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Banks Find Value in Catering to Investment Clients

January 27 – Consumers who purchase an investment where they bank will keep their deposit and credit products longer, say researchers with LPL Financial and Kehrer Bielan Research & Consulting. That finding was  the main take-away from a co-sponsored study, “The Value of an Investment Client to a Bank or Credit Union.”

The study built upon the findings of similar research done in 2012 that recognized the value and return that investment programs bring to financial institutions.

“This study provides our industry important insight into the contribution that a wealth and investment program can make to a financial institution’s bottom line,” said Andy Kalbaugh, managing director of LPL Financial Institution Services, which provides third party investment, advisory and wealth management services to more than 740 banks and credit unions nationwide. “Historically, banks and credit unions have not considered their investment program part of their core business. This study actually shows that making their investment program a bigger priority will generate growth in loans and deposits.”

Among the key findings of the study:

— Financial institutions have achieved better penetration of their client base with investment services than generally believed – 13% of U.S. households own an investment purchased at their primary depository institution.

— These investment clients are more sophisticated than banks and credit unions first considered.

— 39 percent of households that own an investment purchased at their primary bank or credit union are mass affluent, with assets between $100,000 and $1 million, and more than 10 percent have assets greater than $1 million.

— When compared to households without an investment relationship with their financial institution, clients that have purchased an investment from their financial institution:

— have 38 percent greater checking account balances

— have 140 percent greater savings deposits

— are much more likely to use every kind of credit product offered

— are much more likely to own an asset management or advisory account, and three times more likely to have purchased that account where they bank

— Developing an investment relationship with a bank or credit union client builds much more loyalty than selling them another banking service.

— By under-investing in their investment services businesses, retail financial institutions are missing the opportunity to leverage the relationship with these highly desirable customers.

“Financial institutions are still the most trusted financial services providers, by far, but they have fallen short on leveraging that trust into becoming the primary provider of a client’s overall financial services need,” said Dr. Kenneth Kehrer, co-author of the study.

“These findings have profound implications for how banks and credit unions implement their strategy of deepening client relationships,” said Keith Burger, national sales manager of the financial institutions division of AIG Retirement Services, a co-sponsor of the study.

The study analyzed the latest consumer data from the MacroMonitor, the largest comprehensive retail financial-services and marketing database, which is considered the gold standard by many in the financial services industry, and reinforced the findings from the previous study in 2012.

The study was sponsored by LPL Financial and co-sponsored by AIG Retirement Services, Northstar Asset Management Group and Voya Financial.

About LPL Financial

LPL Financial, a wholly owned subsidiary of LPL Financial Holdings Inc. (Nasdaq:LPLA), is a leader in the financial advice market and serves $465 billion in retail assets. The Company provides proprietary technology, comprehensive clearing and compliance services, practice management programs and training, and independent research to more than 13,900 independent financial advisors and more than 700 banks and credit unions. LPL Financial is the nation’s largest independent broker-dealer since 1996 (*based on total revenues, Financial Planning magazine, June 1996-2014), is one of the fastest growing RIA custodians with $84 billion in retail assets served as of September 30, 2014, and acts as an independent consultant to more than 40,000 retirement plans with approximately $110 billion in retirement plan assets served. In addition, LPL Financial supports approximately 4,400 financial advisors licensed with insurance companies by providing customized clearing, advisory platforms and technology solutions. LPL Financial and its affiliates have 3,397 employees with primary offices in Boston, Charlotte, and San Diego. For more information, please visit

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