Mutual fund companies are trying to get a foot in the door at Wells Fargo & Co., hoping that its acquisition of First Interstate Bancorp will spur the banking giant to expand its sales of nonproprietary funds.
"Wells has unbelievable potential because of its size," said Maryann Bruce, the head of bank channel sales for Oppenheimer Management Corp. "It's an account that we've always wanted to work more with."
Outside fund companies have historically received a frosty welcome from Wells. Experts estimate that up to 85% of investments sold by Wells' brokers are proprietary products.
But mutual fund executives are aggressively courting the San Francisco- based company, thanks to its acquisition of First Interstate. With $100 billion of assets, Wells is now too large for fund companies to ignore. The ninth-largest bank in the country, Wells operates in 12 states in addition to its traditional California turf.
"It's better to be in the door or at the front of the line if you want your products to be seriously considered by Wells," said one mutual fund executive, who asked not to be named.
Mark T. Fujii, a senior product manager at Wells, said that though it is not now considering expansion of its list, it is "always open to seeing what a company has to offer."
Toby Mumford, head of bank channel sales at Franklin Resources Inc., said making Wells' preferred list doesn't guarantee "carte-blanche access to" the bank's brokers, who aggressively push the bank's own products. But it does generate enough sales to put the banking company among Franklin's top 10 bank-clients.
Franklin made the preferred list through its prior relationship with First Interstate.
Though it's not on that short list, Oppenheimer expects to book $10 million of sales through Wells this year, mostly because its funds are offered through the bank's asset allocation program. Oppenheimer officials say sales of their company's funds by Wells could grow substantially once the bank finishes converting First Interstate branches this September.
Ms. Bruce said she's confident Wells will react to bank customers' demands for more investment options.
Currently, Wells' preferred list includes its Stagecoach Funds, as well as funds from Franklin, Capital Research and Management Co., Putnam Investments, AIM Capital Management, and Fidelity Investments.
He added that the Stagecoach Funds, and its recently launched Stagecoach annuities, fill "the needs of the majority of our customers."
But even big brokerages such as Smith Barney Inc. and Dean Witter, which in the past have focused heavily on selling proprietary products, have been more open to selling other companies' funds, said Burton Greenwald, a Philadelphia-based mutual fund consultant.
"Banks recognize that it's increasingly a brand name-driven business," Mr. Greenwald said. "If they can't provide their customer base with a broader array of funds, they will lose customers to companies like Schwab and Fidelity that do" provide more choices.
