In his first conversation with the press since LPL’s quiet period, Dan Arnold, president of the financial institutions division said he expects to see significant growth in the bank channel.
“I think the growth prospects are terrific,” he said. “We have an overall demand for advice which tends to help this segment of the industry.”
More specifically, Arnold said the demographics of the marketplace are favorable. Banks and credit unions have grown in their own stature as institutions that offer investments, which has enhanced client size and average size of wallet.
He said he expects banks will continue to have the unique advantage of a warm client base of bank customers that they can cross sell to and leverage, he said. “The penetration rates still have tremendous amount of upside,” he said.
LPL is by far the largest broker-dealer in the bank channel, with 750 financial institutions, which employ over 2,300 full-time advisors and 4,000 platform reps.
Growth suffered somewhat last year as customers contended with the tailwinds from the financial crisis, but “we continued to win 70%-80% of the available opportunities out there,” Arnold said. “Moving into 2011 with market conditions and operating conditions at financial institutions improving, we see greater opportunity. We saw very strong existing customer growth, customers did a great job of capitalizing on improved market conditions and focusing on that opportunity.”
While he did concede that banks and credit union customers don’t automatically associate these institutions with investment services, he says that they are getting more aggressive about getting the message out.
“We’re seeing an evolution of an industry that went from a stance of we’re going to try this to being more aggressive,” Arnold said. “I do believe that the industry has gotten much better at adding the value prop and we’re very competitive to the wires and other industry channels, but I think we still have some ways to improve our reputation and stature.”
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