Investors’ continued interest in annuities helped lift bank brokers’ and licensed bankers’ sales production last fall, according to a report from the Bank Securities Association.

In fact, Kenneth Kehrer, president of Kenneth Kehrer Associates in Princeton, N.J., which provided the report’s data, said bank reps probably "clobbered" non-bank brokers throughout much of the year in terms of their dollar volume of sales.

Banks had a banner year at selling investment products because investors shied away from mutual funds and stocks in favor of fixed and variable annuities throughout much of 2001, according to Kehrer, who tracks these sales. This helped banks because bank brokers sell more annuities than their non-bank competitors.

He estimated that fixed annuities account for 20% to 33% of bank broker sales. When demand for this product grows — as it did last year — bank brokers have an advantage over brokers less familiar with the product, he said.

The Wayne, Pa.-based BSA, whose study was released Jan. 8, said that bank brokers sold an average of $26,508 of investment products in November, up from $25,766 in October. Though sales were down from the year’s high of $27,901 in August, they have been growing overall since January, when bank brokers averaged $19,681, Kehrer said.

Licensed bankers, who sell investments part-time, saw their sales production drop 9.6% in November, to $2,602, Kehrer said. However, the overall trend has been up, he said. In January, licensed bankers averaged $1,579 of sales.

More banks are using licensed bankers to sell basic investment products, in addition to their full-service brokers, and having more investment salespeople should increase sales, Kehrer said. Though he could not say how many licensed bankers there are, 42 of the top 50 banks now use them, he said.

"The common wisdom is that licensed reps couldn’t sell anything because they couldn’t deal with market volatility," he said, but this has proven untrue.

Michael Dibbert, managing director of financial institutions at AXA Financial in Dallas, which distributes the association’s report, said the data suggest that banks have gotten better at dividing business between brokers and licensed bankers, averting internal competition. This has let banks work on squeezing more production out of their reps, he said.

The more comfortable banks get with sales by licensed bankers, Kehrer said, the more responsibility banks seem willing to give them. Roughly half of all licensed bankers now sell variable annuities and mutual funds, which requires more training than life insurance and annuities.

Kehrer also said that, though the stock market fell in March and April 2001, production by licensed bankers rose to $2,434, from $1,993 in February, and production by other bank and non-bank brokers declined. "In some cases they were selling the only thing people were interested in" — fixed annuities — Kehrer said.

The recently improving market also tends to whet investors’ appetite for mutual funds and variable annuities. "The leading indicator is the stock market," Kehrer said. "In the past few weeks it’s come back to where it was in September, and investors don’t want to be left out."

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