While other mutual fund distributors are gobbling up as many banking clients as they can, Alps Mutual Fund Services is meticulously pursuing exclusive agreements with regional partners.

So far the Denver-based company's policy to take on only one customer per geographic area has spared its clients competitive friction.

And besides restricting its offerings of mutual fund distribution and marketing support services to noncompeting clients, Alps has also steadfastly refused to develop its own mutual funds.

"We don't have them and we never will," said Arthur J.L. Lucey, president of the 38-employee firm.

Mr. Lucey adamantly defends his company's passion for exclusivity: "The customer is guaranteed we won't be cross-selling someone else's products or our own products in the same market."

So far the strategy seems to be working. Alps has seven mutual fund clients right now, Mr. Lucey said, and "we've won three of the last three bids we've made."

In marketing and sales support, regional exclusivity may offer value, one mutual fund observer said. "If you really have a novel idea, there is a level of proprietariness to it," said Geoffrey H. Bobroff, an East Warwick, R.I.-based consultant. "When a Bisys is representing two or three banks in a market, it raises some questions."

But exclusivity does have a price. In keeping with its contract as distributor and administrator for western regional power First Interstate Bancorp's Westcore Funds, Alps "turned down business in their area," Mr. Lucey said.

It is in the protection of innovative solutions that the company's executives believe their exclusive arrangements offer the greatest benefit. Mr. Lucey cited the traditional separation of advertising firms and rival clients as the model for Alps' approach.

An advertising firm doesn't work for both Ford and General Motors, he said. "We want to devote our creative resources to being a partner without a conflict," he said.

Alps offers a range of support services to bank-managed mutual fund families, including the Mariner Funds from Marine Midland, Buffalo, and First Funds from First Tennessee National Corp., Memphis.

As a fund administrator, Alps manages such back-office functions as accounting, shareholder services, and regulatory compliance. The company also provides marketing consulting and distribution services, including sales training, or "wholesaling," to banks' institutional and retail sales forces.

Mr. Lucey says the firm's strengths are its flexibility and marketing savvy. "We don't have a cookie-cutter approach," he said.

In its role as a consultant to bank marketers, Alps emphasizes detailed, easy-to-understand materials because investment products sales are still new to many banks' front-line salespeople.

"Bankers are different ... than traditional brokers," Mr. Lucey commented. "We're used to looking at things from their side of the desk."

Mr. Lucey and W. Robert Alexander, Alps' chairman, cut their marketing teeth at First Interstate Bank of Denver. They left the bank to found Alps in 1986, believing they could do a better job as administrators and distributors while charging less than companies already in the business.

"People were getting 20 to 30 basis points," Mr. Lucey said, "for doing very little."

The fact that the two executives bring both banking and investment product marketing experience to the table appeals to some clients.

"Their background in banking and mutual funds helped them stand apart in their sensitivity to our needs," said C. Douglas Kelso, manager of trust product development at First Tennessee National.

The company's modest size and short client list has also proved attractive.

"While we were relatively small, we wanted to have a more meaningful relationship than we might have gotten with a larger vendor," said Mr. Kelso. The bank's six-fund mutual fund family has more than $500 million in assets.

Alps executives say they want to preserve their intimate relationship with clients by growing their business slowly. Though current agreements preclude new clients in the Northeast, West, and South, Mr. Lucey is scouting for new banks.

"We want to absorb the business we've got now," Mr. Lucey said. But the company has "strong leads" in the Southeast and Midwest, and "in the next year we'll have a Southwest partner."

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