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A Simple Formula For Helping Bank Annuity Sales To Prosper

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A Simple Formula For Helping Bank Annuity Sales To Prosper


Ever since the early 1980s, when savings and loan associations in California, Florida and Ohio began selling annuity products, annuity business in financial institutions has been growing.

Sales of fixed and variable annuities through banks, thrifts and credit unions in 2002 reached $48.9 billion, a 22.4% share of the entire individual annuity market, according to LIMRA.

Its hard to argue with the fact that financial institutions as a whole have done a fine job of providing consumers with the benefits of annuities. Some, however, have had far greater success than others.

Why? There are a number of factors that contribute to the success or failure of a financial institutions annuity platform or investment sales program. These factors typically fall into the following broad categories:

Senior management support.This is probably the most important factor behind the success or failure of a financial institutions annuity sales. If senior management doesnt actively provide visible (not just verbal) support to the program, it will languish.

Senior managers must assist with the program launch, attend campaign rollouts and constantly communicate to all employees the importance of the sales program to the institution and to each and every employee. In many cases, senior management must also spearhead integration of the retail investment program with an existing trust department to ensure that all areas are working together to serve customer needs.

Employee selection. The platform or dedicated sales representative and the program manager must all be the right people for their jobs.

First, employees chosen to become licensed platform representatives should be those who volunteer for the role instead of being assigned to it.

Good candidates will have had prior success in promoting new bank products, will be customer-focused and will be looking for career advancement.

Dedicated investment representatives should also have some demonstrated success before being hired. If they come from outside the financial institution environment, they must be able to assimilate a new type of culture and customer base.

Dedicated investment representatives also must have good customer profiling skills and sensitivity to all regulatory and legislative compliance issues.

The program managers function is critical. This person must be adept at motivating and providing appropriate feedback to licensed representatives so that overall program goals are achieved. Only he can provide strong internal direction. This cannot come from any outside wholesalers or third party marketing organization used by the bank. They will not have the power or control needed to enforce the programs sales or compliance goals. If the annuity program is not managed well and is merely treated as just another transaction, it is guaranteed to underperform.

Training.Proper training is also critical. If not supplying its own training, the financial institution can use training from its insurance carrier or outside marketing organizations. If it uses such outside training, however, the bank should ask for references, both for generic and product training. Specific questions to ask other institutions using the training include the following:

–Does the training help licensed representatives develop and sharpen their skills in critical areas like profiling customers properly to determine their needs?

–Is quality referral training available for non-licensed employees?

Referral training is critical. Increasing referrals to the investment sales staff not only helps to improve the programs bottom line but also helps keep customers from moving their funds to financial products sponsored by competing institutions.

Web-based training should also be considered. It can be an important adjunct to face-to-face training or used wherever a live trainer is not feasible due to geography, timing or budget constraints. The consistency of message provided by Web-based training is typically quite helpful from a compliance perspective as well.

A small number of organizations offer Web-based referral and investment sales training that is specifically designed to meet the needs of financial institutions.

Setting goals. Program managers and licensed representatives must each have clearly defined goals in order to measure performance. Program managers, product providers or third party marketing organizations should create jointly a business plan that presents a road map for the success of the annuity sales program. Investment representatives should also have their own personal business plans and goals, typically developed with the assistance of their broker/dealer or TPM organization.

Once goals are set, there should be ongoing campaigns to push sales and motivate the licensed representatives. All sales and marketing campaigns should be coordinated between representatives, senior management, the marketing department and front-line branch staff so there is no confusion about what will happen when.

Again, bank management and employees should take extreme care to meet all regulatory compliance goals and standards.

Rewards and incentives. Its a mistake to pay licensed representatives by salary only or to fail to provide proper incentives to bank employees for referring customers. Rewards and incentives, either monetary or nonmonetary, should be timely and linked to good performance. Branches should provide regular sales recognition programs. Product providers will usually help sponsor them.

While there are many factors that can contribute to the failure of a financial institution annuity sales program, perhaps the biggest single reason is that the institution doesnt know what it doesnt know.

Thats where quality product providers, TPM organizations and training firms come in. They are all a tremendous information resource waiting to be tapped.

is president and CEO of NFC Consulting Group, a consulting and training firm in Chicago. E-mail: [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 28, 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.


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