New national study says financial institutions can reach and retain more affluent clients
NEWARK, N.J.--(BUSINESS WIRE)-- Customers who purchase investment and insurance products where they bank have on average $348,000 of investable assets, 84 percent more than financial assets held by other banking customers. However, only two out of every 10 affluent customers have purchased these products from their bank or credit union, according to The Value of an Investment and Insurance Customer to a Bank, a study by Kenneth and Christine Kehrer and Peter Bielan. The study was co-sponsored by Prudential Financial, Inc. (NYSE: PRU) and Western National Life.
“Overall, banks and credit unions have a terrific opportunity to market to households likely to buy investment and insurance products,” said John Gies, vice president and national sales manager, Prudential Annuities. “While many of these institutions are focused on banking products and services as their primary source of fees, a potential strategy for boosting profits – especially among highly desirable customers – is hiding in plain sight.”
The study also found that investment and insurance customers are 34 percent more likely than other households to stay with their current financial institution – even if they receive better offers. By contrast, selling the typical customer additional banking products did not yield meaningful increases in customer loyalty.
“The research confirms that the number of products is much less important than the type of product in predicting how ‘sticky’ a customer is likely to be,” said Gies. “Nevertheless, banks and credit unions have a significant opportunity to redeploy resources and cross sell strategies. Those strategies work well today on core banking products, but research shows a far greater return by repurposing those efforts to focus on investment and insurance products for existing bank customers.”
“The results provide the proof needed for banks and credit unions to seize the opportunity for developing investment and insurance relationships with existing customers,” said Kenneth Kehrer, Ph. D, founder of Kehrer-LIMRA and co-author of the study. “The ones that commit to these relationships will clearly have a competitive advantage.”
According to Bruce Abrams, president and CEO of Western National Life "Dr. Kehrer's research highlights the untapped potential among affluent bank and credit union customers, who have a tendency to concentrate their financial services at the same places where they bank. We hope that these findings prove useful to the banks and credit unions with whom we do business, and Western National is proud to have been involved with this study.”
The Value of an Investment and Insurance Customer to a Bank also found:
Consumers who have purchased an investment or insurance product from their primary bank or credit union have checking account balances that are 16 percent higher than households without a brokerage or insurance relationship. Brokerage customers have savings account balances that are on average 85 percent higher than non-brokerage customers. Brokerage and insurance customers have more than twice as many credit products and 11 percent more remote banking products than customers who have not purchased an investment or insurance product from their primary bank or credit union.The study draws on data from the MacroMonitor, the largest comprehensive retail financial-services and marketing database that has measured, analyzed, and interpreted consumer attitudes, behaviors, and motivations continuously since 1978. The 2010/2011 MacroMonitor is a national sample survey of 4,374 households, with an oversample of 1,500 affluent households, reweighted to be representative of the U.S. population. This comprehensive survey is conducted every other year by the Consumer Financial Decisions Group of Strategic Business Insights, formerly part of SRI International.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $901 billion of assets under management as of December 31, 2011, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.
Prudential Financial, Inc.Darrell Oliver, 973-802-9627darrell.oliver@prudential.com
Source: Prudential Financial, Inc.
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