LPL Study Confirms That Cross-Selling Is Actually Working Well For Banks

Monday, March 05, 2012 12:03
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LPL Study Confirms That Cross-Selling Is Actually Working Well For Banks

Tags: banks

The "bank-sold" investment channel receives a lot of scorn from less captive advisors, but banks remain heavily invested in selling mutual funds and annuities for one simple reason: it makes them money.

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LPL learned that the customers who buy funds and insurance from their bank tend to be more affluent than those who don't.

 

That's not exactly a revelation because the banks prospect the customers with higher account balances, and only those with cash on hand can spend it anyway.

 

What's noteworthy is that the cross-selling relationship actually works the other way. People who bought investments or insurance from their bank tend to take out twice as many loans from the same institution than those who get their funds and annuities elsewhere.

 

That's the real win for banks. By becoming the quarterback for their mass affluent customers, they're on the spot when it's time to refinance the house or buy a new car. 

 

And the interest and origination fees are where the real money is.

 

Your clients already get their investment products through you, so this isn't an issue for them. But if you know a local bank that doesn't have an in-house advisory team, it might be worth introducing yourself as a potential partner.

 

After all, they want to keep their mass affluent customers from straying just as much as their bigger rivals do. And if you can offer them the same kind of stickiness -- under your banner or through a private label arrangement -- then they might be better positioned to hold their ground.

 

Not all banks are wirehouses with their own captive advisory armies, after all. And with you in the driver's seat, the ultimate client may get a better deal.

 

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