Magazine article American Banker

Third-Party Bank Sales Up in 2000; Downtrend Seen

Magazine article American Banker

Third-Party Bank Sales Up in 2000; Downtrend Seen

Article excerpt

Most third-party investment product providers increased their sales through banks last year, a survey found, but observers say the bear market will make it hard for them to do the same this year.

Sales last year at more than two-thirds of 17 firms surveyed by Kenneth Kehrer Associates of Princeton, N.J., were higher than in the preceding year. Companies that sell a high proportion of fixed annuities had a particularly good year, said Kenneth Kehrer, president of the consulting firm.

However, much of last year's sales revenue growth came either when third-party marketers took on more bank clients or in a strong first quarter that made up for weakening volume the rest of the year, Mr. Kehrer said.

Sales of variable annuities and mutual funds will "continue to struggle" along with the stock market, he said.

Third-party marketing firms supply investment products and brokerage services to banks that are too small to own a broker-dealer or choose not to have one. Some also package products and give sales support to larger banks that run their own brokerages.

Independent Financial Marketing Group Inc. of Purchase, N.Y., a subsidiary of Liberty Financial Cos. of Boston, was the top seller of mutual funds and annuities through banks, with $3.086 billion. A 31% decline in mutual fund sales through this channel from a year earlier was offset by an 88% increase in fixed annuity sales. Variable annuity sales rose 2%, to $1.553 billion.

Robert Spadafora, president of Independent Financial, attributed the mixed results to market volatility but said that variable annuities are starting to make a comeback this year, as people seek more tax-exempt investments. …

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