Fifth Third Bancorp. is seeking to leverage a newly won contract to administer a major retailer's 401(k) plan into a high-margin money management assignment.

The Cincinnati-based banking company became administrator and record keeper this year for the 401(k) plan offered by Consolidated Stores Corp., a national retailer of toys and discounted merchandise.

Fifth Third, however, failed to capture the management of plan assets, the profitable plum in the 401(k) business. That job still falls to Merrill Lynch & Co., which supplies the mutual funds that are the investment options in Consolidated's plan.

But Fifth Third hopes eventually to interest the big retailer in using its Fountain Square mutual funds instead.

"Part of the strategy is to ... get in the door through the administrative function," said Sandra J. Lobert, a vice president for trust and investments. "Ultimately, we'd like to offer our investment products and other bank services."

Even without the investments piece, the Consolidated assignment is something of a coup for Fifth Third. With 32,000 employees and 6,200 participants in its 401(k) plan, Consolidated is just the sort of big company that typically turns to an insurer or mutual fund company, not a bank, to serve its employee retirement plan.

But after considering proposals from a number of fund companies, the Columbus, Ohio-based retailer chose nearby Fifth Third to replace William M. Mercer Inc. as plan administrator and State Street Boston Corp. as trustee.

"We were looking to get a higher level of customer service ... and are able to save money," said Mark J. Fisher, benefits manager at Consolidated. Fifth Third, he said, was able to offer more features at 25% less cost than the previous vendors.

As for having Fifth Third manage the plan's assets, Mr. Fisher said Consolidated Stores reviews investment options annually and would be willing to consider Fifth Third's proprietary mutual funds next year. But the bank's funds would have to place among the top 20% in performance in their respective categories to stand a serious chance of being accepted, he added.

Fifth Third's patient approach, using the administration business as an entering wedge to get a plan's assets, could pay off, one consultant said.

"Record keeping is usually a break-even business," said Catherine S. McBreen, a consultant at Spectrem Group, Chicago. "But for banks it may be a good wedge because there's so much day-to-day contact with the customer."

In winning the administration and record keeping contract, one key factor in Fifth Third's favor was the dedicated representatives available to answer employee questions, Mr. Fisher said. The previous vendor only offered an automated telephone system to field customer inquiries. Turnaround time for plan reports and statements to employees is also significantly faster, he said.

Fifth Third's nearby headquarters was another compelling ingredient in its selection over national competitors, Mr. Fisher said.

They're "regional and local to us, and that was a big plus," he said.

The local touch is increasingly important even to large companies, which sometimes feel their plans get lost in the shuffle at the biggest providers, Ms. McBreen said.

"Corporations are wanting to have a provider who's nearby and can provide day-to-day handholding," she said.

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