The
Financial Services Market is highly dependent on establishing sales
and distribution partnerships in order to satisfy client/customer
demands with a wide variety of investment, savings and insurance
products. Banks, brokerage firms, mutual fund companies, insurance
carriers and money managers have a long history of working together
under sales/distribution compacts to satisfy their clients’ needs.
Financial product
vendors that sell products through financial distribution
networks have acquired significant experience in consistently
growing revenues and managing partner relationships. The factors
which make this industry ideal candidates for the PVO™ Solution
include the following:
-
Fund sponsors,
insurance carriers and money managers have created numerous
alliance and channel partnerships;
-
Most financial
service product ‘manufacturers’ have multiple sales distribution
relationships;
-
Non-performing
alliance partners have historically been eliminated using sales
and revenue criteria only;
-
Understanding the needs of both the fund seller and the end
customer is key to success in the highly competitive financial
services sector;
-
No
technology-based solution currently available to address business
problem;
-
Need to capture
both qualitative and quantitative business knowledge,
intelligence and analytics;
Mutual Funds
Over
the past 25 years there have been dramatic changes in how mutual
funds and annuities have been sold to the investing public. One of
the most pertinent developments relative to where PVO™ can add value
is the dramatic expansion of venues through which mutual funds and
annuities can be sold. With the expansion in distribution channels,
many fund sponsors have abandoned earlier, single-channel
distribution strategies in favor of multi-channel distribution –
often competing head-to-head with other fund sponsors within the
same distribution channels.
As a share of
mutual fund assets, the advice channel is the largest, accounting
for an estimated 55 percent of all mutual fund assets. The retirement plan channel is second in size with an asset
share of 16 percent. The institutional channel has an estimated 13
percent, the direct channel 12 percent, and the supermarket channel
5 percent of all fund assets.
Fixed and Variable Annuities
Fixed and Variable
annuities are distributed through many of the same financial
intermediaries. The difference in distribution channels between
fixed and variable annuities is related to the nature of the
product. Variable annuities are similar to stock-based investments
and therefore attract a different type of customer from fixed
annuities, which tend to be associated with other fixed-rate
products such as certificates of deposits sold by banks.
Distribution of
these products within financial intermediaries is somewhat more
complicated because state and federal regulators require sellers of
variable annuities to register with National Association of
Securities Dealers as securities dealers.
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