Mutual fund companies and brokerages used to turn up their noses at bank mutual fund executives, viewing them as also-rans in the marketing and management of investments.

Not anymore. In recent years, as banks have beefed up their mutual fund businesses, they have lost some of their top talent to nonbank competitors.

At firms ranging from tiny Kinetics Asset Management to industry leaders like Alliance Capital Management and Invesco Funds Group, former bank mutual fund executives now occupy corner offices.

These ex-bankers look back at their old employers with pride, saying that they learned valuable lessons that remain relevant in their new roles. But they also revel in the differences.

"At a bank, you learn a lot about controls and compliance. You see a lot of zeroes at the end of numbers," said Steven R. Samson, a veteran of Chase Manhattan Corp. and U.S. Trust Corp. who is now chief executive officer of Kinetics, a $1.5 billion-asset fund company in White Plains, N.Y. (See article on page 1.)

"At the same time," Mr. Samson said, "deals get so big that they're hard to implement."

American Banker recently caught up with some other fund industry notables who spent time in banking.

  • Before joining New York's Alliance Capital Management LP, Richard A. Davies made his mark at First Chicago Corp., now part of Bank One Corp. He ran the company's brokerage business after getting its mutual fund group up and running.
  • Mark H. Williamson, chairman and chief executive officer of Invesco Funds Group in Denver, cut his teeth at NationsBank Corp.
  • Robert D. Flowers Jr. passed through First Union Corp., Bank One Corp., and BankAmerica Corp. before taking over as director of Jersey City-based DLJdirect's select client group.

The lessons these executives have carried away from their banking days vary, but they share the belief that banks have a strong future in the investment business.


During six years at First Chicago, Richard A. Davies was in the vanguard of the banking industry's move into the investment business.Before joining Alliance Capital as managing director of its bank sales division in 1995, he was a strategy consultant at First Chicago. Soon the bank would tap him to head its fledgling mutual fund business.

"We were really starting a new business within the bank," said Mr. Davies, who later went on to run First Chicago's brokerage unit. "We were kind of inventing it for ourselves, and that teaches you a lot."

Mr. Davies now oversees sales and distribution for Alliance through a range of advisory-based channels, and no longer works with the bank channel. But, he said, his banking days gave him a firmer grounding in all aspects of the mutual fund and brokerage business - from mutual fund pricing, to broker compensation, to regulation.

The benefits of having that range of experience are not always tangible, but the end result is a greater understanding of how the business functions as a whole, Mr. Davies said.

"It's the perspective you have as a general manager," he said. "That's something that bank people have had, because they have run their own business within the bank."

Mr. Davies left First Chicago shortly after it announced plans to merge with NBD Bancorp. The resulting company was later bought by Bank One.


At Invesco Funds Group, chief executive Mark H. Williamson relishes being able to focus exclusively on investments."There's a satisfaction to me to being involved in the primary purpose of the organization," said Mr. Williamson, who joined Invesco in 1998 after 12 years at NationsBank, the predecessor to Bank of America Corp.

"Investing is not a part of what goes on at Invesco - it's our core business," he said.

NationsBank, where Mr. Williamson oversaw the asset management unit and proprietary mutual funds, was as aggressive and dynamic as any nonbank investment firm, he said. But the company's size and centralized structure could be a drain on time, he said.

Because it is relatively smaller, Invesco is "more focused on the customer and less focused on internal issues," Mr. Williams said.

But of the skills Mr. Williamson acquired at NationsBank, one of the most useful for his new job has been the ability to coordinate with working groups in a large company, he said. Invesco is part of Amvescap PLC of London.

"We have offices in 26 countries around the world," he said, and fostering teamwork in that environment is crucial.


Robert D. Flowers Jr. says banks can do very well in the investment business - if they make fundamental changes to the way they do business."It's too parochial in the bank environment," Mr. Flowers said. Whereas nonbanks focus on clients' needs, at banks "everyone's still working for their silo," he said. "Banks have the product capability, but the silo issue gets in the way."

He should know. On the way to his current job as director of DLJdirect Inc.'s select client group - which targets clients with $1 million or more to invest - Mr. Flowers held top positions in the brokerage units of First Union, Bank One, and BankAmerica.

His new employer has "silos," too, he said. But DLJdirect, which is mostly owned by Donaldson, Lufkin & Jenrette Inc., has done a better job of encouraging referrals to sister providers, largely through compensation and incentives, he said.

At the top level, bank executives understand the need for change, but "the bigger you are, and the longer you've been there, the slower you change, and they're fighting their way through the process," he said.

"I still believe banks have the greatest opportunity to succeed in the financial services business, but their culture gets in the way of success."

Debra Cope contributed to this report.

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