Fleet Plans to Use Schwab Mart in Wrap Account

Fleet Financial Group, which recently bought the discount broker Quick & Reilly, plans to incorporate Charles Schwab & Co.'s OneSource mutual fund supermarket in a new wrap account.

The Boston-based banking company is negotiating with San Francisco-based Charles Schwab to give Fleet customers access to some of the 800 no-load, no-transaction-fee funds available through OneSource, a Fleet executive said.

The move comes despite Fleet's access to Quick & Reilly's supermarket, which offers investors 290 no-fee mutual funds.

Fleet is still in negotiations with Schwab, said Linda Goodwin, a senior vice president and managing director for marketing at Fleet Investment Management. She said that she expects to close the deal and roll out a new wrap account by the fourth quarter.

"We would use some of the OneSource funds to go in the wrap with ours," she explained.

Fleet's negotiations with Schwab were first reported by Bloomberg News. Schwab declined to comment.

For now, Fleet plans to include in the new wrap account only funds drawn from itsown Galaxy Funds and funds from Columbia Asset Management. Fleet acquired Portland, Ore.-based Columbia last year.

Two types of wrap accounts will be launched. One will be aimed at high- net-worth investors and the other at somewhat more middle-income investors. Details are still being finalized, Ms. Goodwin added.

Fleet is drawn to the wide choice of funds offered by OneSource and to the possibility of offering its own portfolios in that wildly popular fund mart. But Ms. Goodwin said that other factors are influencing the strategy.

"It's mostly the clearing and technology that we're going to be taking advantage of," she said.

Ms. Goodwin said Schwab's ability to balance portfolios "within minutes" is crucial when providing a wrap account. Schwab would clear the funds available through OneSource; U.S. Clearing Corp., Quick & Reilly's clearing arm, would clear Fleet's funds.

"Schwab is a great partner, and it would be to our advantage to work with the best on the technology side," said Ms. Goodwin.

Schwab has a similar agreement with First Union Corp. in Charlotte, N.C., and its brokerage arm, Wheat First Union.

It also provides OneSource funds to the wrap account of Cleveland-based KeyCorp, but does not yet attach clearing services.

Quick & Reilly is looking at providing access to funds in its own supermarket for Fleet wrap customers, and is also examining other potential synergies with Fleet, a spokesman said. Fleet bought the brokerage firm in January.

Quick & Reilly also plans to increase to as many as 600 the number of funds available in its no-transaction-fee program.

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