Kehrer Finds September Hit On Bank Broker Dealers Less Than Expected
Bank broker/dealers came through the market instability that followed the Sept. 11 terrorist attacks much better than expected, says Kenneth Kehrer, head of the Princeton, N.J. research firm, Kenneth Kehrer Associates.
Kehrer reports the typical bank broker/dealer experienced a 20% decline in revenue during September but notes that many had expected much worse.
Similar findings were reported by the Bank Securities Association, Wayne, Penn.
In its September survey of banks, the BSA found that broker-dealer productivity held up well, considering that there was only one week of production before the impact of events on Sept. 11th, that markets were closed for a 2nd week and that securities prices for the remainder of the month were volatile.
The typical bank broker/dealer produced $154 in revenue per $1 million in bank retail deposits during September, one-third less than the high water mark set in March, reports the November edition of the Kehrer-Equitable Monthly Bank Investment Services Monitor.
“August had been a banner month for investment sales in banks, but the equity markets were reeling from dismal economic news in early September,” comments Michael Dibbert, managing director of the reports sponsor, Equitable Distributors, New York, which is the wholesale distribution company of AXA Financial, Inc.
“With September having three fewer business days than August and the fact that the markets were closed for four days following the Sept. 11 disaster, it was not unreasonable to expect that bank investment sales would be down 30% overall, even if the same daily activity had been maintained from August,” Dibbert says.
While sales were down in all product lines, sales of fixed and variable annuities held up better than mutual funds sales, which were down 30% in the typical bank, says the Monthly Monitor. Additionally, bank broker/dealers benefited from an increase in other sources of income, such as trailer fees, interest and trading profit.
“Overall, the results for September reaffirm the confidence that bank customers have in the financial advice provided by bank broker/dealers in these uncertain times,” says Dibbert.
For the Monthly Monitor, Kehrer surveys a sample of bank retail investment services programs every month. Twenty-nine banks participated in the September survey.
The BSAs study found that broker productivity in banks in Sept. fell to $21,476, down 23% from $27,901 in August.
At the same time, licensed banker productivity dropped back to $2,358, from $3,462 in August, a 31.8% drop.
BSAs index of bank broker/dealer revenue slipped to 115, a 20.1% drop from the 144 level achieved in August. The index is based on a benchmark of 100, set in 1998 to gauge the rises and falls of bank broker/dealer productivity.
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.