piece is about to explode, and not just for Arvest.

According to Investment News magazine, over the next 30 years, $30 trillion will be passed down from baby boomers to Generation X to millennials.

In addition to investors retiring, financial advisers themselves are making the leap to retirement, opening their firms up to sales and acquisitions. Banks, historically among the biggest buyers of wealth management firms, are showing interest in the offerings. In 2014, banks bought 47 registered investment advisers and trust companies, twice as many as in 2013, according to Reuters.

Locally, firms such as Trust Company of the Ozarks was acquired by Simmons Bank. The deal, which closed in third-quarter 2015, added $1.1 billion in assets under management to the financial institution that managed roughly $3.5 billion in trust assets at that time. According to the most recent Springfield Business Journal list data, in 2014, The Commerce Trust Co. topped the list with $1.32 billion in local assets under management, followed by U.S. Bank’s The Private Client Group with $1.26 billion.

Kissee said increased federal regulation also is playing a part.

“New regulations are causing some to leave the business,” he said. “Those companies where wealth management may have been an ancillary part of their business, it’s not worth it to continue.”

Kissee is referring to the impending fiduciary standard set to take effect next April. In February 2015, President Barack Obama directed the Department of Labor require that retirement advisers abide by a fiduciary standard – putting their clients’ best interest before their own profits.

“The rule used to be the investment must be suitable for the client, which was pretty obvious,” Kissee said. “Now, it also has to be in their best interest. That’s not a change in how Edward Jones does business, but it will be for a lot of others.”

Kissee predicts the market will see more banks buying up advisory firms, such as insurance companies, many of which offer investment advice alongside car insurance.

For Arvest, Crain predicts the potential new clients will mean continued double-digit growth across the footprint. The bank entered the wealth management space around 2012, growing about 75 households per year. Now, locally, the division advises roughly 300 households and expects to double that in the next two to three years.

“Springfield is the preeminent growth market for Arvest right now,” he said. “We’ve been very patient with this process so we could get it just right. That’s happened, and we are in go mode.”