Financial advisors are an indispensable repository of investment and retirement information, not to mention a gateway to a wide variety of different financial products.
Despite this, three-fourths of American households do not have a personal financial advisor, according to a recent LIMRA study. However, most households have established a financial services relationship–with their banks.
What’s more, consumers are increasingly turning to their local banks for the convenience and credibility of savings and retirement planning advice. This advice now often includes annuity solutions, usually traditional fixed annuities, but in recent years, variable annuities too.
In view of these trends, banks are re-examining their current annuity offerings and annuity carrier relationships. They are looking for new ways to reinvigorate sales.
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This poses the question: When banks evaluate carrier lineups, which annuity distribution players will stay in the game?
The question applies to evaluations by third-party marketers (TPMs), too. The TPMs came onto the banking scene in the 1980s, aiming to help bridge the gap between banks and insurance using their relationships with insurance companies that some banks could not have at the time. Today, TPMs work directly with many bank representatives to determine bank client needs and position FA offerings, including fixed index annuities, and essentially influence annuity selection at many community banks.
The relationship of the banks and TPMs, and the criteria they use for selecting annuity distribution players, sheds light on the potential future of annuity players in the bank distribution channel. Data on this emerged from a recent telephone survey of 32 banks and TPMs, representing over 82% of annuity industry sales through banks in 2005. The survey was conducted by Dr. Kenneth Kehrer, a director of Kehrer-LIMRA, and commissioned by ING U.S. Financial Services.
One finding: Average banks and TPMs have annuity selling agreements with 21 annuity providers, with a range from 5 to 40 selling agreements. However, TPMs work with even more carriers, on average, than banks.
In fact, TPMs work with an average of 19 actively sold carriers versus 11 actively sold carriers for larger banks.