A year after setting up its bank sales division, American Century Investments has inked distribution deals with 19 banks and is looking to create a wholesaling staff to serve its new clients.
The clients include units of First Union Corp., BankAmerica Corp., Wells Fargo & Co., BankBoston Corp., and Norwest Corp., said David Larrabee, vice president and director of bank and trust sales for American Century, based in Kansas City, Mo.
Industry watchers say that although American Century is a relative newcomer to bank sales, it should be able to hold its own.
"They can compete with anybody," said Paul Kampner, a Chicago-based consultant. "They're not fighting a reputation battle or a quality battle- they have good funds."
But American Century has some catching up to do. Already, 72 mutual fund companies distribute their products through banks, according to American Brokerage Consultants in St. Petersburg, Fla.
And the biggest players-Putnam Investments, Boston; American Funds Distributors, Los Angeles; AIM Distributors, Houston, and Franklin Templeton, San Francisco-each do business with hundreds of banks.
About 80% of American Century's deals are to sell funds for 401(k) plans through the banks' trust departments, with the remainder in retail or personal trust, said Mr. Larrabee.
Cynthia Winslow, director of sales for BankBoston Investor Services, said the bank added American Century funds to its 401(k) lineup last month, making it one of 55 fund families the bank offers.
"They have a very strong reputation, good growth funds, good moderate risk and specialty funds, and they have a nice fixed-income group as well," she said.
American Century's partnership with J.P. Morgan - the bank took a $900 million, 45% stake in the fund company in July-rounds out its fund family with money market mutual funds, which should appeal to banks, said Mr. Larrabee.
Morgan, meanwhile, is marketing its services to banks' capital markets and corporate trust operations, and the two partners are discussing how to combine those efforts, said Mr. Larrabee.
Before that, "There were parts of the banks we were not calling on just because we didn't have the products to make it a viable opportunity for either the bank or ourselves," he said.
The company expects to name three wholesalers in 1998, and those positions will be filled from within the company. As the bank sales effort matures, American Century is also looking to fill a fifth and final territory manager position, responsible for signing up banks in the Ohio Valley region.
"We're hiring folks as we grow the business," said Mr. Larrabee, who previously handled the Ohio Valley assignment himself.
Late last year and early this year, American Century hired four territory managers, each with many years of executive experience at banks or investment companies.
David Swan, formerly of UMB Bank in Kansas City, Mo., handles the western region; Jamie Teschner was hired from Federated Investors in Pittsburgh to drum up business in the Southeast; DeAnna Basler, previously with Oppenheimer Capital in New York, is responsible for the Northeast; and Dan Frank, from Mainstay Funds, New York, handles the Midwest.
Banks have long made American Century funds available to customers who requested them, and they account for $4 billion of American Century's $61 billion of assets under management. Sales through banks were $1.5 billion last year.
But the fund company started a formal effort to get on banks' lists of recommended funds late last year when it formed a bank distribution department.
The effort coincided with the decline of its core base of customers who buy funds without the help of a financial adviser. The fund company anticipates signing up another 30 banks or so by the end of 1998, and developing relationships with more than one department within the banks.
