All the recent publicity about dishonest and unethical behavior at a certain large unnamed bank is a good reminder to go back to the basics when it comes to your farm operation’s inner circle. That includes asking the right questions to determine if your banker is, in fact, a trusted adviser or a mere product peddler.
Often, the nudge to assess a banker results when there’s a significant change in a farm’s operations, whether it is transferring the farm to another generation of ownership or making a large investment or change. But filling out a periodic “scorecard” of sorts on your ag banker is also important because it allows you to determine if he or she is, in fact, representing your interests or if you’ve fallen into a comfort zone that’s not necessarily in your best interests.
• Is he/she a reliable agricultural banker? Because agriculture is a very cyclical and volatile industry, there are some bankers who may be really easy to work with when times are good, but very tough to work with when times are bad. Is your banker there for you through good times and bad? This includes being there in all cycles of the market as well as being accessible and delivering prompt decisions regarding your requests.
• Has your banker walked in your shoes? In this industry, that means your front-line banker has grown up in, worked on or owned and operated an agricultural-based operation. That kind of knowledge, experience and background is invaluable in our type of banking because agriculture is unlike any other industry. This is further complemented by a banker who not only understands, but also believes in the products or services he or she is offering and acts as an advocate for the ag industry; not a transaction-maker.
• Does your banker listen to your needs? A good banker should do more listening than talking, and listen not only to you, but also collaborate effectively with other members of your advisory team.
• Does your banker offer needs-based solutions, or is he or she a talker who pushes products? A good sign is that your banker doesn’t strong arm you into buying something. Instead, he or she listens first (consultative sales that involves a lot of listening on his or her part vs. a lot of talking) and follows up with value-based propositions that solve problems. These should make sense for your operation and sit right with you and not leave you with buyers’ remorse.
• Does your banker know your operation intimately? Has he or she put on boots and walked your operation, and got to know its inner workings and nuances? Today’s ag farms are very complex, especially the larger operations. No two farms are the same in terms of needs, management, ownership structure and business model. Your banker should be knowledgeable about the type of enterprise your farm is involved in as well as all types of farm financial issues.
• Is your banker employed by a financial institution that is fully committed to agricultural banking? This is essential because only then is there institutional support to provide a high level of service.
• Does your banker stand by his or her word? This means that over time, your banker proves to be honest and trustworthy, doesn’t overpromise and maintains a high level of confidentiality.
• Does your banker have your best interests at heart? Sometimes this may take the form of challenging you to substantiate why you want to pursue an investment, growth, addition or significant change to your operation. While your banker should always be a problem-solver, a good banker isn’t afraid to ask the difficult questions and even challenge you on occasion.
How does your banker rate? Ask yourself these questions on a regular basis to ensure your banker truly is a trusted adviser.
Dave Coggins is chief banking officer/executive vice president for Investors Community Bank.