With the launch of a new investments unit this month, BankAmerica Corp. is striving to fundamentally change its profile in the investment management business.
Long known as an institutionally oriented investment manager - it all but abandoned the retail investments business seven years ago - the San Francisco-based banking company hopes its new investment management services group can become a premier seller of investments to common folks.
"One of our goals and determinations is to be viewed as a much more important provider of mutual funds and related products to a retail clientele," said group executive vice president Alexander Anderson, who heads the new unit.
BankAmerica believes the new division can boost retail sales by improving coordination among the retail brokers serving its branch network, its mutual fund product managers, and its investment managers.
Previously, the retail brokerage chief, Robert Flowers, reported to the head of BankAmerica's institutional trust business, John Lloyd. Meanwhile, Debra McGinty-Poteet, the banking company's proprietary fund manager, reported to vice chairman Mike Rossi. So did Keith Wirtz, head of the investment management group.
By having, the heads of all three of these units report to Mr. Anderson, it is anticipated they will do a better job of working together. This, in turn, is expected to boost BankAmerica's investment sales, especially sales of proprietary mutual funds to retail investors.
For example, the reorganization could help BankAmerica's 450 retail brokers get better support from its proprietary mutual fund product managers, said an investment sales consultant who has done some work for the banking company.
Also, the management change could help the retail brokers have more input into the creation of new funds.
The consultant, who asked not to be named, said he had specifically recommended that BankAmerica combine its investment activities into a single unit to boost sales.
Other banks could probably benefit from similar integration moves, added Geoffrey H. Bobrott, a mutual fund consultant in East Greenwich, R.I. That's because most banks have their retail brokerage reporting to retail banking executives, while the proprietary fund managers report to investment specialists in the trust department, he explained.
One bank that has a reputation for doing a good job of coordinating its various investment activities is Wells Fargo & Co., according to Mr. Bobroff and other consultants.
This is significant because before coming to BankAmerica, Mr. Anderson, 45, spent eight years at Wells Fargo, most recently as executive vice president of private banking, institutional investment management, and proprietary mutual funds.
"I am confident that Alex will take these businesses to the next level to create a seamless, integrated investment product group that provides greater value to customers," Mr. Rossi, the BankAmerica vice chairman, said about Mr. Anderson in a press statement.
BankAmerica's new focus on retail investments is a marked departure from its strategy in the late 1980s.
Abandoning a traditionally lucrative niche of the retail investments business, in 1987 the banking company sold its lead personal trust unit to Wells Fargo for $92 million. As part of the deal, BankAmerica agreed not to compete with Wells in personal trust for five years.
During that period, BankAmerica hired GNA Corp., a Seattle-based unit of General Electric Corp., to operate a retail brokerage force in its branches.
In 1991, BankAmerica bought out that operation to create its own retail broker, and has since nearly doubled the brokerage sales force.
But BankAmerica did not get back into personal trust until its acquisition of Security Pacific Corp. in 1992. Personal trust assets now make up about half of the $30 billion of discretionary trust assets managed by the investment management group.
The merger also boosted BankAmerica from a bit player in proprietary fund management to one of the largest fund managers among banking companies.
But most of BankAmerica's $8.4 billion of mutual fund assets are from institutional investors, a notoriously fickle crowd, as the banking company well knows.
Redemptions by "hot money" institutional investors, and losses on derivatives, forced BankAmerica to bail out two money funds for $67.9 million of losses earlier this year.