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Who garnered the top slots on last year's third-party marketer report card? To find out Bank Investment Consultant teamed up with American Brokerage Consultant's Dick Ayotte to ask their bank partners. A total of 261 banks responded with data on 33 TPMs, however only seven TPMs had enough bank ratings (more than four) to be included. TPMs were rated on 22 factors, ranging from compliance expertise to banking knowledge, sales management to technology and marketing.
The upshot was no surprise. The top three TPMs held on to their leads from 2007: Investment Professionals (IPI) was the valedictorian as it has been for the past three surveys. Raymond James came in second and Essex National Securities (ENSI) captured the bronze. The remaining four TPMs were Invest, Primevest, LPL and Infinex, in that order.
Like banks, TPMs, are consolidating, dropping to seven significant players from 14 three years ago. And the study found a trend toward a greater use of TPMs. Even among large banks-$1 billion or larger-the majority (78%), employ third-party marketers. "Some banks that had their own broker-dealers have decided it was too expensive for them to maintain their own broker-dealers and have now turned to TPMs," says Heywood Sloane, managing director of the Bank Insurance and Securities Association. "Historically, banks graduated from a TPM to having their own broker-dealer as they got bigger." But growing demand for technological efficiency and compliance expertise has discouraged some banks from creating their own B-D.
Banks looking to start or improve their investment programs can't go wrong with any of the top seven. "TPMs have become all things to all banks and credit unions, so their differences have become blurred," says Ken Kehrer, director of consulting firm Kehrer-Limra. "There isn't a bad apple in the bunch. So it becomes finding the TPM that fits your needs."
That said, there are differences among the top three TPMs. IPI is a rapidly growing Texas-based company. Most of its reps are "managed" or work for the TPM and not the bank. "Managed programs are more profitable for the bank," explains Jay McAnelly, IPI's executive vice president and national sales manager. "Cost of employment is expensive. We offer banks the choice whether they want us to handle that expense or not....