Essex Corp. was the top marketer of mutual funds and annuities through banks last year, according to a consultant's study.
Boosted by its fixed annuities niche, the New York-based firm topped competitors with $2.6 billion in total sales, according to Kenneth Kehrer Associates, Princeton, N.J.
The next-biggest seller was Marketing One Securities Inc., Portland, Ore., which sold almost $2 billion worth of funds and annuities through banks.
Invest Financial Corp., Tampa, was the third-highest seller through the bank channel with $1.3 billion.
Essex and Marketing One capitalized on a continual climb in interest rates last year that helped push investors into fixed annuities, which offer a stable return. Both firms specialize in the sale of fixed annuities. This year Essex saw almost $2.2 billion in fixed annuities sales, 26% more than in 1993 when interest rates were lower and mutual funds were the rage.
A fixed annuity is a contract sold by life insurance companies intended for retirement planning. Clients invest money that builds up at a fixed rate on a tax-deferred basis over a specified period of time. They are often viewed as an alternative to bank-issued certificates of deposit.
"Essex is in a lot of banks as the annuity wholesaler, but the banks use their own broker-dealer for mutual funds," explained Mr. Kehrer. "So as the tide shifted toward annuities, it really helped them, because that's their main business."
Marketing One sold $1.5 billion in fixed annuities.
The leading seller of variable annuities for the fourth year in a row was Planco Group, a Paoli, Pa., firm that saw $347 million of sales, up 14% over 1993. Variable annuities are more like mutual funds in that investors usually choose from a number of debt and equity options. These investment products tend to be riskier than fixed annuities, but offer the potential for greater returns.
Invest Financial Corp., Tampa, saw the highest sales of mutual funds among the investment product marketers with $705 million, but that was down 52.7% from 1993.
Two big players, GNA Corp., Seattle, and Marketing One saw 64% and 68% drops respectively in their mutual fund sales over 1993.
Both lost big banking company clients that chose to bring their investment programs in house. GNA lost its servicing contract with BankAmerica Corp in 1993. Marketing One lost Wells Fargo & Co. in January 1994..
GNA's fixed annuity sales jumped 44% in 1994, however, making it the third-largest seller of that product.
Mr. Kehrer said now that interest rates have come down again, mutual fund sales at banks are increasing and fixed annuity sales are declining slightly.
"So, right now the companies that emphasize mutual funds, their sales are improving. The companies that emphasize fixed annuities are having a difficult year so far," Mr. Kehrer said.
