The continuity of relationships with distributors is a key to success in selling annuities and other insurance and investment products in the ever-changing marketplace, the presidents of the distribution arms at Nationwide and Manulife say.
Matt Riebel, the president of Nationwide's Financial Institution Distributors Agency Inc., said his company's relationships with 350 banks have served it well as the banking industry consolidates.
"We work with every major bank program in the United States," he said, including such as Citigroup Inc., Wells Fargo & Co., Bank One Corp., and SunTrust Banks Inc. His unit sold $3.3 billion of annuities through banks last year.
Robert T. Cassato, the president of Manulife Wood Logan, the annuity distribution and marketing arm of Manulife Financial in Toronto, said that distribution relationships would help make a success of Manulife's planned purchase of John Hancock Financial.
Mr. Riebel spoke at the UBS Asset Gathering Challenge in Boston Wednesday, and Mr. Cassato spoke there Tuesday.
His company's relationships with so many banks have kept its products on their shelves even after major mergers, Mr. Riebel said. As big banks get bigger, the providers that are only in one of the two merging companies are often the first to be jettisoned, he said. Because Nationwide often has relationships with both merger partners it has been able to keep its shelf space in the post-merger company.
With banks "shelf space means a ton," he said. At an independent financial planner, a provider could be one of 58 whose products are sold, he said, but at a bank the provider roster could be just a handful of names.
A key to success is the attitude that, "if you work with us, we guarantee that you'll make more money than you did the year before," Mr. Riebel said. Too many firms focus on taking away business from other insurers, he said.
"Just taking a larger piece of the pie away from other companies within a bank client's business doesn't do [the bank] any good," Mr. Riebel said. Instead, Nationwide focuses on trying to help the bank expand its book and make more money.
Banks are also looking to add products - like life insurance and retirement plans - to add revenues beyond what they can get from annuities, he said.
Mr. Cassato's unit at Manulife focuses on developing relationships with distribution outlets, including banks, financial planners, wire houses, and agents.
Strong wholesaling remains very important because of the complexity of products like annuities, Mr. Cassato said, and he predicted that direct sales would not become common any time soon.
Manulife has mainly emphasized manufacturing products, instead of owning its distribution, though he acknowledged that Hancock comes with a career agency staffed by 1,700 agents.
Manulife and Hancock announced in September that they intend to merge. The deal is expected to close this quarter. The combination would let both companies grow in scale, expand Manulife's reach into the United States, broaden its distribution, and add products, Mr. Cassato said.
Nationwide is the fifth-largest seller of annuities through banks, according to data from Kenneth Kehrer Associates in Princeton, N.J. It was No. 4 in fourth-quarter variable annuity sales, with volume of $304 million, and No. 5 in fixed annuities, with $282 million. Neither Manulife nor Hancock ranked in the top 20 annuity sellers through banks in the quarter.
