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Study Certain services help retain membercustomers
SAN DIEGO (3/5/12)--A new study says that financial institutions' members/customers who buy investments and insurance services where they bank are more likely to stay with the institution--and be more profitable to the institution--than member/customers with multiple banking relationships.

The study, "The Value of an Investment and Insurance Customer to a Bank," was conducted by investment broker dealer LPL Financial LLC, a wholly owned subsidiary of LPL Investment Holdings Inc. in San Diego. It examined  the role of investment services and insurance customers at retail financial institutions.

The findings:

  • Households that buy investment and insurance products where they bank are among the retail financial institution's most profitable and desirable customers because they are more likely to stay than those in multiple relationships.
  • By underinvesting in these services, the financial institutions are missing an opportunity to increase the "stickiness" of highly desirable member/customers.
  • Member/customers who purchased these products from their primary bank or credit union have checking account balances that are 16% greater than households without a brokerage or insurance relationship.
  • These member/customers have savings account balances that are on average 85% more than non-brokerage account member/customers; and
  • Brokerage and insurance customers have more than twice as many credit products and 11% more remote banking products than customers who have not purchased an investment or insurance product from their primary bank or credit union.
The study was designed to help institutions see the opportunity that exists from a successful and growing investment and insurance program, said Andy Kalbaugh, managing director and president of LPL Financial's Institution Services division.

"Until now there has not been a source of industry data to test this belief [that investment and insurance services are strategically important], and this appears to have led to under-investment by banks and credit unions in their investment and insurance services capabilities," said Kenneth Kehrer, founder of Kehrer-LIMRA and co-author of the study.

The study drew on data from MacroMonitor, a retail financial services and marketing database.

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