recent study suggests that they outpaced many of their competitors last year in asset-gathering. Money managers affiliated with banks and trust companies are perceived to lack the asset-building savvy of those owned by securities firms. However, their assets under management grew by an average of 12.4% in 1994 while assets at units of brokerages and investment banks declined by 5.4%, according to a study released last week by the research firm Investment Counseling Inc. According to Investment Counseling's report, money management units of banks and insurance companies "received the benefit of the distribution and access to assets provided by the parent." The study said a lack of distribution made it difficult for independent firms to compete. Yet it was not determined how distribution affected broker-affiliated investment management firms, because that group had the smallest sample in the survey. The overall average asset growth for the industry in 1994 was 9.4%, according to Investment Counseling Inc., which is based in West Conshohocken, Pa. To calculate asset growth, the study compared yearend net assets under management at 70 money management firms, including 11 owned by banks or trust companies. Only money management firms owned by insurance firms exceeded bank and trust company units in performance. Insurance company-owned firms did the best in 1994, boosting their assets by an average of 15.7%. Bankers think the trend runs even deeper. "People are interested in multiple products and that plays to banks and insurance companies better that smaller boutique providers," said an official of one of the banks polled. The banker, who requested anonymity, surmised that independent money managers, who often provide single-equity products, were feeling the heat of broader demands made by institutional and private clients. Bank-affiliated participants in the Business, Financial, and Compensation Analysis survey included La Salle National Trust, Meridian Investment Co., U.S. Trust Co., Shawmut Investment Services Group, State Street Research and Management, UBS Asset Management, and Barnett Banks Trust Co. Previously, there was more parity in asset growth between investment management companies with different types of ownership. From 1991 through 1994, the average ranged between 25.1% and 31.8%. The survey authors note that other factors besides distribution advantages may have affected the growing disparity between bank-owned money managers and independent firms. "In 1994, fixed income managers had their worst results in decades," said Gregory A. Hazlett, director of Investment Counseling's research. "What sort of allocation the banks had to fixed income may have had something to do with that divergence," he said. The bank and trust money managers also had better profit margins than their boutique competition. This difference is attributed to lower overhead costs at bank-owned firms. In 1994, independent firms witnessed a 20.6% increase in expenses compared to 17.1% at the bank-owned firms. Those expenses offset the higher revenues for independent firms, which increased 20% from 1993 to 1994. Bank-owned money managers increased their expenses 15% from 1993 to 1994. Yet, Mr. Hazlett thinks bank-owned firms may want to increase their expenses even more to assert their competitive abilities in the investment management business. "It's an image problem that probably doesn't go across the board. But, maybe they need to hire more marketing people to change that image," Mr. Hazlett said.

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