World Trade Center, Citigroup manages the distribution of the largest U.S. bank-owned retail fund group, using the same approach the banking company has applied to its other business lines: selling multiple products with multiple brands through multiple sales channels.

Laurie A. Hesslein, executive vice president of Salomon Smith Barney Inc. and head of U.S. mutual funds for SSB Citi Asset Management Group, oversees this complex web of products, brands, and sales forces. In a recent interview, she said Citi's fund business was still undergoing changes, including revised marketing plans and materials and additional product offerings that are to be launched this fall.

Carefully monitoring cross-selling opportunities through Citigroup's sprawling retail distribution channels, Ms. Hesslein said, "We are always looking for new ways to grow."

Citi was already one of the largest bank managers of mutual funds before its October 1998 merger with Travelers Group. That historic combination created a retail fund group with assets measuring $133 billion at midyear, enough to vault over Mellon Bank Corp. and into first place among bank mutual fund managers, according to rankings compiled by Summit, N.J.-based Lipper Inc.

Citigroup's fund business focuses on four brands, each with its own identity. Each of the families is sold through one or several channels, which include Salomon Smith Barney offices; Travelers insurance representatives; Citibank's U.S. branch network and overseas offices; outside brokerage firms; and two Travelers-owned agencies, Copeland Companies and Tower Square Co.

Observers said Citi faces many challenges as it tries to build market share in the retail fund world, but commended the decision to manage sales using multiple brands and channels.

"You have a higher probability of getting wallet share," said James Cerutti, a marketing consultant and brand expert at New York-based FutureBrand. "Advisers aren't going to tell their clients to put all their money in one basket."

"With so much money flowing through the fund world, this might not be the best time to consolidate brands," added Elsie Maio, president of New York-based brand strategy firm Maio & Co. "They have established brands already. It could be an embarrassment of riches."

Still, some observers noted that Citigroup's focus on selling almost exclusively through its own sales force with the exception of one of its fund families may put it in danger of falling behind other fund companies that now sell through Internet-based fund supermarkets.

"They are going to have to face up to the mutual fund marketplace," said Edward Furash, chairman of Alexandria, Va.-based Monument Financial Group and a long-time retail-banking consultant. "The chance of success by selling solely through your own shop has weakened."

Ms. Hesslein, 39, brings a great deal of experience to the task ahead of her. She joined Salomon Smith Barney in 1995 as director of unit investment trusts after stints in fund sales and development at Shearson Lehman Brothers and Merrill Lynch & Co.

In 1997, she was named director of the Smith Barney Mutual Funds. Back then, she said, sales of the fund family were languishing and other competitors were picking up market share. The company decided to overhaul the portfolio selections and reposition the funds, pitching them to investors as "style-pure" (meaning nearly entirely invested in their advertised asset class). Another critical decision was to make the portfolio managers accessible to the brokers who sold the funds and to their clients.

"We needed to help the financial consultants sell them," Ms. Hesslein recalled.

The changes worked. "We took a fund company that was okay but not great and turned it around," Ms. Hesslein said. "We started moving up in market share."

In the new organization, the Smith Barney Mutual Funds, the oldest and largest of the four fund families, acts as the cornerstone of the retail fund business. The family has 60 individual portfolios ranging in style from an aggressive growth equity fund to a natural resources fund to an array of U.S. government and municipal bond funds.

They are marketed exclusively through Smith Barney offices throughout the United States -- and through a new 401(k) retirement product -- and are targeted toward high-end, sophisticated investors, Ms. Hesslein said.

Salomon Brothers Investment Series, a collection of 10 funds, is also aimed at the well-heeled client set. Ms. Hesslein said their appeal was their "high-octane," aggressive investment style. Many of the portfolios are fixed-income, a nod to Salomon's historic strength.

The family is sold through Salomon Smith Barney offices as well as more than 200 national and regional brokerage firms, including Merrill Lynch. Ms. Hesslein said differentiation was the greatest challenge for the Salomon funds, which have to compete for brokers' attention with other well-known fund companies' wares.

"We are looking to add more depth and breadth to the family," Ms. Hesslein said. "We don't want Salomon to be a niche brand. We want it to be a well-known brand with a full complement of products."

The two other families, CitiFunds and the Concert Funds, are designed for middle-market consumers. CitiFunds offer 23 portfolios, mostly money-market accounts, with a smattering of stock and bond selections. In addition, CitiSelect, a group of nine funds, offers a mix of different stock and bond weightings for investors seeking ready-made asset allocation.

The Citi funds are sold through the U.S. branch network and through Primerica Financial Services, an Atlanta-based Citigroup unit that deploys tens of thousands of financial planners to sell insurance and investment products to middle-market consumers.

The Concert Funds, represented by Concert Investment Series and Concert Allocation Funds, are also marketed through Citibank branches and Primerica. They are managed by the same portfolio managers who watch over the Smith Barney Mutual Funds.

Ms. Hesslein said the company's strategy centered on cross-selling and bringing new product offerings to market quickly. Many of the pieces were already in place before the merger that created Citigroup. The next step was to match existing products at each of the predecessor companies with corresponding channels at the combined institution and to find gaps that needed to be filled.

"We looked at who we were distributing products to, which brands we had that would fit elsewhere, and where they were being sold, and then we looked for similarities," she said.

Initial tests have yielded positive results.

The company introduced the Concert Investment Series in Citibank's U.S. branches in April and has already racked up sales of $86 million. The funds are also sold through Primerica.

A new product added to the Smith Barney Mutual Funds family that allows investors to create their own portfolio by picking from a selection of 20 growth and 20 value stocks has sold more than $500 million since its introduction in late July, Ms. Hesslein said. Premium Selections, as the product is called, is sold through Salomon Smith Barney offices.

In addition, Citi has repositioned a collection of 14 Global Horizons funds, which specialize in offshore investing. The family, renamed Salomon Brothers Global Horizons and relaunched in mid-September, was added to product rosters in Citi's U.S. and foreign branches. It previously was sold only through Salomon Smith Barney offices.

Much more is on the agenda, including the development of an Internet sales strategy, Ms. Hesslein said. "We are building up," she said. "Later in the fall, there will be a lot more I can tell you." ?

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.