By Cyril Tuohy
Average bank investment program revenue per household rose to $46 last year, a 21 percent increase over 2012, as advisors managed more money for fewer households. This was among the findings of an annual benchmarking study by Bank Insurance & Securities Research Associates (BISRA).
BISRA also found that deposit revenue penetration in 2013 — the amount of program revenue generated per $1 million of retail deposits — was at its highest level since the Great Recession.
Part of the average bank investment program revenue increase was due to the big stock market gains of last year. Also, the number of bank households per full-time financial advisor shrunk to about 11,000 households last year from about 12,000 in 2012, said Janet Cappelletti, head of research for BISRA.
As a result, average investment program revenue per bank household increased steadily to $46 last year, an increase from $38 in 2012 and $34 in 2011, Cappelletti said.
Since 2010, the number of bank households per full-time financial advisor has shrunk 33 percent as the average assets under management per broker has increased 35 percent over the same period, BISRA said.
Bank investment programs are steering their wealthiest customers to top financial advisors, which “allows for deeper relationships leading to greater share of wallet and access to outside assets,” Cappelletti said.
Customers with fewer assets are steered toward the banks' “platform reps,” she said.
Managing more money for fewer clients has led to record median amounts of managed money contributing to the bank revenue mix, and also to record bank revenues generated by full-time financial consultants, the BISRA survey found.
The annual benchmarking survey helps the industry gauge fee-based sales performance.
Selling life insurance and annuities through banks represents one of several sales channels for financial advisors. Other channels include national wirehouses and regional and independent broker/dealers and insurance agents.
Banks and credit unions, which already own a local branch presence, offer a natural distribution outlet for insurance products.
Banks, with 22 percent market share in fixed individual annuity premiums in the second quarter, are the second largest channel of fixed annuity sales after the independent agent channel, according to LIMRA.
Investment and insurance programs contributed an average of 10 percent to banks' or credit unions' noninterest income last year. This is a jump of 2 percentage points over 2012, the BISRA study found.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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