Households that buy investments and insurance where they bank are among a retail financial institution's most profitable and desirable customers, according to a report issued today by LPL Financial LLC.

The study, "The Value of an Investment and Insurance Customer to a Bank," conducted by Kenneth and Christine Kehrer and Peter Bielan, and co-sponsored by LPL Financial, also found that such customers are more likely to stay with that institution than customers with multiple banking relationships. It also determined retail institutions that under-invest in their investment and insurance services are missing the opportunity to increase the "stickiness" of these highly desirable customers.

Andy Kalbaugh, managing director and president of LPL Financial's institutional services division, said the study is designed to help institutions see the opportunity that exists with a successful and growing investment and insurance program.

"Intuitively, many executives at financial institutions have believed in the strategic importance of the investment and insurance services customer," said Kenneth Kehrer, founder of Kehrer-LIMRA and co-author of the study. "But until now, there has not been a source of industry data to test this belief, and this appears to have led to under-investment by banks and credit unions in their investment and insurance services capabilities."

The study draws on data from the MacroMonitor, the retail financial-services and marketing database that measures consumer behaviors. The 2010/2011 study is based upon a national sample of 4,374 households, including 1,500 affluent households. The survey is conducted every other year by the Consumer Financial Decisions Group of Strategic Business Insights, formerly part of SRI International.

Additional findings include:

Consumers who have purchased an investment or insurance product from their primary bank or credit union have checking account balances that are 16% higher than those of households without a brokerage or insurance relationship.

Brokerage customers have savings account balances that are on average 85% higher than those of non-brokerage customers.

Brokerage and insurance customers have more than twice as many credit products and 11% more remote banking products than customers who have not purchased an investment or insurance product from their primary bank or credit union.

-Jim McConville