Most third-party investment product providers increased their sales through banks last year, a survey found, but observers say the bear market will make it hard for them to do the same this year.
Sales last year at more than two-thirds of 17 firms surveyed by Kenneth Kehrer Associates of Princeton, N.J., were higher than in the preceding year. Companies that sell a high proportion of fixed annuities had a particularly good year, said Kenneth Kehrer, president of the consulting firm.
However, much of last years sales revenue growth came either when third-party marketers took on more bank clients or in a strong first quarter that made up for weakening volume the rest of the year, Mr. Kehrer said.
Sales of variable annuities and mutual funds will continue to struggle along with the stock market, he said.
Third-party marketing firms supply investment products and brokerage services to banks that are too small to own a broker-dealer or choose not to have one. Some also package products and give sales support to larger banks that run their own brokerages.
Independent Financial Marketing Group Inc. of Purchase, N.Y., a subsidiary of Liberty Financial Cos. of Boston, was the top seller of mutual funds and annuities through banks, with $3.086 billion. A 31% decline in mutual fund sales through this channel from a year earlier was offset by an 88% increase in fixed annuity sales. Variable annuity sales rose 2%, to $1.553 billion.
Robert Spadafora, president of Independent Financial, attributed the mixed results to market volatility but said that variable annuities are starting to make a comeback this year, as people seek more tax-exempt investments. However, he said, overall sales so far this year are down from a year earlier.
We have a number of people who have been investing with us for the past five to 10 years for whom last year was their first negative return, he said. The key for bank brokers is to be proactive with clients, make sure youre the one calling them.
If one were to include individual stock trades PrimeVest Financial Services Inc. of St. Cloud, Minn., a unit of the Dutch financial company ING Group, was the top overall seller of investment products through banks with $5.637 billion of volume.
Bankmark of Morris Plains, N.J., a subsidiary of Conseco Inc. of Carmel, Ind., was the second-biggest seller through banks. It also posted the biggest percentage sales increase from the previous year 64%, to $5.561 billion.
IFC Holdings Inc. of Tampa, Fla., which had been the top performer in the 1999 survey, would have held the third spot last year. However, it reported separate figures for its two operating units after National Planning Holdings of Santa Monica, Calif., the brokerage arm of Jackson National Life Insurance Co. of Lansing, Mich., bought it in September.
Invest Financial Corp. sold $3.252 billion of products through banks last year, and Investment Centers of America sold $1.721 billion.