First Tennessee Bank's investment advisers and clients are only slowly warming up to its fee-based registered investment advisory platform.

Rhomes Aur, the executive vice president of wealth management at the First Horizon Corp. unit, said he expects broader interest soon, but analysts said the Memphis company needs to be realistic, since fee-based platforms take time to resonate with customers. "It's like taking olives out of a jar," Aur said in an interview. "Once you get the first one out, the rest of them fall out too."

The registered investment advisory platform, which First Tennessee unveiled in June 2008, has been "fully embraced" by 15% of the bank's 90 advisers, he said. Marketing of the platform, which is available to advisers in First Tennessee's private banking and wealth management units, was increased early this year, and assets under management should reach $100 million by yearend.

One factor in the slow start has been the economic downturn, but reps have also been hesitant about being compensated under a fee-based approach, Aur said. Arrangements that involve advice and fees typically pay advisers 1% to 1.5% a year of a client's assets, while commission-based sales pay larger amounts up front.

Fee-based accounts are catching on rather slowly at banks, according to Kehrer-Limra. It said fee-based platforms accounted for 6.7% of bank investment programs' revenue in 2007. Kenneth Kehrer, the research director at Kehrer-Limra, said the riddle of how to make fee-based investment sales appealing to brokers is slowing acceptance of that model throughout the industry.

He said banks are not willing to pay advisers attractive sums up front for the assets they bring in "because it's like paying in advance."

One solution is to hire reps who already have a large book of fee-based business. Fulton Financial Corp. in Lancaster, Pa., hired 15 advisers over the past year who have helped its retail brokerage unit build its fee-based platform to about $150 million of assets within the past six months, said David Hanson, chairman of Fulton Financial Advisors, the bank's wealth unit.

"We've made a lot more progress a lot more quickly than I would have anticipated," he said. "By far the biggest progress we've seen has been from recruiting."

It's a challenge to convert brokers to the fee approach, Hanson said. The brokerage has been on a push to expand its fee-based business since the middle of last year, when it converted to a Raymond James Financial Corp. platform. Between the gradual acceptance from existing brokers, and the influx of new brokers, Fulton Financial Advisors expects to increase revenue, he said.

Mutual fund investors shifted away from commissions and toward fees last year. Of new fund sales through brokers and advisers in 2008, 62% did not involve front-end fees, according to a study by Strategic Insight Mutual Fund Research and Consulting LLC.

At First Tennessee, reps say that clients who have adopted the fee-based approach said like the sense of having their interests aligned with their advisers, Aur said. It developed its RIA platform to generate more revenue from affluent clients. He said stronger market conditions could lead to a spike in growth.

"A down market is not a good time to roll out anything," he said. "But now that we're out there, when the market turns we will have a chance to capture assets and clients from other firms."

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