Focus on NDIP

How To Sell And Comply
Whether directly selling products or referring customers to the NDIP sales desk, the goal is to be sure the customer understands the difference between bank products and non-deposit investment products that are not protected by FDIC insurance. This is why everyone - yes, everyone - in the bank must know how to make referrals and answer questions.

It is one thing for management to know the rules and the broker/ dealers to have the proper licenses. But the bank's vulnerability to allegations of customer confusion can begin with a customer question put to anyone in the bank. The most likely places for this to happen are at the teller windows and at the new accounts desks.

When the bank decides to offer non-deposit investment products, it is time to schedule and begin training for everyone in the bank. What most bank staff need to know is relatively simple. Their knowledge requirements fall into two categories. First, this is an investment product just like products offered through mutual funds and brokerages. It is NOT a deposit. It does entail risk of loss. When the stock market takes a plunge, so do these products - while the certificate of deposit or passbook savings account sits safely in the bank, insured by FDIC, slowly earning interest.

Second, front line staff needs to know how to refer customers to the NDIP sales area - and NOT make any representations about the products!!! It can be difficult to accomplish a successful sales-oriented referral and avoid making any representations about the product. That's why your training program should involve practice. It might also be a good idea to give frontline staff a script which they can keep handy at their stations. For example: "Yes, our bank has an arrangement with "Modern Mutual Funds". Their representative is Susan Jones who sits on the other side of the lobby at the desk in the corner. She's with a customer right now, but if you would like, I can have her call you. She can explain all about their products. Is there a time that would be convenient for you?"

It may also be useful to train frontline staff to refer customers to both the broker/dealer and to bank customer service staff. This can have the effect of calling the customer's attention to the difference between the products. For example: "Yes. Our bank has an arrangement with "Modern Mutual Funds". Their representative is Susan Jones who sits on the other side of the lobby at the desk in the corner. It looks like she is free right now. You might also want to talk with one of our customer service representatives. They can explain the bank's products such as certificates of deposits, savings programs, and IRAs. That would be any of the people at the desks on this side of the lobby."Staff should be coached to avoid making conclusory comments or recommendations of any kind. They should avoid making statements such as "Our bank selected the best mutual funds products" or"It's just as good as a savings account." Never never say anything like "we think your money will be safe with the company we selected."

Staff should be encouraged to practice making referrals with each other. Then have them evaluate - as customers - what they understood from the referral. This will give them practice and help them to listen while they talk. Remember, this may be the most important part of the compliance program.The goal of training should be the heightened awareness of all staff. FDIC has developed a video training program that covers all the points they believe staff should understand. It is designed for use by all banks that are FDIC-insured. Contact your nearest FDIC office for information.

ACTION STEPS

Review new employee training. If the bank offers NDIP products, be sure that new employees get information on what they are, who handles the sales, and what to say and not say to customers.
Schedule training for all lobby staff. The training should explain how to make referrals, and what bank deposit staff cannot say about investment products. Include practice!
Spend some time in the bank lobby. Watch the sales process. Eavesdrop a little. Listen to tellers make referrals. If you hear mistakes, schedule more training and practice.
Making referrals correctly is an accomplishment. Consider giving recognition to someone who does it well. Also consider using asking him or her to demonstrate the technique in the next training program or staff meeting.
Review your third party contract. Make sure that it provides that the third party will maintain the training and qualifications required for any sales staff that will be working with or in your bank.
Also, review your training calendar to make sure that the bank conducts refresher training for all customer contact staff.