Bankers wondering if they should push life insurance through their platform personnel are closely watching Fidelity Federal Bank in Glendale, Calif.
The $3.7 billion-asset thrift, which last summer began selling term insurance through branch employees, has developed an investment products program that has become the envy of many bankers.
Since Fidelity Federal added life insurance to its platform program, all eyes have been on the thrift to see if the product can generate the same results that mutual funds and annuities have.
"In the ideal platform program, every single employee is a dedicated investment representative," Robert P. Condon, president and chief executive of Fidelity Federal's Gateway Investment Services, told a group of bankers at an insurance conference in Miami recently.
A debate is raging among bankers on how to sell investment products and life insurance. Mr. Condon says no one is better suited to hawking the products than the employees who have first contact with the customer. Many banks are training such platform personnel to sell mutual funds and annuities.
But life insurance adds a complication that many bankers say only a specialist can handle, because the product takes much more time to sell than mutual funds and annuities.
Discussing life insurance means dealing with the touchy topic of death. Moreover, customers' health determines the kind of products they are eligible for, a situation that doesn't arise in the sale of mutual funds and annuities.
"If the platform people really are active with all the things they should be, they don't have the time or inclination to sell sophisticated insurance products," said Richard White, executive vice president overseeing trust, brokerage, and private banking at Birmingham, Ala.-based SouthTrust Corp.
Fidelity Federal's Mr. Condon raised eyebrows when he revealed sales and pretax income numbers showing the thrift had generated a 36.8% growth in pretax earnings between 1992 and 1996, while slashing expenses nearly in half to $1.2 million.
Fidelity Federal's brokerage subsidiary increased pretax earnings to $3.5 million in that four-year period. And the thrift has boosted its transactions of mutual funds and annuities nearly 400%, from 3,396 to 12,500.
Mr. Condon is convinced that life insurance sales will soon become just as meaningful to the bottom line of his brokerage as mutual funds and annuities. How does he plan to do it? Slowly.
Fidelity Federal is first trying out Protect 10, a term policy designed by CNA Insurance Group, Chicago, specifically for platform staff. Adding one product at a time is Fidelity Federal's style.
"You have to bring platform salespeople through a series of barriers," he said. "Start with deposit products, CDs. Then get them a life license and sell annuities."
The idea is to get them used to these products one by one, then train them to take a holistic approach to a customer instead of merely conducting transactions. "If you can teach a sales force to do that, you can teach them to sell insurance," he said.
One reason Mr. Condon's thrift has been successful at cross-selling investment products is that it is primarily a retail thrift, taking deposits and making loans to individuals. But large commercial banks are trying to cross-sell a variety of sophisticated services to business executives and the wealthy.
"They don't need to know about trust and everything else you'd find in a traditional bank," said Kenneth Schweiger, vice president of bank distribution at New England Cos., Boston.