Banc One Corp.'s mutual funds are now available to state employees in Arizona and Texas for individual retirement savings plans.
The Columbus, Ohio-based bank has joined forces with Legend Group to sell its One Group Funds to Arizona and Texas university, public school, hospital, and state employees. Legend Group, a Palm Beach Gardens, Fla., firm that designs retirement programs, will administer and distribute the funds.
Traditionally, the plans are stocked with annuity offerings.
This is Banc One's first foray into the public employee retirement account, or 403(b), business. A spokeswoman said the bank is in the early stages of developing an institutional 403(b) product.
The 403(b) tax-sheltered account market is relatively uncharted territory for banks and for mutual funds. But funds are increasingly becoming a more popular investment option for these accounts, according to Access Research Inc., Windsor, Conn.
Of the $330 billion in 403(b) assets at the end of 1995, only $37 billion was in mutual funds. That was up from $28 billion in 1994, according to Access.
An industry consultant said banks should do well in the 403(b) plan market because they tend to have more patience for new business lines than other financial service companies.
"Banks have the ability to plan out further in advance and suffer through getting to the point of being profitable," said Richard Ross, a consultant at Fifty-plus Communications Consulting, Glencoe, Ill. Mutual fund companies tend to have shorter time lines, Mr. Ross said.
But David B. Master, a consultant at Optima Group, Fairfield, Conn., said that once a bank's funds are offered to eligible employees, the bank still has to sell its products. The general image of banks as stable institutions is likely to help Banc One do that, Mr. Master said.
Banc One's brand identity is the key to marketing the 403(b) plans in Texas and Arizona, said a bank spokeswoman.
Jeff Close, with Access Research, said 401(k) retirement account providers are getting into this business because they already invested in the infrastructure that can also be used for public employee retirement accounts. However, about half of all assets invested in 403(b) accounts are now controlled by TIAA Cref, a New York-based annuity company, Mr. Close said.