Michael Forstl, the new manager of bank sales at John Nuveen & Co., has begun his job near the bottom of a steep hill he must climb.
The Chicago-based mutual fund company he works for specializes in municipal bond portfolios - not exactly the hottest commodity these days at bank brokerages.
"If you look at the banking industry three years ago, sales were dominated by fixed income funds. Now, the industry has made a 180-degree turn," said Mr. Forstl, vice president, financial institutions group.
Selling bond funds was easy when customers scrambled for alternatives to certificates of deposit. Today, those same customers are overlooking Nuveen and focusing on the longest bull stock market run since the 1960s.
As long as the stock market keeps soaring, the outlook for bond fund sales doesn't look good, said Dennis Dolego, partner at Financial Research Corp., a Chicago-based fund tracking firm. "Unless Nuveen broadens its product line, its distribution of funds through banks will only be modest," he said.
But executives at Nuveen plan to stick to their knitting.
As a result, Mr. Forstl is forced to find ways to boost sales without any product innovations. That involves customizing marketing materials for banks and helping brokers run seminars about bond funds and tax planning.
Nuveen, which manages $30.6 billion of open- and closed-end funds, has also streamlined the reporting structure of its financial institutions group, bringing some marketing employees under Mr. Forstl.
Mr. Forstl, 33, a Nuveen veteran who took on the bank sales post Jan. 1, said he would continue heavily marketing unit investment trusts because that product helped buoy total sales through banks in 1995. Total sales were "up modestly" over 1994, he said.
And Nuveen has Mr. Forstl's predecessor, Jerome Contro, pitching a new service to bank trust departments and brokerage firms. The company is offering to manage the individual portfolios of customers with a minimum of $250,000 to invest.
But "our biggest battle now is convincing bank brokers to not just sell the hot stock product," said Mr. Forstl.
Few took the bait last year, when Nuveen drew only $15.1 million in fresh assets into its municipal bond funds, a mere 1.6% of the amount it had drawn two years earlier, according to Financial Research.
Adding to Nuveen's struggle is current talk in Congress about taking away the tax-exempt status of municipal bonds, which has put bond fund investors on the sidelines.
