Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Annuities > Fixed Annuities

BISA: Bank 3Q Broker-Dealer Sales Slip

Your article was successfully shared with the contacts you provided.

NU Online News Service, Nov. 25, 2003, 5:45 p.m. EST – Broker productivity at regional and national banks slipped during the third quarter to $23,393 per month, 14% below the average of $27,055 achieved in the third quarter of 2002, according to new data from the Bank Insurance and Securities Association, Wayne, Pa.[@@]

The latest quarterly production average was 25% below the all-time quarterly high of $31,209 recorded in the first quarter of 2001, according to the survey results, which were compiled by Kenneth Kehrer Associates, Princeton, N.J.

The survey was sponsored by AXA Distributors, New York, a unit of AXA S.A., Paris, and a securities unit of Bank of America Corp., Charlotte, N.C.

Banks told Kehrer researchers that their retail securities programs’ contribution to net income, before overhead allocation and taxes, averaged 32% of bank broker-dealer revenue in the third quarter, 2% below the average for the third quarter of 2002 and 37% below the average for the second quarter of 2003.

Although broker productivity was down, licensed platform bankers held steady. The typical platform rep generated monthly gross commission revenue of $2,021 during the quarter, 2% below the average for the same quarter last year but up slightly from the average for the second quarter of 2003. Monthly licensed banker productivity had fallen in four of the previous five quarters and remains 27% below the high of $2,752 recorded during the first quarter last year, BISA reports.

The average monthly gross production of licensed bankers was $1,782 in July, down 8% from the June average. Platform rep productivity jumped 20%, to $2,140, in August and held at about that level in September.

The monthly record for licensed platform banker productivity is $2,980. The record was set in April 2002, at the height of the fixed annuity boom, BISA says.

While fixed annuities continue to provide the largest share of bank broker-dealer revenue, their share now has shrunk for five straight quarters. Bank variable annuity sales increased but did not make up for the drop in fixed annuity sales.

Fixed annuities had accounted for over half of bank broker-dealer revenue from June 2001 until September 2002. Their share slipped to 43% in January and 38% in February, BISA says.

By way of comparison, only 25% of total bank retail securities revenue came from fixed annuities in the third quarter of 1999, BISA says.

Variable annuities provided 21% of bank securities program revenue in the third quarter, the same share they held in the second quarter. VAs had provided 17% of retail securities program revenue in the previous three quarters, including the third quarter of 2002.

For the fifth consecutive quarter, VA revenue exceeded mutual fund revenue at the typical bank brokerage.

Banks’ mutual fund revenue was 14% of total bank broker-dealer revenue in the quarter, up from 12% a year earlier but slipping from 15% in the second quarter 2003.

General securities transactions captured 17% of bank securities revenue in the third quarter, up from 8% a year earlier.

The share of bank brokerage revenue coming from sales of life insurance slipped to 1.6% in the third quarter, from 2.3% in the previous quarter. Comparable figures for the third quarter of 2002 are not available. BISA did not track the bank brokerage revenue share coming from life insurance in 2002.

Other sources provided 15% of bank brokerage revenue, up from 9% in the same quarter last year. “Other sources” include trading profits, interest income, fees from managed money accounts, trailer commissions and marketing allowances. Revenue from fee business amounted to 14% of the other revenue, or 1.7% of total bank brokerage revenue.

The average bank retail securities program reported annualized revenue of $2,306 per $1 million in bank retail deposits in the third quarter of 2003, 13% above average for the third quarter of 2002.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.