Wells Would Use Advisers For Securities Wrap Account

Wells Fargo & Co. is looking to go head to head with wire houses that manage separate equity and fixed-income accounts for individuals.

To keep its clients from taking separate account business to firms like Merrill Lynch & Co., Wells will shortly unveil a wrap account, Wells Select, with a minimum investment requirement of $100,000, said Dennis Mooradian, a bank official.

In an unusual twist, the San Francisco-based banking company plans to outsource the management of the accounts to one of 32 investment advisory firms.

"You see the headlong crash that is taking place between banks and brokerage firms," Mr. Mooradian said.

"We don't want our clients to feel that they have to go anyplace else to get the full range of products and services."

Mr. Mooradian, who is an executive vice president of the bank's private client services and president of Wells Fargo Securities, said that the rollout awaits approval from the Securities and Exchange Commission. Wells Fargo Securities has filed with the SEC to become a registered investment adviser.

The accounts will charge a minimum fee of 3% and will be sold by 340 financial consultants and private client managers at Wells.

The initial client contact is with Wells Fargo, which in turn outsources the management capability to firms like Lazard Freres & Co. and Nicholas Applegate, said Mr. Mooradian.

"Our financial consultants and private client managers manage the client relationship, and it allows the money manager to focus on managing money," he said.

The managers would receive a fee of 50 basis points for equity accounts and 35 basis points for fixed-income portfolios.

Though the minimum investment for the new account is $100,000, Mr. Mooradian said that the bank expects to attract clients with $1 million to $5 million to invest.

Wells is among the first banks to offer such an account, said Jerome Paolini, a Wells vice president and national product manager in private client services.

Wire houses like Smith Barney Inc. and Merrill Lynch have traditionally dominated the equity account business, said Andrew Guillette, a consultant with Boston financial research firm Cerulli Associates.

Figures compiled by Cerulli for 1996-data for 1997 are not yet available-showed no banks directly involved in the business, said Mr. Guillette. However, there are a number of third-party vendors that may provide turnkey services to banks that want to be in that business, he said.

Wells already has a wrap account program, Portfolio Advisor, which is built around its proprietary Stagecoach Funds and third-party mutual funds. As of March 31 the Stagecoach Funds had roughly $25.3 billion of assets under management.

Since last summer Wells has had an arrangement with Dean Witter Reynolds, the retail arm of Morgan Stanley, Dean Witter Inc., which involves the sharing of technology research and some products.

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