Sensing competitive obstacles to expanding in the bank sales channel on its own, Phoenix Home Life Mutual Insurance Co. has struck an alliance with a leading marketer of annuities through banks.
Planco Group, Paoli, Pa., agreed last week to promote the insurance company's 17 mutual funds through its 22 wholesalers dedicated to banks. Both companies refused to disclose the financial terms of the alliance.
Phoenix, based in Hartford, Conn., focuses on the insurance business, but also manages $8.4 billion in mutual fund assets. It promotes them to banks, brokerage firms, and financial planners through its Enfield, Conn., distribution arm, Phoenix Equity Planning Corp.
Officials at both companies acknowledged that their competitors have outstripped them in recent years by forging similar alliances. But now they say the companies are poised to capture a greater share of the market.
"We needed a stronger position in this marketplace," said Douglas Tarella, Phoenix Equity's vice president for financial institutions. "We gained much more in a very short period of time than we could have hoped to build on our own," he said about the alliance.
Right now, 5% of Phoenix's total mutual fund sales come from banks, and none of the company's 12 wholesalers specialize in the bank sales channel. Mr. Tarella said he did not have any sales targets yet, but getting banks to contribute 15% in two years "should be easy to do."
Phoenix benefits from the alliance because it gains greater access to banks than it had before. The new wholesale force - a team of salespeople that will market the funds to banks - is comparable in size to those of many of larger mutual fund companies.
For instance, Putnam Investments, the leading seller of mutual funds through banks last year, has 21 wholesalers, and Franklin Resources Inc. has about 35.
While Planco gives Phoenix a doorway into banks, completion of a pending agreement to acquire a majority stake in money manager Duff & Phelps would give the Connecticut firm a higher profile with investors, Mr. Tarella said.
When the deal is completed in October the company will have in excess of $35 billion of assets under management, Mr. Tarella said. "That puts us in the major leagues."
The alliance enables Planco - which for 18 years has been marketing insurance companies' fixed and variable annuities to banks, brokerage houses, and financial planners - to broaden its investment offerings.
Phoenix's variable annuity products "attracted us into the discussions," said Kevin Connor, vice president in charge of financial institutions sales for Planco.
Mr. Connor added that several companies have called quite frequently expressing interest in forming similar alliances with Planco, but he would not reveal how serious the discussions were or how many were held.
