Bank-owned broker dealers are doing a better job selling annuities than banks and credit unions that work with third-party marketing firms, according to a new study from Kehrer Bielan Research & Consulting.
In 2014, the 25 largest bank-owned broker dealers produced almost $22 billion in fixed and variable annuity sales, or 57% of the total sold by all banks and credit unions. Third-party broker dealers, in contrast, accounted for just 38% of the annuities sold, or $14.7 billion.
The reason for bank-owned broker dealers' enhanced ability to sell annuities was tied to their tendency to utilize platform bankers in support of financial advisors, the authors of the report said. "The banks and credit unions affiliated with the third-party BDs are much less likely to license customer-facing bank and credit union staff to sell annuities," Tim Kehrer, senior research analyst at Kehrer Bielan, said in a statement.
Bank-owned broker dealers drummed up $11.7 billion in fixed annuity sales, or 58% of all fixed annuities sold by banks and credit unions, and $10.2 billion in variable annuity sales, or 56.5% of all variable annuities such banks and credit unions sold. The 10 largest third-party marketing firms sold $7.3 billion in fixed annuities, or 36% of the total sold in the channel, and $7.5 billion in variable annuities, or 41.2% of the total sold in the channel.
"Even as firms take steps towards more financial planning and advisory activities, a significant amount of fixed and variable annuities are distributed to their client base," Peter Bielan, a principal of Kehrer Bielan, said. "We find that variable annuities are more popular in banks and credit unions that still do mostly transaction business."
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