ReliaStar's PrimeVest third-party marketing subsidiary has emerged as the winner among the ING Americas units that were candidates to lead the charge in cross-selling investment products through banks and broker-dealers.
Cross-selling the three fund families ING Americas now owns into its annuities and employee benefits products is clearly how it intends to flex its marketing muscle. Glenn Hilliard, president and CEO of ING Americas, said that retail and work-site sales fuel more than half of the 25% that the company contributes to the overall pretax profit of the parent ING Group.
PrimeVest's victory shows how dominant ReliaStar has become in the structure and conceptual future of ING less than three months after the Dutch company bought it. In the new corporate structure unveiled this week, mutual funds distribution and retail financial services - two of the four new business segments - are being led by John Turner, the former chief executive officer of ReliaStar, and Bob Salipante, former president and chief operating officer of ReliaStar.
The retail financial services division is to be in charge of cross-marketing, which Mr. Salipante said on a conference call Thursday will be a key to reaching ING's revenue growth objective.
Mr. Salipante also said that PrimeVest will manage both bank and broker-dealer distribution. The activities had been split previously. And as part of its management, the unit will distribute into group insurance products, employee benefits, and executive benefits. "As customers have grown 401(k) balances, it's a tremendous opportunity to bring in Bob's organization," said Tom McInerney, general manager and chief executive officer of ING's U.S. Worksite Financial Services. He was previously president of Aetna Financial Services.
Total sales of annuity products through all channels - banks, insurance agents, wire houses, and broker-dealers - are expected to have increased from $4.5 billion in 1999 to about $6 billion this year. Fixed annuities accounted for 20% of sales, with the remainder in variable annuities. In 2000, fixed annuities are on track to be 28% of total sales - nearly double what they were in 1999, according to rating firm Fitch Inc.
Mr. Salipante sees the greatest cross-selling opportunity in putting mutual funds into insurance and work-site products. With the acquisitions of ReliaStar and Aetna, ING has three mutual fund families - ReliaStar's Pilgrim, with more than 40 funds; Aetna's Altus, with 20; and ING's own family, which has 20 funds. "It's a broad array, from money market to stable value to value and growth, both domestic and international," he said.
Aetna's bank sales, will continue to be made directly and through its financial planning broker-dealer subsidiary, FNIC, Mr. Salipante said.
Fitch analyst Martha Butler said that ING has put most of its focus on the broker-dealer channel rather than on banks. "They've put a lot of effort and muscle behind the broker-dealer channel," she said. ING started buying its own broker-dealer network about four years ago."
ING's network of broker-dealers serving independent financial advisers has been put under a new entity, ING Advisors Network, which will be part of Mr. Salipante's division; it is to manage distribution of insurance, banking, and mutual fund products as well as financial planning and advisory services.
Miles Gordon, FNIC president, has been named chief executive officer of the network, and bank distribution, insurance management, and financial planning management will come under its aegis.
According to sources, the bank distribution functions formerly led by ING's Financial Institutions Division are being relocated from Des Moines to ING's offices in Hartford, Conn.