Invest Financial Corp. has taken a key step to ensure that its client banks won't feel aftershocks from the breakup of its parent, Kemper Corp.
The Tampa-based investment marketer, which runs mutual fund and annuity sales programs for 240 banks, says it will continue to buy its securities processing services from Kemper Clearing Corp.
Kemper plans to spin off the unit to employees and stockholders in June. The move is part of Kemper Corp.'s plan to be acquired in May by a group of investors led by a Swiss insurance company.
By retaining Kemper Clearing as its securities processor, Invest expects to avoid disruptions in services to individual investors, said Merlin R. Gackle, Invest's chief executive. He said Kemper Clearing Corp.'s state-of- the-art communications technology is one of its strongest attributes.
Clearing firms like Kemper play an important, behind-the-scenes role in investment transactions. These firms serve as depositories for investors' money, pay and collect dividends, and make the transactions between brokers and the investors.
Disruptions in service might cause delays in the timely delivery of statements, among other problems, industry source said.
Third-party marketing firms like Invest that offer banks investment sales support typically include clearing services as part of the package. Their client banks generally have little say over the clearing firm they use, though they are paying for the service.
Invest charges, as part of the revenue sharing agreements it has with banks, $25 for each of the 400,000 stock and bond transactions it makes a year, according to Mr. Gackle.
Executives at some rival marketing firms have maintained that Invest's clearing fees could rise, now that its family ties to Kemper Clearing Corp. are being severed. These sources say that Kemper has been subsidizing the cost of the services but won't be able to do so once Kemper Clearing is a stand-alone company.
Both Invest and Kemper Clearing Corp. say that no such subsidy has ever existed.
