A small Connecticut firm has joined the small but growing coterie of companies helping small banks sell 401(k) services to their customers.
Wright Investors, a Bridgeport-based investment management firm, has done this with the launch earlier this year of a pair of 401(k) services designed for community banks to resell.
One of the services, Pathways, is aimed at companies with more than 50 employees. The other service, QuickPaths, is aimed at smaller companies.
Wright is pitching the services to the 56 banks that use its investment management services. Wright manages $4 billion, mostly from community bank trust accounts.
"With increasing consolidation in this business and money-center banks filling every nook and cranny, these community banks have got to devise a plan to get customers into the bank," said Louis P. Nagy, a senior vice president with Wright's bank services management team.
Assets in 401(k) plans are expected to grow to more than $500 billion this year, and are expected to top $600 billion in the next year, according to Cerulli Associates, Boston.
Banks handle about a third of the market, and that share is growing, said Linda M. Kerschner, a vice president at First Union National Bank of North Carolina in Charlotte.
The investments available in Wright's 401(k) service are the 11 portfolios in Wright's proprietary True Blue Chips Funds. The funds are sold only through bank trusts departments.
Wright values the 401(k) plans daily, maintains shareholder records, and gives investors access to account information through toll-free telephone lines.
Wright has pledged not to let two clients in the same market sell 401(k) services from Wright in competition with one another, Mr. Nagy said. That promise caught the eye of at least one small bank.
"It really attracted us because we knew they wouldn't be out there competing against us," said Joseph J. Murray, chief executive officer, of the Dime Bank, a $113 million-asset bank in Honesdale, Pa.
Theresa M. Gillotti, assistant vice president for $206 million-asset Ridgefield Bank, in Conn., said her bank's year-old trust department turned to Wright to round out and boost its trust services.
"We had customers going out the door and taking their money to local brokerages," she said.
