The dozen largest third-party broker-dealers supporting the investment and insurance services business in banks and credit unions generated $1.4 billion in revenue in 2011, up 9% from the year before, according to the 2011/2012 TPM Report by consulting firm Kehrer Saltzman & Associates.
The $1.4 billion was the highest total revenue the third-party marketing firms produced since Kehrer Saltzman & Associates began tracking TPM firms in 2006.
The revenue growth was driven by a 7% increase in financial advisor productivity and better market conditions that increased asset portfolio values, said Kenneth Kehrer, a principal of Kehrer Saltzman.
The revenue gains were achieved despite a continuing decrease in the number of advisors deployed by the top 12 TPM firms. In 2011, 6,234 advisors were registered with third-party marketing firms, down 20% from 2008, according to the report.
Kehrer Saltzman attributes the decline in advisor headcount to the consolidation of the bank and credit union industry, which reduced the number of FDIC-insured banking institutions from 9,630 in 2001 to 7,366 in 2011. The number of FDIC banks reporting investment services revenue also fell over the past decade – from 2,326 in 2001 to 1,835 in 2011, according to Kehrer Saltzman.
The consolidation has not helped TPM firms gain more business with banks and credit unions. Less than one-fourth (24.9%) of all banks offer investment and insurance services to their customers, barely more than in 2001, when 24.3% were offering services, the report found.
“The future of TPMs hinges on whether they can penetrate the large number of banks that are on the sidelines of investment services,” Dr. Kehrer said in a statement.
The dozen largest third-party marketers account for 36% of all bank and credit union sales of annuities. The institutions that partner with TPMs account for 44% of the variable annuity premium sold through financial institutions but just 30% of fixed annuity sales, according to Kehrer Saltzman.