Merrill, PaineWebber, Smith Barney Among 68 Signed to Sell PNC's Funds

Some of the country's largest brokerage firms have agreed to sell PNC Bank Corp.'s proprietary mutual funds.

Merrill Lynch & Co., PaineWebber Inc., and Smith Barney & Co. are among the 68 brokerage firms that have signed contracts to sell PNC's Compass Capital funds, said a senior executive familiar with the negotiations.

Prudential Securities Inc. is also close to signing an agreement, the executive added.

The distribution contracts come after more than six months of negotiations by the Pittsburgh-based company's Compass Capital Management unit. The unit, which manages $10 billion of mutual fund assets for PNC, has been trying to match the success that industry leaders such as Chase Manhattan Corp. have had in selling their mutual funds outside the bank channel.

In a telephone interview last week, Salvatore M. Capizzi, a Compass executive vice president, said the company is determined to compete "on the same level that Franklin, Putnam, MFS" and other big-name mutual fund companies do.

While he would not discuss details of the brokerage negotiations, Mr. Capizzi said the company has hired four salespeople, called wholesalers, who will focus on selling the Compass funds through outside brokers and financial planners. Three more wholesalers will be hired by July, he added.

Still, at least one expert said PNC would have a hard time getting its new sales relationships to bear fruit.

"Our experience is that many institutions have more success in signing agreements than moving any significant volume through them," said David B. Master, a senior consultant at Optima Group, Fairfield, Conn.

"It's a very tough road," he added. "Short of having an outstanding story, or the wholesaling support and marketing materials that the major players have, the likelihood of success is very low."

But Mr. Capizzi said he's confident PNC will be able to attract a "significant amount of new business" through its broker-dealer arrangements.

"I'm aware that a sales agreement is nothing more than a piece of paper that clutters up your desk," he said. "We're building the ability to give" brokers "the service and attention that they need."

To do that, he said, PNC will now focus on developing sales through the firms with which it has signed agreements, instead of spending resources trying to sign up more.

He added that the Compass Capital Funds have performed well recently, making them an easier sell.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER