Insights | 02.26.19
Financial Institutions Are Deepening Relationships with Investment Clients
Engaging in planning with a client is clearly key to becoming the client’s trusted financial advisor. Kehrer Bielan research has demonstrated that assets flow to the advisor who creates the plan. That said, planning penetration — the percent of clients who have the financial plan created with your firm — should be a higher priority.
According to benchmarking surveys recently released by Kehrer Bielan, 5.7 percent of investment client households in banks and credit unions that track financial planning activity had a financial plan created or updated by their advisor last year. That pace promises to close the gap that financial institutions face in becoming the trusted financial advisor of their investment clients.
Kehrer Bielan research on the MacroMonitor consumer financial decisions database found that 11 percent of U.S. households have a financial plan, but only 10 percent of those plans were provided by an advisor in a bank or credit union. Among clients who have an investment relationship with the financial institution, only 2.7 percent have a financial plan created by their bank-based advisor.
Thus, the institutions that provided data on their financial planning activity are increasing their planning penetration over historical levels. But, they are in the minority. Only 40 percent of the banks and credit unions track the planning activity of their advisors. Planning penetration is undoubtedly even lower in the other institutions.
The benefits of better plan penetration include better client retention and satisfaction, more assets under management and greater share of the client’s wallet. Thus, planning penetration should be a bigger deal to banks and credit unions.
Kehrer Bielan conducts three separate benchmarking surveys of bank-owned broker dealers, credit unions, and regional and community banks that partner with third-party broker dealers. This year’s benchmarking surveys encompass 201 financial institutions and more than 10,000 financial advisors — far more than any other survey of the bank insurance and securities community. The combined benchmarking database provides an unparalleled opportunity to benchmark performance, examine industry trends and identify best practices.