Bank-based adviser productivity stayed relatively flat in February, in large part reflecting January's weakness. But observers are enthusiastic about the rest of 2010.
Adviser productivity at banks totaled an average of $15,200 in transactions, up from $15,121 in January, according to the Bank Insurance and Securities Association's Monthly Sales Productivity Benchmark, which is based on Kehrer-Limra data.
Transactions with fees for February were an average of $24,953, compared with $27,540 in January.
Hypothetically, February's average production should be a lot lower. January is one of the months in which quarterly money management fees are collected, which generally causes a spike once per quarter. The following month's figures are always down from that — they include 12b-1 fees, but no asset management fees.
But this past quarter, there is not much difference between January and February production. "January's increase was much less than it normally is, so the decrease in February is much less than it normally would be," said Scott Stathis, Kehrer-Limra's chief operating officer. "When you look at that month after, the drop is usually 25% to 30%. This time it was only 9%, not because February was so strong, but because January was so weak."
Year over year, February was not that bad — adviser production increased 26% from a year earlier. But month-to-month performance clearly indicates that rep production has a long way to go until it can be considered back on track. "The $15,200 figure is normally in the twenties," Stathis said. "We haven't been out of the teens for the past year, which is pretty weak and not where we should be."
However, Stathis thinks advisers will not have long to wait until they start experiencing an uptick in their performance. "The market is starting to cooperate, so variable annuities will get more attention, and the spread between fixed annuities and CDs is rising. We could be in an upward slope for the rest of the year."
Advisers in Kehrer-Limra study groups are correspondingly more positive in their outlook, he said.
Meanwhile, platform reps, who are bankers licensed to sell simple investment and insurance products, had a pretty good February, with production rising 36%, to an average of $799 in February, up from $587 in January, selling 50% more fixed annuities and 102% more life insurance, Stathis said.
"It isn't hard for them to sell 102% more life insurance because they normally sell so little of it," he said, "but a 50% increase in fixed-annuity sales is significant."
Stathis suspects widening spreads have made short-term annuities more attractive than certificates of deposit, explaining the bump in sales.