Banc One Corp. and Invesco Retirement Plan Services have formed an alliance to offer midsize businesses a 401(k) option.
The plan, called Pathways to Retirement with Banc One SM, will offer middle-market companies-those with 100 to 500 employees and a minimum of $5 million in 401(k) assets-access to 28 funds from the bank and Invesco.
Banc One Investment Management Group will put up 14 of its One Group funds and Invesco will put up 14 of its Invesco, Primco, and Aim funds.
Banc One will serve as the distribution channel, and Invesco will perform the back-end accounting and administrative work, the companies said. Observers said banks must offer 401(k) products with a broad mix of fund families to stay competitive in the retirement investment business. Banks therefore must form partnerships with nonbanks to complement the proprietary funds they offer.
"Many of the banks have had their own proprietary products, but many retirement plans want choice," said Joy Montgomery, president of Money Marketing Initiatives, Morristown, N.J. "So they need a partner to offer some investment choices." John Alexander, senior managing director of defined contribution services for Banc One Investment Management Group, Columbus, Ohio, called the alliance with Invesco, which was formalized in December, "straightforward."
"We wanted access to their core competencies, which are record keeping and administration, and their multifamily of funds, the Aim and Invesco family of funds," Mr. Alexander said.
Middle-market businesses, he added, are "the segment that everyone is going after" because two-thirds of these companies currently don't have 401(k) plans. It "is a market that Banc One as a corporate bank serves today in a big way."
Atlanta-based Invesco is a subsidiary of Amvescap PLC, a London-based global investment company with $192 billion of assets under management. Last February, Invesco acquired Aim Management Co., the Houston-based mutual fund company.
Robert J. O'Connor, chief executive officer of Invesco Retirement Plan Services, Atlanta, called Banc One "a new and valued distribution channel."
"This is our first undertaking with a bank," he said, and the deal is aimed strategically at "the emerging market through the middle market." Ann Mahrdt, a senior consultant for Spectrem Group based in Chicago, called the alliance "the best of both worlds," combining Banc One's distribution skills with Invesco's administrative expertise. "People are looking at their core competencies and they are finding mates where they are weak," she said. "In this marketplace, people want more choice. They don't want to stay with a single family of funds."
Mr. Alexander agreed. "Aim, Invesco, Primco, the One Group-those four investment families we identify as being multimanager," he said. "That is what plan sponsors are looking for in this market. They are not just looking for a family of funds, they are looking for multiple families."
