Bank brokerage had a terrible 2009 as investment revenue per $1 million in retail deposits fell 12%, according to Kehrer-Limra, which now has full data for last year.
Kehrer-Limra uses revenue per $1 million in retail deposits to level the playing field between the largest and smallest banks. Banks set a high of $1,829 of investment revenue per $1 million in deposits in 2008, but the revenue number slipped to $1,601 per $1 million in deposits last year.
The number through June 30 this year is $1,579 per $1 million in revenue, the firm said in its latest Bank and Credit Union Investment Program Benchmarking Study, but the bulk of the Princeton, N.J., consulting firm's results focus on 2009, when profit on revenues fell 75% as advisers shifted to low-margin products.
Sales of annuities — both fixed and variable — suffered last year as revenues from the fixed product slipped 25% and from the variable, 21%, due to low rates and investors' reluctance to go anywhere near the equity market. Their subsequent flight to safety led to a 17% uptick in bond sales. Life insurance, which can be used as a fixed-income account that yields income depending how it is set up, produced a 15% revenue gain.
Investors' growing confidence in the market is leading to growth in bank-based advisers' average monthly production. It had taken a hit in 2009, down 8% from the preceding year's $25,609 (including commissions, trails and recurring revenue), at $23,692. However, this year's results through June 30 are much healthier, up 15%, to $27,310 per month.
The continued low-rate environment means annuities are still taking a hit, down 27%. However, investors' interest in the stock market is coming back; variable annuity revenues were up 16% and mutual funds, 31%.
Scott Stathis, a managing director at Kehrer-Limra and its chief operating officer, credits at least part of this growth to good salesmanship and a can-do spirit among program managers and advisers.
