HOLLYWOOD, Fla. -- Advisor sales productivity reached $228,684 in 2010, up from $216,738 in 2009, to Kehrer-LIMRA founder Ken Kehrer and chief operating officer Scott Stathis, who presented annual trends at the 2011 Bank Insurance and Secruities Association conference in Hollywood, Fla.
That 6 percent gain still left productivity below 2008 levels, the analysts said.
Total average gross production was up 15%, driven by an increase in value of assets under management. This was driven by strong growth life insurance sales by bank financial consultants and an increase in fee-based revenue, they said.
Platform rep productivity was up roughly 25%, up to $1400 per platform rep, compared with a historical average of about $1,200, according to Kehrer-LIMRA, Kehrer-LIMRA, which provides information and consulting services to financial institutions.
W\hat’s driving that productivity is fixed annuities, but in the gap between fixed annuity sales and platform rep productivity is growing. Filling that gap, said Stathis, is that platform reps are doing a good job selling variable annuities and life insurance.
Product Trends
As for product trends, fixed annuities have been down in the product mix, while variable annuities and recurring revenue are up.
Life insurance sales year over year have been impressive in 2009 and 2010, said Stathis.
“As a channel, we’re doing a good job. More and more reps are getting comfortable selling life insurance,’’ he said.
That life insurance is still primarily single premium. While the actual volume of life insurance sold is relatively small, banks have been the fasted-growing distribution channel for two years in a row, which is “turning heads,” says Stathis.
In terms of program revenues compared with bank deposits was “ho-hum,” Kehrer said, up just 1% at $1,600 per $1 million in deposits. Part of that weak showing was due to a big influx in deposits over the past year.
Net income margins brought more than quarter of revenue into the bottom line. Profit margins in 2009 were about 23%, estimated 2010 numbers based on monthly surveys are probably at 27%.
Predictions for 2011 according to a recent Kehrer-LIMRA survey showed a trend toward increasing financial advisor sales forces: 54% said the sales force would increase at 5-10%, 21% or respondents said that they would increase their consultant ranks by more than 10%.
Platform growth was slightly less positive but still 50% predicted a growth in platform reps for next year. “This is encouraging because the typical bank needs to increase its ranks by 70% to be in line with best practices,” said Kehrer.
When asked if they would shift their platform reps to referrals only or to sales only, the vast majority planned to keep their platform rep duties the same as it’s been.
Trendy products in 2011 are in the following order managed money, life insurance and market linked certificates of deposit, followed by long-term care/annuity combos and indexed annuities. At the bottom of the list were long-term-care/life insurance combos and exchange-traded funds.
But all banks are overwhelming looking at more fee-based business and financial planning in the coming year. And it has become much more important to integrate investment programs with trust services. “The key to growing and moving forward is integrating the two,” said Stathis.
Silver Lining
Product diversification is a silver lining of the past few years, says Stathis. “You’re seeing reps getting more comfortable with many more products.”
As a result there’s a paradigm shift from asset allocation to product allocation, something consumers are less connected with.
“Annuities are now an asset class,” said Stathis. “I envision a rep sitting down with clients and showing them a list of products and saying, ‘We usually suggest these products.’”
The products include variable annuities, annuities with guarantees, income annuities, systematic withdrawal plans, life insurance and long-term care insurance.
