Responding to customer requests, Minnesota's largest thrift, TCF Bank, has added mutual funds to its product line.
And in a rare display of brand loyalty, the Minneapolis-based company has selected seven funds - all from Putnam Financial Services, Boston.
"Our customers have been asking for a broad-based product line and Putnam gives us the full spectrum of mutual funds," said William A. Cooper, chairman and chief executive officer of TCF Financial Corp., the thrift's parent company. Sales began in the thrift's 65 Minnesota branches this week.
Bid to Raise Fee Income
Robert Evans, vice chairman of TCF Financial, said the thrift decided to sell funds in part to increase its fee income, and in part to keep customers in the fold.
"They were going to buy them from someone, so it might as well be us," Mr. Evans said.
In picking a partner, TCF considered "10 of the largest companies that do bank sales and a couple that are just starting to think about it," Mr. Evans said. He would not name other mutual fund companies whose services were considered, however.
Variety of Options
In the end, TCF went with Putnam because "it is a conservative, well-known firm with a wide selection" of funds, the vice chairman said. Although Mr. Evans would not discuss the terms of the deal, he said Putnam also "offered us a good financial arrangement."
Through its investment division, TCF Securities Inc., the bank is marketing Putnam funds with a wide range of investment objectives including growth, growth and income, income, and tax-free income.
Although it is unusual for a company to offer only one fund family, "it makes some sense," said Avi Nachmany, a partner at Strategic Insight, a New York-based mutual fund consulting firm that advises banks.
Mr. Nachmany predicts that as smaller institutions get into the business, this trend will increase: "Small companies are looking for outside partners."
Mr. Evans does not expect annuity sales to decline at the expense of adding mutual funds. So far this year, TCF has sold $130 million in annuities.
"The mutual fund customer has a much different profile than the annuity customer," Mr. Evans noted. While annuity purchasers' average age is 67, people who buy funds tend to be younger, have higher income, and lower net worth, he said.
