First Union Corp. has hired 22 annuity wholesalers from Essex Financial Corp. to bring its annuity sales efforts closer to home.
"They thought we did such a good job recruiting and training people, they took our wholesalers," said Kevin Crowe, chairman of Essex. The New York-based firm will continue to train and support the Charlotte, N.C.- based banking company's 3,000 annuity sales field representatives, as it has for the last three years.
First Union accounted for more than $1 billion of Essex's $3.1 billion of annuity sales in 1996, according to Kenneth Kehrer Associates, Princeton, N.J. In 1995, the banking company sold only $166 million worth of annuities.
Banks have been increasingly seeking more control over their training and marketing forces by hiring them away from marketing firms, according to industry observers. For example, Wells Fargo & Co. hired a team of annuity wholesalers from Marketing One in 1994, as part of a larger restructuring of its insurance unit.
At the time, the company also brought most back-office functions of its annuity program in-house.
After losing Wells Fargo as a client, Marketing One was forced to lay off 13% of its sales force the next year.
But Essex is not expected to be so profoundly affected by First Union's move, industry observers said. First Union has no plan to bring in-house the marketing and training services it currently gets from Essex, the bank spokesman said.
Mr. Kehrer, the consultant, said some bankers want their wholesalers to report directly to them rather than to a third-party firm, giving them more control over their sales force.
"The move is unusual but not unnatural," Mr. Kehrer said of First Union's decision.
Another observer said First Union's plan was probably driven more by ego than by a desire to save money. Indeed, Mr. Kehrer said, the savings the bank will reap from this move are negligible.
In an interview with the American Banker last month, Essex's Mr. Crowe said his company would focus this year on midsize banks with less than $15 billion of assets. The company is going to explore bringing its sales tracking software, EASIS, to smaller banks, he added. EASIS is currently available to Essex's larger clients.