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BISA Reports Big Drop In Bank Fixed Annuity Sales

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NU Online News Service, Feb. 17, 2004, 4:32 p.m. EST – Bank broker-dealers ran into turbulence in the fourth quarter of 2003.[@@]

The stock market did great last year, but registered representatives at bank broker-dealers generated 7% less commission revenue during the latest quarter than they generated during the fourth quarter of 2002, according to the Bank Insurance and Securities Association, Wayne, Pa.

Average commission revenue for investment reps who hold Series 7 retail licenses and work full time in banks fell to $21,990 per month, from $23,740. Fourth-quarter production was also down 6% from the total for the third quarter.

Licensed bankers averaged $1,820 in monthly gross commissions, down 3%, BISA reports.

BISA based the quarterly survey report on data collected by researchers at Kenneth Kehrer Associates, Princeton, N.J. AXA Distributors, New York, sponsored the survey.

Earlier in 2003, bank customers seemed to be shifting toward variable annuities and away from fixed annuities.

During the fourth quarter, bank customers continued to retreat from fixed annuities, but variable annuities had trouble capturing the assets flowing out of fixed annuities.

The share of bank investment revenue coming from variable annuities crept up to 18%, from 17%, but the share coming from fixed annuities fell to 34%, from 47%, BISA says. The share coming from VA sales was down from 21% in both the second and the third quarters of 2003.

In terms of retail bank deposits, FA sales rose to $773 per $1 million in bank deposits, up from $761 per $1 million in deposits in the fourth quarter of 2002, but VA sales shrank to $415 per $1 million in retail deposits, from $483.

The softness in VA sales was due largely to a shift toward investments in stocks and bonds, BISA figures show.

Life insurance sales accounted for 2.9% of bank brokers’ revenue in the quarter, down from 3.1% in the third quarter, but life insurance revenue penetration increased to $92 per $1 million in bank retail deposits, up from $38 per $1 million in retail deposits.