Insights | 04.13.21
This Year’s Annual Checkup: Good News or Bad News?
According to the 2020/2021 Annual Industry Checkup, the three primary metrics used to track the health of the bank insurance and securities industry—growth in revenue, advisor productivity, and advisor headcount—were all essentially flat year over year. A fourth indicator, investment assets, was up, but perhaps less so than one may have hoped, given strong market growth in 2020.
So, what was the headline coming out of the virtual unveiling of the Annual Industry Checkup on March 11? It depends on who you ask.
Source: 2020/2021 Annual Industry Checkup, Kehrer Bielan Research & Consulting
“I think in a normal year we would all look at this and say this is pretty disappointing,” offered Tim Kehrer, Director of Research at Kehrer Bielan Research & Consulting and author of the Annual Industry Checkup. But, Kehrer allowed, 2020 was not a normal year. “Given everything that was going on to the extent that it looks like the industry sort of treaded water last year, maybe treading water is the best that we could hope for.”
Other participants in the virtual unveiling sounded a more positive note.
“I’d be remiss if I didn't congratulate this industry,” commented Rob Comfort, President of CUNA Brokerage Services. “Put yourself back a year ago, when you were sitting in those meetings with your finance people, and they were saying, ‘Well, what's the impact of this going to be?’ And we were starting to speculate we might be down 50%. This could have been a disaster of a year,” Comfort continued. “But when you look at these numbers, look at what this industry had to overcome last year, just to be flat, I say congratulations.”
Jim Campone, Executive Director of Program Management at CUSO Financial Services/Sorrento Pacific Financial, added that one would expect investment assets, which grew 4.7% in banks and credit unions in 2020, to lag the market. “Not all the assets that are in the investment services program are going to be S&P 500 assets,” explained Campone. “There's going to be a portion of [assets] that are going to be allocated towards other fixed interest solutions, such as fixed annuities. So that's going to reduce what that overall growth rate would be.”
The life stage of the typical financial institution investment client may also help to explain the slow growth of investment assets. “Financial institutions are serving, in a lot of cases, older clients. A number of these clients might be in more of a distribution phase than in an accumulation phase,” Campone continued.
Of course, using an industry-wide view can obscure important differences among firms. “Not every firm came in at 0.1% [revenue growth],” commented Peter Bielan, Principle at Kehrer Bielan. “There were some firms that did noticeably better than 0.1%. There were other firms out there that we know that were down greater than 10%, so the average can be a little bit misleading.”
What caused some firms to be up, and others to be down? For Bielan, a lot comes down to resources. “It's because there are firms that have been able to get resources,” he said, and others that have not.