Leverage your bank’s investment expertise to uncover opportunities

The recent state of the market has led to excess cash on hand for many companies. Many are looking to seize the opportunity and invest. But when they do, they tend not to turn to their banks.

“Companies know to come to us for loans and deposits, but not investment expertise,” says Denise M. Penz, executive director of wealth management at Home Savings Bank. “We want business owners to see us as their partner, capable of addressing personal and company challenges. Much of that can be done by better leveraging their current banking relationship.”

Smart Business spoke with Penz about the ways in which banks have evolved to play a fiduciary role in their clients’ investing.

In what ways can a bank play a significant role in a company’s investing practices?

Most companies are already working with a bank for deposits, treasury services to manage day-to-day cash, and loans. Banks have a seat at the table. They’re looking at companies’ balance sheets and digging into their financials. It seems like talking about investment strategy would be a natural extension of that existing partnership.

Someone who works closely with a company’s balance sheet and balance strategies can identify areas the company might need more leverage, or more cash. They can also offer sound investment strategies based on the knowledge that relationship imparts.

How can a bank help shape personal investment strategies?

Often in meetings with business owners there are discussions regarding personal investments as well as business strategies. Those conversations provide another dimension to the relationship, help the banking partner understand the owner’s long- and short-term goals, and see the bigger picture by sharing information beyond the piece the bank was initially contacted to manage.

Seeing the bigger picture helps the bank understand the owner’s risk tolerance based on past and current market performance, and the business assets he or she is willing to put at risk. Past performance is not indicative of future results, but it puts into perspective the total need for cash and cyclical events that affect the investment process.

How has the bank’s role in a company’s investment strategy evolved?

Long considered a place for deposits and loans, over the past 20 years banks have become very entrenched in the investment market. Though banks tend to be more conservative than other investment strategists because of the unique regulations that banks are held to, they’ve always provided investment services to clients.

Banks work with companies on a holistic financial strategy. They recruit and employ investment experts — attorneys, CPAs, financial planners, tax experts — who together provide a breadth of knowledge that puts banks in a position to compete with anything individual investment firms offer.

Why should a company that hasn’t given much thought to its investment strategy at least talk to their bank about what could be achieved?

The market is ever changing, and that requires professionals on the financial side to help businesses navigate its new realities.

Business owners may be missing opportunities to employ financial and investment strategies that can greatly help their businesses, and in most cases, help them achieve their personal goals. Whether it’s general risk-tolerance decisions or balance sheet management, it’s important that every business move beyond the strategies they already know and understand, and tap into the expertise of their banking partner to find novel ways to make the best use of their cash.

Banks want business owners to know they’re available to help them develop their financial strategies and manage through the balance-sheet decisions they’re considering. Get a check up. Invite a bank to explore the books to find strategies that may present opportunities to grow the business in a different way.

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