The Bank's Association of Connecticut has thrown down the gauntlet to companies that specialize in marketing mutual funds through financial institutions.

The Hartford-based trade group has formed its own broker-dealer unit to help its members participate in the mutual fund boom.

Though many state trade associations have taken steps to help their members get into the fund business, the effort by the Connecticut group is one of the most far-reaching yet.

"I think it's a smart idea," said Richard Ayotte, president of American Brokerage Consultants, of St. Petersburg, Fla. "The bankers associations really have a good franchise with their members."

The Connecticut group plans to provide a range of investment products at discount prices to banks and thrifts throughout the state, with an emphasis on helping community institutions that aren't selling mutual funds now.

The trade group also thinks it can woo larger financial institutions that now use the services of rival companies such as Invest Financial Corp. and Marketing One.

The reason: The broker-dealer unit, dubbed Connecticut Association Securities, is a nonprofit venture. So a share of the profits from mutual fund sales, which ordinarily would go to a dealer, will remain with member institutions.

"We decided to use our collective clout to put more money in the bank's pocket and provide more control over the product," said Gerald Noonan, president of the banks association.

Advice and Recruiting

The trade group represents 56 thrifts, most of which are savings banks. It is merging next month with the Connecticut Bankers Association, which has 37 commercial bank members.

Connecticut Association Securities will advise banks on the appropriate steps for setting up and maintaining a mutual fund sales program.

Robert Brawders has been named president of the brokerage. Mr. Brawders, who was vice president and regional manager for retail services of Mechanics Savings Bank in Hartford, set up a full-service brokerage for the thrift.

Salespeople will be recruited by the brokerage, but will be dual employees of the brokerage and the banks where they are stationed. All will have a minimum of two years' experience, and must have a Series 7 license from the National Association of Securities Dealers. The credential authorizes them to sell a range of investment products.

Slow Start

Connecticut Association Securities hasn't begun signing up members yet, because it is still choosing a clearing agent to handle transactions, Mr. Noonan said. But the group expects to have 10 members signed up as brokerage clients within a year, he said.

"We can't get it started fast enough," Mr. Noonan said. He said two member thrifts that were getting ready to team up with an outside marketing firm have put plans on hold to examine the trade group's approach.

Mr. Noonan said the potential pool of clients includes 35 thrifts with combined assets of $10 billion that currently don't have any arrangements for selling mutual funds.

In addition, he has identified another dozen or so thrifts with $5 billion in combined assets that use a third-party marketing firm and might want to switch.

To make the program a success Mr. Noonan estimates that he will need to sign up banks with combined assets of $2.5 billion to $3 billion.

The program has already received a strong vote of confidence from 10 members thrifts, each of which provided $50,000 to help capitalize the new venture.

Combined with $100,000 committed by the trade group, Connecticut Association Securities has $600,000 in its coffers.

In a telephone interview, Mr. Noonan said the mutual fund business is attractive to his members because their role is changing.

"Our old mission of intermediation is diminishing," Mr. Noonan said. "There have to be other products and services to use those assets that we have.

"Five years ago it would have been anathema to even consider this. Mutual funds and other financial products were viewed as the enemy."

But Mr. Noonan said many of his members are too small to interest the companies that help financial institutions market investment products.

Some members feel overwhelmed at the prospect of selecting a company, and still others fear that marketing firms will push products whether or not they are right for bank customers.

"One of our real selling points is that when we bring in and train brokers, bankers don't have to worry about somebody deciding in a boardroom far away, |Hey, let's dump this stuff this month,'" Mr. Noonan said.

"If we didn't start this, our members would all just gradually move into one of the other companies that are out there already," Mr. Noonan said. "But the advantages we have will be significant enough to win them over."

Similar to IBAA Plan

The Connecticut plan is similar to an initiative on the national level by the Independent Bankers Association of America, which plans to begin offering mutual fund services through its broker-dealer unit this year.

The American Bankers Association recently took a slightly different route, endorsing the mutual fund marketing services of Wall Street Investors of New York.

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