As banks wade deeper into the mutual fund business, they face a sometimes bewildering array of choices.

Selecting which mutual funds to offer to customers is one of the most crucial decisions a bank faces. It can be a mind-boggling chore, especially for banks that are new to the business.

Experts say that in assessing potential mutual-fund providers, banks should look carefully at the size of the companies' sales and support staffs, as well as their qualifications.

To be sure, bigger is not always better.

"Quality counts more than quantity," said Kurt Cerulli, principal of Cerulli Associates, a consulting company in Boston.

Solid Indication

Nevertheless, how many people a fund company has selling to and supporting banks is widely considered a solid indication of its commitment to the bank marketplace.

A sales staff with experience in the bank environment is a major asset to bankers, Mr. Cerulli said, since the bank sales process is different from selling to insurance or brokerage companies.

For instance, he noted, the success of a bank's sales efforts can depend heavily on the mutual fund representatives' ability to get referrals from bank tellers and loan officers. Solid sales support from a mutual fund company can help foster cooperation between the key players.

Fund companies also play an integral part in training bank representatives about their company's products and services. In the brokerage business, that type of training is not so necessary, Mr. Cerulli said.

"The level of hand-holding is a lot higher" when salespeople work with banks, he said.

In an informal survey of some of the biggest mutual fund companies that sell their products through banks, the American Banker found big differences in the way sales forces are structured.

The most noticeable differences are what companies call bank salespeople and how they break down their sales staff, making it difficult to determine exactly how many employees sell exclusively to banks, and who does what.

A number of companies that are acknowledged leaders either would not or were unable to provide data by press time. These companies include Massachusetts Financial Services, Putnam Financial Services, Federated Investors, and Capital Research and Management.

One reason given was fear that competitors would "stretch" numbers to appear more impressive.

Reluctance to provide data also reflects the sensitivity of this information.

While this makes straight numerical comparisons difficult, there were some clear leaders.

Fidelity in the Lead

Of the companies that did provide data, Fidelity Investors boasts the largest sales force dedicated to banks.

The Boston-based firm has 40 representatives stationed in nine cities, according to Nishan G. Vartabedian, executive vice president for the bank services division.

The figure includes 11 "external wholesalers," who visit banks to provide support services.

Each is assisted by an "internal wholesaler" counterpart.

John Nuveen & Co. weighed in with the largest number of so-called dedicated wholesalers.

The Chicago-based company has 19 such employees, who focus exclusively on providing sales support to banks that sell Nuveen funds. In addition, four sales associates provide support from the firm's homebase. That is a sizeable chunk of Nuveen's total sales force of 85.

Another Chicago-based company, Kemper Financial Services, followed closely, with 15 dedicated representatives, including a national sales manager, out of a total of 48 salespeople.

Double-Duty Salespeople

Eaton Vance reported 13 regional representatives, or wholesalers, and a senior vice president, assisted by 13 marketing representatives. But these 27 salespeople do double-duty, serving both banks and independent broker-dealers. The Boston-based company manages over $10 billion in asssets and derives about a quarter of its sales from banks.

Colonial Mutual Funds also has 13 of its 37 wholesalers in the bank sales channel. The Boston-based company manages about $9 billion for investors.

Franklin Resources, Inc. has eight regional wholesalers in the bank channel out of a 33-person sales staff.

The San Mateo, Calif.-based company has more than $57 billion of assets under management. About a quarter of its sales are to banks.

Pioneer Group has only five wholesalers devoted to thebank channel, but it uses the resources of its 36-person sales force "to help supplement our bank sales effort," said Thomas Ryan, vice president of bank marketing at the Boston-based company.

Using "cross-channel wholesalers" allows Pioneer, which manages about $7 billion in assets, to compete with bigger players, Mr. Ryan said.

Most mutual fund companies call their outside employees that market to banks "wholesalers." However, these representatives may identify themselves as regional vice presidents or key accounts managers when calling on banks.

Back at home base, wholesalers have internal counterparts whose responsibilities range from scheduling appointments and providing marketing; support to answering questions while wholesalers are meeting with bank clients and closing deals.


Several firms, including Colonial, Franklin, and Eaton Vance, match each wholesaler with an internal counterpart.

These telemarketers, as they are known inside the industry, have a variety of titles including regional marketing representatives, regional sales representatives, sales associates or assistants and inside wholesalers.

Telemarketers who work in the bank environment often play a more important role than their colleagues who service brokerage firms, Mr. Cerulli said.

For example, he noted, they tend to have phone conversations that are two or three times longer.

Often a bank representative who calls into a telemarketer has a client sitting in his office and needs immediate answers to a series of questions, Mr. Cerulli explained.

Telemarketers in the bank channel must be well-trained to meet the bankers' needs, he said. "They are almost a part of the face-to-face process."

Of the companies polled, Kemper has the largest internal department devoted to bank sales, with 14 people to field inbound calls, six to place outbound calls, and four marketing representatives. Banks account for about 30% of Kemper's sales.

Expansion Plans

While most of the companies polled said they planned to expand their bank sales forces if bank sales increase, only Oppenheimer Management Corp. and Nuveen stated definite growth plans.

Nuveen plans to add between two and four people next year, according to Mr. Cantro.

Oppenheimer has only 12 outside wholesalers, but they appear to be the one to watch. The New York-based company, which manages over $18 billion of assets, has grand plans.

"With the caveat that there's not a major change in the rate bank sales are growing, we plan to double our sales force by the end of 1994," said Bruce C. Dunbar, senior associate in Oppenheimer's public affairs department.

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