This study, like its six predecessors, seeks to establish a profile of productive bank insurance/investment programs. Originally, these studies focused primarily on the sale of annuities and mutual funds through the bank branch system. Increasingly, however, more attention has been focused on some other areas—life insurance, for instance, and, more recently, fee-based products. The Bank Insurance Market Research Group’s earlier Bank Insurance and Brokerage Productivity Studies were in 1992, 1994, 1995-96, 1998, 2000, and 2002.

We seek to answer some perennial questions about these programs:

• What are the profit margins in these programs? What sorts of commissions are earned?
• Are products sold principally through "dedicated" agents or platform staff?
• How productive are dedicated sales agents? In terms of sales, revenues and profits?
• What are the median sales-to-deposits ratios in alternate investment programs?
• Which life insurance products generate the most revenues? How are they sold?
• What are the key obstacles to life insurance sales?
• What is the size of the typical annuity sale? Mutual fund sale?

Thirty-six institutions participated in the study:

• Nine were "very large" institutions (with $30 billion or more in assets).
• Nine were "large" institutions (with $10 billion to $29.99 billion in assets).
• Nine were "medium" size institutions (with $3 billion to $9.99 billion in assets).
• Nine were "small" institutions (with less than $3 billion in assets).

The Study includes:

• Data from 36 depository institutions
• Premium, revenue and earnings comparisons in:
• Fixed Annuities
• Variable Annuities
• Mutual Funds
• Life Insurance
• Profits margins compared:
  • What are pre-tax profits as a percentage of sales?
  • Gross commissions as a percentage of sales?
  A profile of the industry’s most productive insurance and brokerage programs:
  • Four size categories
  • Thrifts and commercial banks
  • Geographic regions
• What are main obstacles to life insurance sales?
• 93 pages of hard data

Executive Summary [Page 1]

The Results [7]
P1. What is the size of participating institutions?
P2. What is the geographic location of participants?
A1. What type of institutions are participants?
A2. Does the institution sell fixed annuities to retail customers? [8]
A3. How long has the institution been selling fixed annuities?
A4. Does the institution sell variable annuities to its retail customers?
A5. How long has the institution been selling variable annuities to customers? [9]

B. Life Insurance
B1. Does the institution sell traditional non-credit life insurance?
B2. How long have institutions been selling life insurance? [10]
B2a. Does the institution own an insurance agency that sells life insurance?
B3. Which lines of life insurance does the institution sell to its retail customers? [11]
B4. Which lines of life insurance do institutions expect to offer in the next 18 months?
B5. Which lines of life insurance generate the most revenues for the institution? [12]
B5a. Which lines of life insurance generate the 2nd most revenues for the institution? [13]
B6. How is life insurance sold at the institution?
B6a. Which delivery channel produces the most revenues? [14]
B7. What is the most common compensation structure for an institution’s life agents? [15]
B8. What is the most effective lead source for life insurance sales?
B9. What is the second most effective lead source? [16]
B10. Life Insurance revenues
B11. Life Insurance sales [17]
B12. Deposit-base penetration (life insurance) [18]
     Top Ten Institutions: 1992-2004
B13. What is the single greatest obstacle to establishing an effective life insurance program?
     ‘Obstacles’ by type of problem [19]
     ‘Obstacles’ ordered by asset-size groups [21]
     Life insurance sales at 28 institutions [23]
B14. Profitability of life products [24]      Life insurance profits as a percentage of sales
     Three median ratios for life sales [25]

C. Mutual Funds and Proprietary Products
C1. Does the institution sell mutual funds to its customers?
C2. How long have institutions been offering mutual funds?
C3. Does the institution sell its own proprietary mutual fund? [26]
C4. Does the institution own a broker/dealer? [27]
C5. What percentage of overall investment sales are from proprietary products?
C6. What percentage of overall investment sales are from fee-based products?
C7. What is the single most promising area of future revenue growth for the institution?

D. Sales and Productivity [28]
D1. Does the institution license platform people to sell annuities?
D2. How many platform people within the institution are licensed to sell annuities?
      Ten largest platform programs [29]
D3. For which products do institutions have ‘dedicated’ (i.e., specialized) agents?
D4. How many dedicated agents sell fixed annuities? [30]
D5. How many dedicated agents sell non-credit life insurance? [31]
D6. How many dedicated agent/brokers sell mutual funds? [32]
D7. What are total fixed annuity sales over the most recent 12 months?
     Top 10 in fixed annuity sales [33]
D7a. What were fixed annuity sales by bank type and size?
     Fixed annuity sales by type and size [34]
D7b. What are fixed annuity sales per ‘dedicated’ agent?
     Fixed annuity sales per dedicated rep
D7c. Fixed annuity revenues [35]
D7d. What order of pre-tax profits are banks earning from fixed annuity programs?
     Pre-tax earnings from FA sales at 16 banks [36]
D7e. What are pre-tax profits per $1,000 of fixed annuity sales? [37]
D7f. Fixed annuity commissions
D7g. Fixed annuities: deposit-base penetration
     Top 10 in FA deposit-base penetration
D8. Variable annuity sales [38]
     Top 10 in variable annuity sales [39]
D8a. Variable annuities: deposit-base penetration [40]
     Top 10 in VA deposit-base penetration
D8b. Variable annuity revenues [41]
D8c. Variable annuity profits [42]
D8d. Variable annuities: gross commissions
     Variable annuity profits as a percentage of sales at 16 banks [43]
D8e. Total annuity deposit-base penetration: variable and fixed
D9. Mutual fund sales [44]
     Top 10 bank in mutual fund sales [45]
D9a. Fund sales per broker
     Mutual fund profits as a percentage of sales at 16 banks [46]
D9b. Profits as a percentage of mutual fund sales
D9c. Mutual funds: gross commissions [47]
D9d. Mutual Funds: Revenues/profits
D9e. Mutual fund deposit-base penetration
     Mutual fund penetration at 33 banks [48]     
D9f. Total investment sales (fixed and variable annuities plus mutual funds) [49]
     Top 20 in investment sales [50]
D9g. Total investment product revenues [51]
D9h. Investment product revenues/deposits
     Investment sales penetration at 38 banks [52]
D9i. Investment sales/deposits [53]
D9j. Individual stocks and bonds [54]
D9k. Automobile and homeowners insurance
D9l. Commercial insurance
D10. What is the monthly fixed-annuity production of the average ‘dedicated’investment sales rep?
D10a. What is the monthly fixed-annuity production of the average ‘dedicated’ sales rep at the top ten annuity producers? [55]
D10b. What is the monthly fixed-annuity production of the average ‘dedicated’ investment sales rep at the top ten banks in deposit-base penetration? [56]
D10c. What are annual fixed-annuity revenues per dedicated rep?
D10d. What are annual fixed-annuity profits per dedicated investment sales rep? [57]
D11. What is the monthly variable-annuity production of the average dedicated agent?
D11a. What is the monthly variable-annuity premium production of the average dedicated agent at the top ten programs in annuity volume? [58]
D11b. What is the monthly variable-annuity premium production of the average dedicated agent at the top ten programs in variable annuity deposit-base penetration? [59]
D11c. What are annual variable annuity revenues per dedicated rep?
D11d. What are annual variable annuity profits per dedicated investment sales rep? [60]
D12. What percentage of fixed annuity sales are from ‘dedicated’ salespeople—as opposed to platform personnel?
D13. What is the monthly mutual fund production of the average dedicated sales rep? [61]
D13a. What is the monthly mutual fund production of the average dedicated sales rep at the top 10 in mutual fund sales? [62]
D13b. What is the monthly mutual fund production of the average dedicated sales rep at the top 10 in deposit-base penetration? [63]
D13c. What order of revenues are produced by the typical bank broker from mutual fund sales in the course of a year?
D13d. What order of pre-tax profits are produced by the typical bank broker from mutual fund sales in the course of a year
     Revenues per rep at 12 banks [64]
D13e. What order of pre-tax profits are produced by bank brokers from 3 investment products—fixed annuities, variable annuities, and mutual funds—in the course of a year?
D14. If the bank has dedicated life specialists, how much does the typical agent generate in monthly revenues [65]
D14a. If investment sales specialists sell life insurance, what does the typical investment specialist generate in monthly life revenues?
D15. How much sales growth in fixed annuities is projected in the next 12 months?
D15a. How much sales growth in fixed annuities is projected in the next 12 months among the top 10 institutions in annuity sales?
D16. How much sales growth is foreseen in the next 12 months in non-credit life insurance?
D16a. How much sales growth is foreseen in life insurance in the next 12 months among the top ten in life revenues? [67]
D17. How much sales growth is foreseen in mutual funds in the next 12 months?
D17a. How much sales growth is foreseen in mutual funds in the next 12 months among the top 10 institutions in funds sales? [68]
D18. Which products not offered now are expected to be offered in the next 12 months?
D19. Which marketing techniques are used to generate alternate investment product sales?[69]
D20. Which marketing technique is the largest source of investment sales? [70]
D21. Which is the 2nd leading marketing technique for generating investment sales?

E. Third Parties and Commissions [71]
E1. Does the institution work with a third-party marketing firm?
E2. What is the institution’s commission on its best-selling fixed annuity? [72]
E2a. What is the commission on the fixed annuity at the top ten in annuity sales?
E2b. What is the commission on the fixed annuity at larger institutions with $10 billion or more in assets?
E2c. What is the commission on the best-selling fixed annuity at smaller institutions with less than $10 billion in assets? [73]
E3. What is the institution’s commission on its best-selling mutual fund?
E3a. What is the commission on the best-selling mutual fund at the top ten in fund sales? [74]
E3b. What is the commission on the best-selling mutual fund at larger institutions with$10 billion or more in assets?
     Commissions paid to banks for fixed annuity and mutual fund sales: 1992 - 2004 [75]
E3c. What is the commission on the best-selling mutual fund at smaller institutions with less than $10 billion in assets?
E4. Does the institution receive trail commissions for some annuity sales? [76]
E5. Is the annuity program principally a ‘managed’ program?
E6. What is the size of the average fixed annuity sale?
E6a. What is the size of the average fixed annuity sale at the top 10 bank in annuity sales?
E6b. What is the size of the average fixed annuity sale at larger institutions with $10 billion or more in assets?
E6c. What is the size of the average fixed annuity sale at smaller institutions with less than $10 billion in assets? [78]
E6d. What is the size of the average fixed annuity sale at commercial banks?
E6e. What is the size of the average fixed annuity sale at thrift institutions?
E6f. What is the size of the average fixed annuity sale in the Midwest?
E6g. What is the size of the average fixed annuity sale in the West? [79]
E6h. What is the size of the average fixed annuity sale in the Northeast?
E6i. What is the size of the average fixed annuity sale in the South?
E6j. What is the size of the average fixed annuity sale in the MidAtlantic region?
E7. What is the size of the average variable annuity sale?
E7a. What is the size of the average variable annuity sale at the top 10 in VA sales? [80]
E7b. What is the size of the average variable annuity sale at larger institutions?
E7c. What is the size of the average variable annuity sale at smaller institutions with less than $10 billion in assets?
E7d. What is the size of the average variable annuity sale at commercial banks?
E7e. What is the size of the average variable annuity sale at thrift institutions?
E8. What is the size of the average mutual fund sale?
E8a. What is the size of the average mutual fund sale at the ten top banks in mutual fund sales? [81]
E8b. What is the size of the average mutual fund sale at larger institutions with $10 billion or more in assets?
E8c. What is the size of the average mutual fund sale at smaller institutions with less than $10 billion in assets? [82]
E8d. What is the size of the average mutual fund sale at commercial banks?
E8e. What is the size of the average mutual fund sale at thrift institutions?
E8f. What is the size of the average mutual fund in the Midwest?
E8g. What is the size of the average mutual fund in the West? [83]
E8h. What is the size of the average mutual fund in the Northeast?
E8i. What is the size of the average mutual fund in the South?
E8j. What is the size of the average mutual fund in the MidAtlantic region?
     Average ticket size of fixed annuity and mutual fund sales: 1992 - 2004
E9. What percentage of investment sales is repeat business? [84]

F. Disintermediation [85]
F1. What percentage of annuity sales come from existing bank deposits?
F2. What percentage of mutual fund sales come from existing bank deposits? [86]
F3. Are institutions concerned that bank deposits may be disintermediated by investment sales? [87]

G. Carriers [88]
G1. How many annuity carriers do institutions work with?
G2. How many life insurance carriers do institutions work with? [89]
G3. Which surrender-charge schedule best describes institutions’ top-selling annuity? [90]
G4. How many mutual fund manufacturers do institutions work with? [91]
     The study’s 36 participants were from the following states

Appendix [93]

BISA member — $395.00
Non-BISA member — $495.00