After waiting on the sidelines for many years, Rhode Island's Citizens Bank is diving into the mutual fund business.

The Providence-based bank, a subsidiary of Citizens Financial Group, announced this week that it will begin selling Putnam and Fidelity mutual funds through its branches.

The program is a big step for the $8 billion-asset bank holding company, which was one of the last holdouts in a time when most large banks had already plunged into mutual fund sales.

"I think we were the biggest bank that didn't offer mutual funds," said chairman Lawrence K. Fish. The program began in Rhode Island this week and will be launched in Massachusetts and Connecticut this summer.

Taking on Fleet Financial

Mr. Fish said the bank wanted to take its time picking the right partners and products. He said Fidelity and Putnam were selected for their "sterling reputation and solid performance record."

Now the company will go toe to toe with the local heavyweight, Fleet Financial Group, which has made a big mutual fund push. Fleet markets a proprietary no-load mutual fund family, the Galaxy Funds.

"Fleet has put its stake in the ground and I think this is Larry Fish's way of saying, 'I want a piece of the pie'," said Louis S. Harvey, president of Dalbar Financial Services, Boston.

In fact, Citizens raided Fleet's mutual funds operation in February, when it hired L. Peter Sheehan as president of its new investment products group. Mr. Sheehan helped launch Fleet's mutual funds program during a 13-year career at the Providence company.

In his new post, Mr. Sheehan oversees a staff of eight brokers stationed in nine Rhode Island branches. An additional 32 brokers will be added in Massachusetts and Connecticut.

The bank has selected CoreLink Financial, an investment products marketer based in Concord, Calif., to help run the sales program.

Linked by Laptop

CoreLink will arm Citizens' field representatives with laptop computers, enabling them to stay linked to the branches where they are based while they meet clients in other bank branches.

The representatives will be able to use the equipment to show customers financial projections and to close sales.

"The major advantage of being late to the game is that we can offer the latest technology," Mr. Sheehan said.

CoreLink also offers an accounting system that had special appeal to Citizens, Mr. Sheehan added.

For one thing, CoreLink offers consolidated statements, which are seen as strong marketing tool. Consumers like having all their financial information on one statement that is easy to read.

In addition, CoreLink pledges to keep its data base of customer accounts confidential, said Roger Loar, the firm's president.

This is important to many bankers, who worry that if mutual fund companies get hold of customer lists, they will deluge bank clients with marketing materials for nonbank products.

Mr. Fish said the combination of products, service, and technology should give Citizens an edge against its competitors.

"Our customer base is working class, with a tradition of saving," said Mr. Fish. "We wanted to tailor our product for people in the Northeast."

Initially, some of Citizens' mutual fund sales representatives will carry Series 6 licenses, the credential issued by the National Association of Securities Dealers that restricts brokers to selling only mutual funds.

But Mr. Sheehan said he plans to shift the entire sales force to Series 7 licenses over time. These credentials allow brokers to sell a broader range of investment products, including individual stocks and bonds.

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