Wells Fargo & Co., which has run its retail mutual funds business through an outside broker-dealer, is about to bring the large program in house.
All 250 securities salespeople who sell investment products in Wells branches will become employees of the San Francisco bank's own broker-dealer by yearend, according to a Wells spokeswoman.
The representatives are now dual employees of Wells and Marketing One, the Portland, Ore., company that Wells uses to handle trades for branch customers. Marketing One also recruits and licenses the investment product sales force that Wells uses.
More Banks Severe Ties
Wells said it was making the move because it had gained more experience with retail investment sales, and not because it's unhappy with Marketing One's services. The bank has spent the last two years developing one of the industry's most ambitious investment-product programs.
Indeed, experts say that more and more banks are likely to sever their ties with outside marketing partners after they grow and gain confidence in the mutual funds arena.
Other banks. including Dime Savings Bank of New York, already have taken their programs in-house after a period of working with outside marketing firms.
Offers Own Funds
"It's quite a natural progression as banks gain greater comfort with products and sales systems," said Richard Ayotte, managing partner of American Brokerage Consultants, St. Petersburg, Fla.
Wells offers its own Stagecoach mutual funds and other companies' products in 620 branches, mostly in California. The bank's 11 Stagecoach funds had $3.3 billion of assets under management as of June 30.
Wells is releasing few details about its plans to bring the brokerage operation in-house.
A Savings Expected
But the company evidently feels the effort is well worth ii. The shift will save the bank money, allow the retail-investment program to operate more efficiently, and "give us more of an in-house focus going forward," said spokeswoman Mary Essary.
The bank will have to staff up in its broker-dealer, administrative and compliance divisions, observers said. Wells will likely beef up operations to handle billings, statements, and other mailings to securities customers.
Dime, for its part, found that there are many benefits for large banks in taking their programs in-house, said J. Edward Diamond, president of the thrift's broker-dealer unit.
Promoting Own Culture
Dime made its move nearly two years ago, after using Invest Financial Corp., for brokerage and other support services.
"We've been able to create and promote our own culture, and have a great deal more acceptance within the bank," Mr. Diamond said. "The economic benefits cannot be ignored, either."
Exactly how Wells' decision will affect Marketing One is unclear.
A former executive with Marketing One said that Wells accounted for fully half of the marketing company's revenue last year. But Michael Maher, a spokesman for Marketing One, declined to comment on that.
He did say that Wells' move wasn't a surprise.
