and Exchange Commission for a program that the company says would make wrap accounts a more attractive offering for bank brokerages.

Though they are popular at nonbank brokerages, wrap accounts, in which investors pay an annual fee to an adviser for managing a customized portfolio of mutual funds, have been slower to catch on at bank brokerages.

Unlike quick-hit sales such as mutual funds or stocks, wraps need several years to be profitable. And since many bank brokerages cannot afford to pay brokers up-front for future gains, there is often little incentive for brokers to push the products.

Yet as the wrap industry continues to blossom -- it grew 47% last year and topped $82.46 billion during the first quarter, according to Cerulli Associates Inc. of Boston -- banks are increasingly craving a piece of the pie. And the Columbus, Ohio, fund-servicing company says it has come up with a way to help them get it.

Here's how it works: Wrap sponsors such as brokerages would create the asset allocation models and set the annual fee for the accounts. Bisys would then pay the firms an initial fee of 3% of the assets accumulated, said James M. McCoy, senior vice president of product development at the mutual fund servicing arm of Bisys Inc. of Little Falls, N.J. Brokers, in turn, would receive a certain percentage of that.

"Wrap sponsors get the best of both worlds -- the up-front payout of a mutual fund or annuity, and after three years, they get the recurring revenue of an asset management account," Mr. McCoy said.

Bisys would make its money back by charging the sponsor a portion of the annual advisory fee for a set period of time, typically three years.

It also charges a flat fee plus a percentage of assets under management for its back-office support.

Bisys has been developing the program for more than two-and-a-half years. To more forward, it needed permission from the SEC to levy a contingency fee, in case investors close their accounts within three years. The fee, similar to that of a "B-share" mutual fund, is necessary to insure Bisys does not lose the money it advances to wrap sponsors, Mr. McCoy said.

The SEC has typically frowned on programs that penalize investors for terminating an adviser's services because such penalties could make investors reluctant to end a bad relationship, explained Jay Baris, a partner in the New York law firm of Kramer Levin Naftalis & Frankel.

But Bisys convinced the SEC that the contingency fee would merely compensate the wrap sponsor for services already provided, and thus was not a penalty. The SEC was also appeased by Bisys' assurance that it would provide adequate disclosure to investors.

Bisys, which provides back-office processing and other services for five wrap sponsors, says it hopes to see that business increase "significantly" when it rolls out its program as early as next month, Mr. McCoy said. He added that the product would be most appealing to large bank brokerages, which have tried to sell wrap accounts, but have had little success.

Indeed, though the wrap-account business accounted for 1% of gross revenue at bank broker-dealers in 1997, that figure had fallen to 0.6% by last year, according to a study by Kenneth Kehrer Associates of Princeton, N.J.

The findings were culled from a survey of 55 banks, which account for 53% of all investment sales at banks.

By providing incentives to brokers, the Bisys program "could seriously put some rocket boosters on somebody's wrap business," said Jeff Benjamin, a consultant with Cerulli Associates.

Some bank brokerage chiefs said they were interested in learning more about the program.

"We like to look at things that are a little bit different from the way we and other brokerage companies have been doing business," said Joseph Cooney, the president and chief executive of First Security Corp.'s brokerage in Salt Lake City.

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