While some banks opt to run their investment product sales programs themselves, Bank of the West is a firm believer in paying the experts to do it.

After weighing the options, the $3.8 billion-asset bank in San Francisco has decided to stick by its sales partner of six years, Marketing One of Portland, Ore.

In-House Profit Puzzle

"I can't figure out how to make more money by bringing it in-house," said Frank J. Bonetto, an executive vice president who heads the bank's mutual fund program.

Under its agreement with Marketing One, Bank of the West keeps 46% of gross commissions and has practically no expenses, Mr. Bonetto said at a recent industry gathering.

Investment products sales have mushroomed from $14.3 million in 1989 to $93.5 million in 1992, and continue to grow.

Especially for smaller banks, using an outside marketing firm makes sense, said Beth Stelluto, a consultant at Spectrem Group, a San Francisco-based company that advises banks on their mutual fund programs.

Investment products marketers have technical resources, are marketing-oriented, and can give product and sales training, Ms. Stelluto said.

Not that using an outside firm to sell mutual funds has been problem-free for Bank of the West.

Investment representatives can push too hard to get commissions. And it can be difficult to get them to refer customers to trust or private banking departments, Mr. Bonetto said.

Another touchy topic is whether to share customer lists with a marketer. Regulators frown on the practice, and customers can find it uncomfortable.

As a compromise, Bank of the West has branch employees contact customers with maturing certificates of deposit and suggest a meeting with an investment rep.

But on balance, Mr. Bonetto said, the arrangement means good service for customers and healthy profits for the bank.

"The day I can say from a financial and customer standpoint that I should be doing this in-house, I will," he said.

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