UMB Financial Corp., which has made a specialty of helping mutual fund companies serve their clients, is turning its energies inward.
The Kansas City, Mo.-based banking company is making a retail push with its UMB Funds, which were designed more than a decade ago for sale exclusively to 401(k) plans.
Starting later this year, the funds will be offered throughout the banking company's branch network, which spans Missouri, Illinois, Kansas, and Colorado.
"If we don't offer these products, our customers will go somewhere else for them," UMB's chairman, R. Crosby Kemper, said in a recent interview in his mahogany-paneled office at the $6.5 billion-asset company's headquarters.
Modest Sales in Branches
Right now, UMB offers mutual funds and other investment products through its brokerage unit. But sales through branches are modest, and the UMB Funds aren't even part of the retail product mix.
"If you walk in our lobby, you're more likely to get sold Fidelity or another fund," said David Anderson, executive vice president of the UMB Funds.
UMB Funds At a Glance
Portfolios:
Seven
Assets:
$1 billion
Investment
Advisers:
United Missouri Bank (stock and bond funds)
David Babson & Co. (money market funds)
Distributor:
Jones & Babson
Though UMB is preparing to put new emphasis on sales of its funds, servicing other companies' funds will clearly continue to be its mainstay.
The banking company offers a range of services - including custody, transfer agency, and record keeping - to 380 mutual funds. Its client list includes the nation's biggest fund company, Fidelity Investments, plus big names such as John Nuveen & Co. and Lord, Abbett & Co.
UMB is still developing its game plan for expanding sales of its proprietary funds, which currently hold $1 billion in assets. But parts of its strategy have fallen into place.
For starters, UMB is training scores of branch employees to sell funds and has hired a sales manager to oversee the effort.
And earlier this year, the bank announced its intention to change the name of its mutual fund family to draw a clear distinction between the bank and the funds.
The new name, to be adopted by yearend, will be the UMB Scout Funds, Mr. Anderson said.
Finally, changes in the pricing and structure of the UMB Funds are being weighed, and a proposal to launch a variable annuity is under consideration.
Yet for all the attention it is giving to its retail mutual fund effort, UMB is a reluctant entrant into the fast-paced business.
"We're doing this in a defensive way, in a sense," Mr. Kemper said. "I'm not 100% in favor of it."
Mr. Kemper said the bank is offering the funds largely in response to consumer demand for alternatives to traditional bank deposits.
He worries about pushing the funds too hard. If customers are oversold on mutual funds, the bank's reputation could be on the line, he said.
As a result, Mr. Kemper said, caution is the bank's byword in approaching fund sales. "We're not going to say, sell the hell out of our mutual funds to the exclusion of everything else."
Industry observers say Mr. Kemper's stance is not surprising.
"They are extremely conservative," said Denis Laplante, a banking analyst at Fox-Pitt Kelton, New York. "I could see that applying to the mutual fund program."
Certainly, UMB has proved itself to be savvy in serving other fund companies.
As of Dec. 31, UMB ranked 11th among custodians of domestic retail mutual fund assets, with $42.2 billion under custody, according to Lipper Analytical Services, Summit, N.J.
UMB's involvement in mutual fund services for other companies definitely influenced its decision to place more emphasis on its own funds.
"We're one of the preeminent providers of mutual fund services," said Michael Porter, the banking company's director of operations. "To the extent we can do it for our own funds, it makes sense."
While UMB's lead bank, United Bank of Missouri, manages five proprietary stock and bond funds, two money market offerings in the UMB Funds family have been managed by David L. Babson & Co., a unit of Jones & Babson, the fund family's distributor.
In a bid to get more control over the funds and boost fee income, the bank's money management unit is taking over the day-to-day management of the money market funds, which have more than $600 million in combined assets.
