Chase Manhattan Corp. Wednesday kicked off a new approach to selling investments through its branches.
As part of the new program, Chase has brought in a new partner to help it sell investments, and has changed the way its 140 branch-based brokers are compensated.
Chase has also laid plans to give its branch-based brokers state-of-the- art computer systems.
Chase expects the initiative to help it sell 22% more investments through its branches this year - a marked turnaround from the 40% drop in sales last year, to a mere $363 million.
"That is an extremely aggressive goal, given the economic environment we have in 1995," acknowledged Salvatore M. Capizzi, investment products executive with New York-based Chase.
To run the new brokerage operation, Chase Wednesday entered into an unusual partnership with the brokerage firm BHC Financial, Inc., Philadelphia.
As part of the partnership, Chase is managing the branch-based brokerage program, but a new unit of BHC is employing the brokers, clearing trades, and making sure brokers follow investment sales rules. Most banks either farm out such operations, or do it themselves.
Previously, Chase had taken the former approach, by hiring GNA Corp., Seattle, to run the branch-based brokerage program.
Mr. Capizzi explained that BHC was better suited to the partnership approach than GNA was. The 140 brokers manning its branches Wednesday transferred from GNA's payroll to BHC's.
With the change, Chase is also expanding the types of investments its brokers can handle. It is adding stocks and bonds to the mutual funds and annuities from more than a companies that it previously sold. It has also added mutual funds from the Dreyfus, Fidelity, and Zweig families, and annuities from AIG Co. and American Skandia Life Assurance Co.
To this end, over the next three months Chase expects the 45 branch- based brokers not yet licensed to accommodate stock and bond trades to obtain that credential.
In an effort to build a reputation as an unbiased broker, Chase has also changed the way its branch-based brokers are compensated.
Previously, their compensation was in direct proportion to the sales commissions on the products they sold, meaning they made more for selling products with higher commissions. Now, they are paid the same commissions regardless of which long-term mutual funds and annuities they sell.
Mr. Capizzi said that Chase is also teaming with BHC to design a state of the art computer system for its branch based brokers. The system will be installed over the next year.
With the system, brokers will be able to use laptop computers to obtain detailed analyses of clients' investments. The computers will also run optical disks that will play what essentially are computerized video movies to explain the basics of mutual funds.
Mr. Capizzi said the computer system will rank with the most advanced systems at major brokerage firms, and be ahead of most systems at banks. Kenneth R. Hoffman, president of consultancy Optima Group, Fairfield, Conn., said that if the system performs as billed, he would agree.
Mr. Capizzi said the new approach should help Chase pickup clients that now invest through brokerage firms. Such growth is vital, given that banks should expect limited flow of assets from certificate of deposit investors because of rising interest rates.
