PrimeVest Financial Services, Inc. has tapped into a substantial demand for third-party marketing services among banks and credit unions that want temporary solutions or want to limit their level of commitment.
“It’s been more successful than we anticipated,” said LeAnn McCool, national sales manager for PrimeVest, in St. Cloud, Minn. PrimeVest is an affiliate of Cetera Financial Group, in El Segundo, Calif.
More than 90 financial institutions are using the company’s Rep on Demand program, which was launched in February. Banks and credit unions have long partnered with third-party marketing firms such as PrimeVest to get access to the services and staff needed to sell investments and insurance.
In traditional programs, the sales staff for such partnerships are dual employees of the financial institution and the third-party marketer. But in PrimeVest’s Rep on Demand program, the advisers are employed by PrimeVest alone, and they work remotely at a PrimeVest call center.
The service is aimed at budget-conscious financial institutions that want to start new investment services programs, serve smaller client accounts or handle transactional business.
“A lot of financial institutions are trying to build out their wealth management capabilities,” said McCool. “They don’t want to underserve the mass market, but they do want efficiencies along with profitable, recurring revenue.”
It’s also a way for banks and credit unions to plug unexpected gaps in staffing, added McCool, whose company has about 500 financial institution clients overall.
Credit Unions in particular have gravitated to Rep on Demand, said McCool. Those with a multi-state footprint have done so because they want assurance of demand in certain geographic areas before they put dedicated financial professionals there, she said.
Rep on Demand was a big reason American Airlines Federal Credit Union, in Fort Worth, Texas, became a PrimeVest client this fall, said Sherry Reams, managing director of Flagship Financial Group, the credit union’s private-label investment sales program.
Reams’ business has clients in some 45 states—and in some regions there are very few clients, she said.
“It starts to get very expensive to license people in a state for one or two (clients),” she said. “It makes sense to service them remotely.”
AAFCU, which has $5.2 billion of assets and 220,000 members, has an investment team that includes seven full-service financial consultants.
Under normal partnership arrangements between financial institutions and third-party marketers, the financial institutions get the lion’s share of revenue—and they also pay the rep and provide benefits. Under Rep on Demand, Primevest handles payroll and benefits, and the financial institutions get less revenue.
The success of Rep on Demand comes at an opportune time for Primevest. The company says its assets under administration and its number of clients are about where they were three years ago. The third-party marketing business overall has faced challenges not only because of the market’s turbulence but because fewer financial institutions are starting brokerage programs, according to Kenneth Kehrer, director of research firm Kehrer-Limra.
“Historically, these third-party broker-dealers have played the role of getting new banks, virgin banks, into the industry,” he said. “Now when they get clients, they mostly get them from each other.”
A few years ago, the industry got a lift when perhaps two-dozen large banks shuttered their broker-dealer programs and turned over their brokerage operations to third-party firms. There hasn’t been much wind in the industry’s sails since then, leading to questions about whether it has matured or merely stalled, said Kehrer.
The Rep on Demand model could be a way for the third-party-marketing industry to regain some momentum, said Kehrer. Remote reps could help improve banks’ coverage, he said.
What’s more, it makes sense because the financial industry has been moving away from face-to-face relationships, he added. Wirehouses and major banks have been trying to move smaller accounts into call centers, for example.
Primevest’s Rep on Demand business has gathered $1 billion of assets under administration, and its team of nine financial planners, in addition to sales assistants, figures to grow, said McCool.
“Based on the demand, we have every anticipation of continuing to grow this team,” she said.
The current team of financial planners offers a menu of commission-based and fee-based services; they are licensed in all states and have an average of 14 years’ experience, said McCool. Most have worked as advisers in banks or credit unions, she added.
The nine reps work on a salary-plus-commission structure. These advisers can lose clients if their financial institution transfers the business to their internal reps. On the other hand, they don’t need to prospect for clients, McCool noted.
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