Kehrer Bielan Report Series

Strategic Business Insights' Consumer Financial Decisions (CFD) group, in collaboration with Kehrer Bielan Research & Consulting, is pleased to announce the availability of a series of executive reports that focus on the financial-services industry. This series takes advantage of the expertise and experience of Ken Kehrer, Peter Bielan, and Jon Gabriel, who—since 1983—have studied the unique advantages and challenges of banks as financial-services providers. Building on CFD's breadth of understanding of (and data about) consumers' financial needs, Kehrer Bielan leverages the MacroMonitor to produce these premier, in-depth executive analyses.

Report 7

The New Importance of Financial Planning - Part Two: Impact on Client Loyalty and Share of Wallet

(Sponsored by Cetera Financial Institutions)

Households that are attracted to financial planning tend to be wealthier, and be more open to a range of investments instead of keeping their assets in savings accounts. But only 1 out of every 10 financial plans being used by US households today were prepared by a financial advisor working in a bank or credit union. If households reward the individual or institution that prepared their financial plan with increased loyalty and allocation of financial assets, banks and credit unions are missing a huge opportunity.

Cetera Financial Institutions commissioned Kehrer Bielan Research & Consulting to leverage consumer financial data from the MacroMonitor together with Kehrer Bielan's proprietary database of performance benchmarking data to demonstrate the New Importance of Financial Planning. In Part One, we described households that have a written financial plan in terms of their demographics, assets, channel and product usage, and their attitudes towards investing. In Part Two we drill down further, controlling for where the household obtained the financial plan. By isolating those households that obtained their plan from a bank or credit union and examining their financial behavior, we demonstrate the broad advantages that financial planning offers those institutions. Read more

Report 6

The New Importance of Financial Planning - Part One: Who Has a Financial Plan?

(Sponsored by Cetera Financial Institutions)

Financial institutions have encouraged advisors to shift from a commission-for-transaction model to a model grounded in fees for asset management. Despite steady progress, advisory business still accounts for less than one quarter of industry revenue, and within most firms a small percentage of advisors are driving the majority of the business. And external forces such as the advent of "robo" advisors, and regulatory pressure will compress advisory fees. To overcome this challenge, firms will have to look to financial planning as a way to differentiate their advice. Banks and credit unions need a wakeup call to understand the urgency of the situation, and the broad advantages that financial planning offers.

Cetera Financial Institutions commissioned Kehrer Bielan Research & Consulting to leverage consumer financial data from the MacroMonitor together with Kehrer Bielan's proprietary database of performance benchmarking data to demonstrate the New Importance of Financial Planning. In Part One we describe the characteristics of the 15,000 US households that have a written financial plan obtained from a financial professional and compare them to the general population. Herein we explore their demographics, assets, institution and product usage, and their attitudes towards investing. Read more

Report 5

The Value of an Investment Client to a Bank or Credit Union

(Sponsored by LPL Financial, AIG, NorthStar Realty Securities, and Voya)

Investment services have struggled to get a seat at the table where executive decisions are made about institutional strategy and resource allocation, in part because investment services provide such a small direct profit contribution to the overall banking or credit union enterprise. This study demonstrates that the value of adding an investment relationship to an existing banking relationship is much greater than the direct revenue from an investment sale, because the investment relationship increases customer loyalty much more than adding an additional banking relationship. By selling existing clients investment products, the institution will increase the profitability of its banking products because the client will maintain those relationships longer.

Many institutions have underinvested in investment services while they tried to build loyalty by selling additional banking services. The study makes a case that banks and credit unions are leaving money on the table from deposit and credit services by under penetrating their opportunity in investment services.

The Value of an Investment Client to a Bank or Credit Union updates our 2012 study, using the latest data from the MacroMonitor, the gold standard of consumer financial surveys. Read more

Report 4

Maximizing Your Customer's Experiences Through an Integrated Wealth Management Offering

(Sponsored by Cetera Financial Institutions)

Since the introduction of retail securities brokerage into banks and credit unions in the 1980s, financial institutions have struggled with fitting this new business into their traditional structure. Many of them put brokerage, trust and private banking in separate lines of business, with the belief that trust and private banking services are offered to the wealthy, while the broker-dealer services are offered to the mass affluent. The general result is that the retail investments business has operated independently of the financial institutions' more traditional wealth management services and its wealthier clients.

As wealth management becomes more holistic, the flaws in this approach become more prominent. Today it's the elephant in the room, a challenge most financial institutions still haven't solved. This new white paper by Dr. Kenneth Kehrer, the latest Cetera Guide-to-Growth installment, uses data from the MacroMonitor to show how segregation of private banking, trust and brokerage hurts the fundamental profitability and effectiveness of the banking enterprise, and underserves their wealthy clients. Read more

Report 3

The Opportunity for Credit Unions in Investment and Life Insurance Services

(Sponsored by CUNA Brokerage Services, Inc.)

Credit unions enjoy a great deal of trust from their members—more than any other financial services providers. And their member households are much more affluent than the industry understands. But many of them do not view their credit union as their primary financial institution or trusted financial advisor. Why? Because credit unions have not done enough to make members aware of their investment services. Credit union households in the affluent and mass affluent segments use many other financial services providers, who are also trying to win the member's deposit and loan business. If they are successful, the entire member relationship is undermined and is at risk. This study by Kehrer Saltzman & Associates analyzes MacroMonitor data to describe the scope of the opportunity for credit unions in offering investment services, and how credit unions can overcome the barriers to penetrating that opportunity. Read more

Report 2

Who Buys Annuities, and Who Is Likely to Buy Them?

Marketing annuities has become increasingly more challenging in recent years. Interest rates are depressed, living benefits have been constrained, and some underwriters have abandoned the business altogether. Yet annuities offer valuable benefits that are particularly important to many consumers, and they form the core of the investment and insurance business for many distributors. There continue to be many consumers today who are disposed to purchase annuities, and even some who say they are likely to make an annuity investment in the coming months. New research enables annuity marketers to identify those consumers, target them for a variety of marketing and sales campaigns, and understand the messages that will engage consumers who are receptive to annuity solutions. Read more

Report 1

The Value of an Investment & Insurance Customer to the Bank

For many years, bank investment and insurance-services businesses have been challenged to demonstrate their relevance to the overall banking enterprise. The profit contribution of investment services typically accounts for just a few percentage points of the bank's overall bottom line. Because the net income contribution may be marginal, the investment and insurance services are often marginalized, with the result that banks underinvest in this business, constraining its growth. But by underinvesting in their investment and insurance-services businesses, banks are missing the opportunity to increase the stickiness of highly desirable customers. Read more

Check back soon for information about additional reports in this series.