Federated, Branching Out, Now Managing Accounts For Union Planters Clients

Federated Investors, long known for its sale of mutual funds through banks, has entered into an alliance with one Tennessee bank to manage individual accounts. Recently, the Pittsburgh-based fund company started managing equity investments for customers of Union Planters Corp., a $15 billion-asset banking company based in Memphis. Union Planters, which has $1.2 billion of assets under management for institutional and high-net-worth retail clients in six states, was approached by Federated after some of the bank's portfolio managers left last fall. "With the Federated approach, the on-site investment professionals are more free to work on managing portfolios and working with clients," said John D. Temple, executive vice president and manager of Union Planters trust and investment management. "Back-office research and analysis will be done by the 100-plus investment department of Federated in Pittsburgh and New York," he added. The bank alliance is with Federated Investment Counseling, Federated's registered investment adviser that manages accounts for large institutional clients such as pensions, endowments, and charitable foundations. The parent has more than $100 billion of assets under management. "We realize that banks need to develop a continuum of investment products, from mutual funds to separate accounts," said Thomas N. Munsell, director of separate account management, a new business line for Federated. Mr. Munsell said the alliance would serve as a test and that Federated executives are "expecting to be able to roll this out to a much wider audience in 1998." Since entering into the alliance, Union Planters has taken six new institutional clients. Federated money managers are investing in individual securities, not just the firm's proprietary mutual funds. "We took significant new business that we would not have gotten before," Mr. Temple said. "There's a tremendous depth of expertise we gain from this that we could not have developed on our own." The first of three Federated investment professionals to arrive in Memphis was C. Edward "Ted" Gibson, an institutional product manager. He and Mr. Temple once competed against each other at bank trust departments in Jackson, Miss. Mr. Gibson recruited Al Morris, a former Union Planters portfolio manager, to work in Memphis, and is about to hire another investment executive to travel to bank offices. Mr. Gibson and Mr. Temple said having a Federated employee on-site will give Union Planters more credibility than it gets from having bank employees sell third-party funds.

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