Wachovia Corp. is beefing up its life insurance marketing effort with a team of agents stationed throughout the bank.
In January, the Winston-Salem, N.C. banking company will assign 15 insurance agents to work with bankers in the private banking, trust, and small-business-lending departments.
The bank is also negotiating with 10 underwriters to broaden its selection of life insurance products. The bank plans to sell disability and long-term-care policies as well as traditional term-, universal-, and whole-life insurance.
The bank's expansion of its small insurance operation comes in the wake of a Supreme Court ruling early this year giving national banks more latitude to sell traditional insurance products.
In the past, Wachovia's insurance sales have come from investment reps who sold policies as a side plate to more lucrative securities and mutual funds.
"Licensing investment representatives to sell all products doesn't work," said Ellen McKay, a director of Optima Group Inc., a Fairfield, Conn.-based financial services consulting firm. "Insurance is a specialized area. You need agents to be successful," she added.
David L. Holton, president of Wachovia Insurance Services, is currently recruiting candidates for his new insurance sales team.
"A lot of folks with entrepreneurial spirit would want to be in on the ground floor of being in a new delivery channel," he said.
Mr. Holton's strategy is more aggressive than those of most other banks that have ventured into life insurance this year. Most have made tentative moves into life insurance sales on their own, testing the waters with mass marketing such as statement stuffers, or licensing their brokers to sell insurance.
To assure the new hires are credible, Mr. Holton is conducting extensive background checks. He is even asking to see their tax returns to validate stated sales activity.
Mr. Holton has spent the past two years developing a competitive alternative for his customers. "I'm not as concerned about volume figures," he said.
To maintain strength in the investments and financial planning area, banks must add insurance to their till, according to Optima's Ms. McKay.
"It's a long road. Wachovia's aim is to get involved for future business," she said. "One may not have a return the first year, but banks will suffer a negative return if they don't offer insurance."
