Strong Foundation For Growth Under The DoL Fiduciary Standard


In our discussions about DoL readiness with top executives responsible for investment services in financial institutions, it is clear that they plan to focus more on life insurance sales to bolster an expected decline in revenue from commission transactions and lower fees on advisory accounts.  But many are surprised to learn that banks and credit unions have made steady progress in growing their life insurance sales over the past 5 years, given industry reports to the contrary.  Average annual advisor life sales revenue actually increased from $13,374 in 2010 to $16,997 last year.  That was one of the Kehrer Bielan research findings discussed at the firm’s DoL Readiness Roundtable – The New Importance of Financial Planning and Life Insurance.

The growth was driven by a 35% rise in life sales productivity among advisors in bank-owned broker dealers.  Advisors in bank BDs averaged $23,165 in life insurance sales revenue last year, 4 times the life production of their colleagues affiliated with third party broker dealers. Nonetheless, the advisors in banks and credit unions that partner with third party BDs also grew their annual life sales production, 16% from $4,829 per advisor to $5,675.



The increase in life insurance sales may come as a surprise to some industry watchers who have focused on the percent of investment services revenue generated from life insurance. The share of revenue has declined both in bank broker dealers and institutions that partner with third party BDs.  But the average annual production from all revenue sources, particularly advisory business, has surged over the past few years.  So life insurance is a somewhat smaller slice of a much bigger pie.



Kehrer Bielan believes that this is another example of focusing on the wrong metric.  From the point of view of the additional consumers whose life insurance needs were met, the advisors who produced the increased sales, and their financial institutions that booked the revenue, the increase in sales volume is what matters, not that advisory business grew faster than life insurance sales.

The Kehrer Bielan DoL Readiness Roundtable – The New Importance of Financial Planning and Life Insurance was held at the Fearrington House Inn near Chapel Hill September 29-30.

The life insurance sales data are based on the firm’s surveys that cover 2,799 banks and credit unions that offer investment services.