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Fixed annuities remain the vanguard of bank insurance programs, a recent study sponsored by Independent Financial Marketing Group, Purchase, N.Y., found. All of the banks participating in the study say their licensed bankers sell fixed annuity products, compared to only 26% that sell variable annuities through the platform staff.

Many banks are expanding their platform programs beyond fixed annuities to include other financial products, says the study, conducted by Kenneth Kehrer Associates, Princeton, N.J.

Half of the banks sell mutual funds from outside vendors and another 26% sell their own brand of funds. Forty-five percent sell life insurance, the study, “Best Practices in Platform Programs,” found.

Kehrer calls the high number of platform staff selling life insurance, including customer service people, one of the surprises of the study.

Kehrer polled 38 U.S. bank executives responsible for managing their banks platform staff licensed to sell annuities, life insurance or mutual funds. The banks ranged in deposit size from $880 million to $220 billion.

Sales success rates for bank platform reps differed sharply from product to product, according to Kenneth Kehrer, study author and head of his research firm.

The study evaluated bankers product success by calculating their participation rates, which represent the percent of bankers who, in any given month, actually sold the products they were licensed and taught to sell.

Participation rates ranged from a high of 64% for fixed annuities to a low of 29% for both life insurance and variable annuities, Kehrer found.

Participation in sales efforts improved considerably with experience, at least for life insurance, the study noted. The average life insurance participation rate in banks that had been selling that type of product for more than five years was 41%, compared to 27% for younger programs, the study found.

Fixed annuities proved to be the road to profitable mutual fund sales for many bank platform staff. In the average bank, 70% of staff selling FAs also sell mutual funds, while only half of those that sell FAs also sell variable annuities.

The typical platform banker sells five fixed annuities from three insurers, according to the study.

For those selling mutual funds, typical product selection was 32 funds from three fund families.

For variable annuities, the typical product offering was three VAs from two insurers.

The average licensed banker in the studied banks is responsible for selling 22 different financial products. (In one bank, licensed bankers were expected to sell over 200 different kinds of investment and insurance products.)

The study found that banks most commonly selected products for their platform staff based on the products simplicity. Eighty-seven percent of banks cited lack of complexity as the reason they picked a financial product for sales by their platform staff.

Other widely used criteria for product selection included support from a providers field wholesalers, support from internal wholesalers and ease of submitting business.

Almost all the banks set sales goals for their licensed bankers, often based on branch size. Typical monthly goals, the study found, included two or three sales, $25,000 to $75,000 in total sales or $3,000 in revenue.

Almost all the banks had a Series-7 licensed financial consultant or broker presiding over the bank platform staff. That individuals most important role, in most cases, was as a trainer or coach.

More than nine out of 10 banks that used financial consultants for training had them conduct joint sales interviews with platform reps. Other favored coaching approaches were mock sales interviews and product training.

Banks gave considerable attention to compliance with regulations governing sales of financial products, such as federal rules against tying the sale of an insurance product to other financial products sold by the bank.

About three-quarters of banks had more than one executive reviewing compliance, the study found.

For two-thirds of banks, the compliance officer was the banks broker-dealer or insurance agency. Fifty-three percent had the review done by an investment sales manager responsible for the bank branch.

Thirty-four percent had the financial consultant assigned to the branch review compliance, while 21% had a third-party marketer or broker-dealer perform the function.

Among banks offering trust services, about two-thirds said they expect platform staff to make referrals to their trust department. Yet only about half of these actually set quotas for such referrals.

Study sponsor Independent Financial is a unit of the Sun Life Financial Group, Toronto.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 27, 2003. Copyright 2003 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.