A tiny New York City brokerage firm that specializes in managing pension plans for European corporations is staking out new territory at home - community banks.
Muzinich & Co. is trying to persuade community banks in small southern New Hampshire towns to send it their wealthy customers, said sales manager Joseph Dolock. Rather than steal the customers from the community banks, Muzinich wants to offer them a fee-sharing arrangement.
"This is radically different from what anyone else is doing," Mr. Dolock said.
Community banks typically lack the wherewithal to start their own mutual funds. But they are facing increasing competitive pressure to offer their customers investment advice. Many have already seen deposits flow out of their banks to mutual funds and brokerage firms.
Mr. Dolock bills himself as someone who understands the banks' problem. He is a former president of the brokerage subsidiary of Crossland Federal Savings Bank, New York.
His company hopes to help banks by charging their customers a flat fee, probably 1% of assets under management. Most investment managers levy a fee for each transaction.
Muzinich's fee structure is designed to allow brokers to move customers in and out of mutual funds and certificates of deposit without charging them. Such flexibility is important to banks, because it enables them to lure cash more easily into high-yielding CDs when they need to raise money.
"You can move the money in or out of a managed account any time," Mr. Dolock said. "The bank is in control of that money."
Community bankers are generally wary of sending their clients to another firm, as they fear being held liable for unsavory investment advice.
"Banks have shied away from referrals to third parties, when they don't have control over the investment process," said Brian Thompson, chairman of the $180 million-asset Pelham Bank and Trust Co., Pelham, N.H.
Mr. Thompson said his bank is beginning to consider offering brokerage services, but it has not been approached by Muzinich.
For Muzinich, the move is part of a modest expansion into the suburbs, where the company sees new opportunity to give investment advice.
"Bedroom communities near major cities, that's where all the money is," Mr. Dolock said. The towns he is targeting are a stone's throw from Boston.
Muzinich, which employs five brokers, including one it set up last month in Salem, N.H., manages about $130 million in pension assets for European companies. The firm has yet to sign on any banks for its new program, and declined to name those it has approached.
President George Muzinich is currently interviewing brokers to set up offices near Atlanta, as well as in Florida and New York State.
