Gains in revenue and financial adviser productivity have helpedcredit unions and banks increase sales in their investment programsfor the first time in more than a decade.

That's according to the Kehrer Saltzman & Associates' AnnualCheckup report, which was sponsored by INVEST Financial Corp., andexamines the health of the financial advice business at banks andcredit unions.

The percentage of commercial banks offering investment services increased to nearly 27% in 2012, markingthe first increase since 2001, the data showed.

The Annual Checkup also showed gains in investment servicesrevenue and adviser productivity, with revenue up 17% at banks andcredit unions in 2012, led by banks with their own broker-dealers.

Banks in this category reported revenue up more than 19%,compared to just 8% for the banks and credit unions that partnerwith third party broker-dealers, Kehrer Saltzman said. The averageannual gross production in institutions that work with third-partymarketers was up 5.2%, while the productivity gain in banks within-house broker-dealers was 2.1%.

The research also found that there was a gap between consumertrust in banks and credit unions and their trust in the advisers who work there, said Tim Kehrer, senior researchassociate at management consultant firm Kehrer Saltzman inCharlotte, N.C.

“Consumers trust banks, and particularly credit unions, far morethan they trust competitor providers of financial services, Kehrernoted. “But they do not look as favorably on the advisers theyencounter in financial institutions. This gap is particularly widein credit unions.”

For years, the percentage of all U.S. banks selling investmentshovered just under 25%, said Kenneth Kehrer, a principal of KehrerSaltzman. However, the trend in the prevalence of banks offeringinvestment services reflect the consolidation of the bankingindustry over this period, he added.

Today, there are 26% fewer U.S. banks than in 2007, Kennethsaid. While the number of banks selling investments has shrunk,they are now bigger banks, on average. The 27% of banks sellinginvestments now account for 78% of all bank consumer deposits.

Historically, the number of banks with investment servicesofferings has been declining since 2007, said Jon Gabriel, a seniorassociate at Kehrer Saltzman, In 2012, that figure increased byalmost 3% to 1,884. Nonetheless, the number of banks that reportfee income from investment activity is down 19% from six years ago,he pointed out.

“The results of the study mirror the trends we've been seeingfrom a broker-dealer perspective,” said Steve Dowden, CEO ofbroker-dealer INVEST Financial in Tampa, Fla. Adviser productivity increasedalmost 3% in 2012, which can be credited in part to “banksrecognizing the need for broker-dealer support to streamline backoffice operations.

Some of the warning signs from the Annual Checkup included acontinued thinning out of the adviser sales force relative to theinstitution's opportunity and a lack of progress in becoming thecustomer's trusted financial adviser.

“Banks that outsource their broker-dealer had one adviser forevery $320 million in consumer deposits,” Kehrer said. “That figurerepresents less than half the coverage ratio that Kehrer Saltzmanresearch has found to be best industry practice.”

Kehrer said the typical bank needs to more than double thenumber of advisers it deploys in order to fully take advantage ofthe opportunity present in its customer base.