Who garnered the top slots on last year's third-party marketer report card? To find out Bank Investment Consultant teamed up with American Brokerage Consultant's Dick Ayotte to ask their bank partners. A total of 261 banks responded with data on 33 TPMs, however only seven TPMs had enough bank ratings (more than four) to be included. TPMs were rated on 22 factors, ranging from compliance expertise to banking knowledge, sales management to technology and marketing.

The upshot was no surprise. The top three TPMs held on to their leads from 2007: Investment Professionals (IPI) was the valedictorian as it has been for the past three surveys. Raymond James came in second and Essex National Securities (ENSI) captured the bronze. The remaining four TPMs were Invest, Primevest, LPL and Infinex, in that order.

Like banks, TPMs, are consolidating, dropping to seven significant players from 14 three years ago. And the study found a trend toward a greater use of TPMs. Even among large banks-$1 billion or larger-the majority (78%), employ third-party marketers. "Some banks that had their own broker-dealers have decided it was too expensive for them to maintain their own broker-dealers and have now turned to TPMs," says Heywood Sloane, managing director of the Bank Insurance and Securities Association. "Historically, banks graduated from a TPM to having their own broker-dealer as they got bigger." But growing demand for technological efficiency and compliance expertise has discouraged some banks from creating their own B-D.

Banks looking to start or improve their investment programs can't go wrong with any of the top seven. "TPMs have become all things to all banks and credit unions, so their differences have become blurred," says Ken Kehrer, director of consulting firm Kehrer-Limra. "There isn't a bad apple in the bunch. So it becomes finding the TPM that fits your needs."

That said, there are differences among the top three TPMs. IPI is a rapidly growing Texas-based company. Most of its reps are "managed" or work for the TPM and not the bank. "Managed programs are more profitable for the bank," explains Jay McAnelly, IPI's executive vice president and national sales manager. "Cost of employment is expensive. We offer banks the choice whether they want us to handle that expense or not. It also takes all the HR liability away from the bank."

Raymond James, by contrast, works with only dual employees or advisors who are all managed and paid by the bank. A nationally known brand, it has the size and scale to be self-clearing, which can give it tighter control over the back office rather than being a step removed, says Kehrer. Raymond James also has large independent and wirehouse operations, which add to the TPM's resources and scale. Some banks might want the brand recognition of Raymond James behind them, says Kehrer, others might prefer a TPM like IPI or ENSI that specialize only in banks.

For example, while Katherine Beddow, program manager at Flagstar Bank in Troy, Mich. says she didn't like the wirehouse affiliation of TPMs like Raymond James and LPL that serve other channels. "We felt that with a big firm like LPL and Raymond James we'd be lost in the shuffle," she says. Meanwhile, Dave Hanson CEO of Fulton Financial Advisors in Lancaster, Pa., chose Raymond James for its size and access to other kinds of advisors who are fee-based and don't depend on bank referrals.

No. 3 ENSI is concentrated with only 31 bank partners and 373 reps. Although it works with banks of all sizes, its goal is to develop banks with over $1 billion in deposits to have $10 million-producing programs. It has far more platform reps (678) than IPI (75) and Raymond James (0). "Many banks supplement their sales force by licensing or registering bankers," says Kehrer. "If that's important to you, then you might want to work with Essex."

THE PERCENTAGES

Among the top seven TPMs in the study, bank partners of invest had the highest closing rate at 70%, IPI was almost equal at 68%, and Raymond James not far behind at 64%. As for average production per rep, Raymond James was the clear leader followed by invest and Essex. No. 1 TPM, IPI, had the lowest production per sale rep.

Interestingly, Raymond James, which has the highest production per rep also has the highest cost structure. "We're extremely competitive, but we certainly don't compete on price," says John Houston, managing director of Raymond James' Financial Institutions Division. "I think there's too much emphasis on pricing and not enough on delivering quality services and having the right expertise at the advisor level."