As a growing number of investors switch from commission-based brokerage to fee-only RIAs, the market has responded in kind. FINRA data shows that the number of FINRA-registered broker-dealers fell by 17% in the past eight years, while SEC-registered RIAs have grown by 12%. This rise and fall are largely due to the investor preference of paying fees rather than commissions. With a changing market in mind and a recovering economy, investment firms are looking forward to securing their future clientele while also maintaining their current base.

It’s in the financial institutions’ best interest to support their investment programs to achieve retention. In our Leveraging Data For Compensation in LPL Bank and Credit Union Programs webinar Peter Bielan of Kehrer Bielan Research and Consulting shared that 47.6% of households that have an investment at their primary depository institution say they would not switch where they bank as opposed to 37.2% that did not purchase an investment. Loyalty to the financial institution is bolstered by client engagement throughout multiple divisions within the organization.

In the article How Private Banks are Courting the Next Generation of Wealthy Investors, key leaders at large banks share their takes on the market’s current trends. One notable trend was that younger clients don’t need to split their investment portfolios among multiple institutions. Instead, they like the more comprehensive solutions of larger institutions, which may hold a brokerage, RIA, and private bank. These institutions are taking advantage of their variety of services, using cross-selling tactics to keep clients within their organization. Clients, who have purchased an investment at their primary financial institution, boast on average 228% more in checking balance and 70% more in savings than their non-investing counterparts.


Investment Relationship With Primary Institution

Apart from the logistical tactics financial institutions are starting to use, firms are looking towards connecting with their clients on a more personal level. Catherine Keating of BNY Mellon said, “coming through a global pandemic, people are very focused on purpose and values. It makes you stop and think about what’s important to you.” Some value-based tactics include offering specialized investment strategies that focus on environmental, social, and governance factors, along with investor teams mirroring the more diverse clients they serve.

Is your firm adapting and changing its tactics to reach the next generation of investors??

Watch our webinar: Leveraging Data For Compensation in LPL Bank and Credit Union Programs

Read the article from Financial Planning: How Private Banks are Courting the Next Generation of Wealthy Investors

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