Crestar Financial Corp. has selected SEI Corp., Wayne, Pa., to distribute and administer its $1.9 billion-asset family of mutual funds.
In choosing SEI to help market the CrestFunds, the Richmond, Va., banking company is expanding its relationship with SEI. Crestar has used the Pennsylvania company's technology to support its trust business since the 1970s.
Thomas D. Hogan, a group executive vice president at Crestar, said the bank company was impressed with SEI's "marketing support and understanding of banks' retail systems."
Banks that manage mutual funds must turn to unaffiliated distribution companies to handle a range of tasks - such as organizing funds and negotiating sales contracts with brokerages - that are off-limits to banks under the Glass-Steagall Act.
Many of these companies, including SEI, also help banks devise and carry out marketing plans.
In linking itself with SEI, Mr. Hogan said, Crestar is severing a mutual fund distribution contract with an arm of Boston-based Fidelity Investments. The unit, Fidelity Distributors Corp., had handled these duties since the funds were launched two years ago.
As the nation's largest mutual fund company, Fidelity is clearly a large seller of its own funds. But Mr. Hogan said competitive issues were not a factor in Crestar's decision to drop Fidelity.
"We'd still have to compete with them whether or not we had them as our funds' distributor," Mr. Hogan said. Indeed, he noted, the banking company will continue to sell Fidelity's funds.
Crestar will look to SEI to support its 50 brokers, who cover 300 branches in Virginia, the District of Columbia, and Maryland.
To achieve this, SEI will hire a wholesaler from a large fund company to give brokers information and marketing ideas, said SEI senior vice president Victor R. Galef.
SEI also plans to bring on a wholesaler to promote CrestFunds in the 401(k) retirement program the bank company recently unveiled.
Crestar began using SEI's mutual fund distribution services in a small way last year, when it chose the company to distribute and administer an institutional money market fund it had launched.
The result of that trial run demonstrated to Crestar that SEI could handle the entire proprietary fund family, SEI senior vice president Robert Wagner said.