Northern Trust Corp. says it is hitting pay dirt by coordinating the sales efforts of its investment management unit and others, such as retirement plan administration and custody.
Though cross-selling is not new at Northern Trust, the Chicago banking company started training programs on each product and service to bolster the sales method last year.
"We've really elevated our cross-sell in the last year," said Stephen N. Potter, senior vice president of Northern Trust Global Investments. "A lot of that is (because) our investment management resources are greater now."
Northern Trust is repackaging products and services it acquired in recent years, including the index fund manager ANB Capital Management and the employee benefits consulting firm Hazelhurst Corp. Both have taken the Northern brand name.
Acquisitions have helped foster cross-sales, said Constance F. Magnuson, the chief executive officer of Northern Trust Retirement Consulting. The employee-benefits group has expanded since the purchase of Hazelhurst in 1994.
"We invested heavily in our capabilities and infrastructure, so we're in a position where we're winning larger pieces of business," she said. "It's become very obvious for us to link the capabilities in the prospect's eyes."
For example, because index funds can complement defined-contribution and pension plans, the funds are a natural choice for cross-selling, Mr. Potter said.
"It's more of a systems-driven investment strategy. There's no question that a large bank can be very successful at it," Mr. Potter said.
And because of their scale, custody banks "have the cost advantage that no one else can really touch," he added.
Northern's newest account that uses an indexed equity strategy: $1.75 billion from the State Universities Retirement System of Illinois. Northern, which has served as the system's custodian, said Friday that it will manage those assets in an account pegged to the Wilshire 5000 index.
Another new client, Deluxe Corp., a major supplier of checks and technology-related services to banks, hired Northern in November for its defined contribution plan. In addition to managing $200 million in its Daily Collective Stock Fund, Northern provides record keeping, master trust and custody, benefits payments, and securities lending for Deluxe.
Northern Trust manages a total of $236 billion of assets and administers more than $1.1 trillion.
Assets under management for defined-contribution plans at Northern increased 59%, to $18.2 billion in 1998.
By comparison, annual growth in defined-contribution assets nationally is estimated at an average 12.5%, according to a five-year projection released last year by Spectrem Group. The San Francisco-based investment management consulting group has yet to release a figure for actual growth last year.
One of Northern's competitors has also made a concerted effort to create more overlap between investment management and custody clients.
Eighteen months ago, Mellon Bank Corp. started sharing revenue between business units instead of only providing incentives for salespeople, executives of the Pittsburgh banking company said.
"We just deepen and further cement our relationship with our clients," said James P. Palermo, Mellon's executive vice president in charge of global securities services, the custody business unit.
Half of the global securities clients also invest at Mellon.
Mellon, which has been making acquisitions to broaden its menu of investment strategies, also gives clients who buy multiple services a break on costs, said Ronald P. O'Hanley, the executive vice president in charge of institutional asset management. Mellon has $390 billion of assets under management and $1.8 trillion under administration.
