With the lines between banking and wealth management blurring at an unprecedented pace, the financial services industry is in the midst of a strategic transformation. To make sense of this convergence, we sat down with Priya Jaiswal, a leading authority on the intersection of these two powerful sectors. Our conversation explores why giants like Edward Jones are venturing into banking and why regional banks are doubling down on wealth management. We delve into the powerful economic forces driving this change, such as margin compression and the quest for client “stickiness,” and examine how today’s “one-stop shop” model differs from the “financial supermarkets” of the past. Finally, we look to the future, debating whether industry dominance will belong to a few integrated behemoths or a nimble ecosystem of strategic partners.
David Chubak of Edward Jones voiced concerns about “banking deserts” in small towns. Beyond the U.S. Bank partnership, what specific, step-by-step actions are firms taking to bring robust banking capabilities to Main Street, and what key metrics will define success in these underserved areas?
That’s a critical point, and it’s about more than just having a local branch. The real action is a two-pronged strategy. The first, and most immediate, step is the deep partnership model you mentioned. It’s not just about co-branding a credit card; it’s about true integration. Firms are embedding banking portals directly into their wealth management apps, allowing clients to handle electronic payments, check balances, and manage accounts without ever leaving the advisor’s digital ecosystem. It’s a powerful way to bring the best capabilities of a national bank into the 15,000 local offices of a firm like Edward Jones. The second step is a much heavier lift: building their own banking infrastructure. When firms like Edward Jones or Interactive Brokers apply for an industrial bank charter, they are signaling a long-term commitment to offering proprietary products like loans and certificates of deposit. Success here won’t just be measured by new accounts. The key metrics will be the adoption rate of these banking services among their existing wealth clients and, crucially, a measurable decrease in “assets held away” as clients consolidate their financial lives. In those small towns, success will look like a client confidently telling their advisor, “Tell me about my plan,” knowing that plan now includes their banking, borrowing, and investments, all in one place.
Jayne Hladio and Susan deTray believe banks have an advantage due to daily client interactions. Can you walk me through how a regional bank leverages these everyday touchpoints to successfully introduce and integrate wealth management services for its existing banking clients?
They are absolutely right, and it’s an advantage that’s hard to replicate. Let’s imagine a scenario at a firm like Citizens Bank. A long-time commercial banking client, a local business owner, is having a routine conversation with their banker about their line of credit. Through their daily interactions and by seeing the account data, the banker notices that significant cash reserves are building up in the business’s checking account, earning next to nothing. This is the critical touchpoint. The banker, who has built years of trust through handling payroll and loans, can naturally pivot the conversation. They can say, “I see the business is doing exceptionally well. That’s fantastic. Have you thought about a strategy for making this excess capital work for you and your family personally?” This isn’t a cold call from a stranger; it’s a warm introduction to a wealth advisor who is part of the same team. This “co-location” of expertise, as Susan deTray calls it, is key. Because people bank every day but might only review their portfolio quarterly, the bank becomes the primary relationship hub, creating a steady stream of opportunities to seamlessly introduce wealth management as the next logical step in the client’s financial journey.
The article highlights client “stickiness” and margin compression as key drivers. How do you quantify the increased lifetime value of a fully integrated client, and which specific services—like cash sweeps or specialized lending—provide the biggest and most immediate boost to a firm’s bottom line?
The financial impact is profound, and it’s measured in two ways: revenue depth and client longevity. Quantifying the value starts by looking at the “share of wallet.” A client with a single advisory account generates one stream of fee-based revenue. But when you add a mortgage, a securities-backed loan, and daily cash management, you’ve not only added multiple new revenue streams but you’ve also made that client exponentially “stickier.” They are far less likely to leave for a competitor when their financial life is so deeply interwoven with the firm. This dramatically extends their lifetime value by preventing churn. As for the most immediate boost to the bottom line, nothing beats cash sweeps. It’s a beautifully simple and profitable mechanism. When a client’s uninvested cash in a brokerage account is automatically “swept” into an affiliated bank, the firm can then lend that money out and earn a significant net interest margin. It’s a high-volume, low-effort way to directly combat the margin compression they’re feeling from things like commission-free trading. It’s the engine that powers a lot of this convergence because the return is so direct and immediate.
Phil Waxelbaum noted this convergence is “everything old is new again,” comparing it to the 1990s “financial supermarket.” What technological advancements and changes in consumer expectations make the modern “one-stop shop” model, like Charles Schwab’s, more likely to succeed today than its predecessors?
Phil Waxelbaum’s observation is astute, but while the ambition is the same, the execution and the environment are worlds apart. The fatal flaw of the 1990s “financial supermarket” was that it was a supermarket in name only. In reality, it was a collection of siloed departments under one roof that rarely communicated. The client experience was clunky and disjointed. The single biggest difference today is technology. A modern firm like Charles Schwab has built a seamless, integrated digital platform. A client can view their checking account, mortgage, and investment portfolio on a single dashboard on their phone and move money between them with a single swipe. This unified digital experience is the glue that makes the model work. The other crucial factor is the evolution of consumer expectations. We’ve been conditioned by tech companies to expect simple, integrated ecosystems. We want one login, one relationship, one seamless experience. The 90s model failed because it couldn’t deliver that. The modern model, exemplified by Schwab’s bank with its more than $450 billion in assets, is succeeding precisely because it meets this fundamental consumer demand for convenience and integration.
What is your forecast for the future of the “one-stop shop” model in financial services? Will we see a few dominant players emerge, or will partnerships between specialized firms become the most successful strategy for serving clients in the next decade?
My forecast is for a bifurcated or hybrid market, not a single dominant model. On one hand, you will absolutely see a few massive, fully integrated players emerge as the dominant forces. These will be the firms that have the scale, capital, and technological prowess to build and own every piece of the value chain, much like Charles Schwab has already done. They will cater to the client who values the simplicity and power of a single, all-encompassing brand. However, I believe the most common and, in many ways, most nimble strategy will be built on strategic partnerships. As Jayne Hladio correctly pointed out, the regulatory complexity and fiduciary responsibilities of running a bank are enormous. It is harder than it looks. Therefore, most wealth management firms will find it far more efficient to follow the Edward Jones playbook: focus on what you do best—in their case, hyper-local client relationships—and partner with a best-in-class institution like U.S. Bank for the banking infrastructure. This allows firms to offer a comprehensive “one-stop” experience to their clients without the immense operational drag of building it all themselves. The future isn’t one or the other; it’s both—a handful of giants and a thriving ecosystem of specialized firms collaborating to serve a diverse client base.
