A banking veteran wants to change the way third-party marketing firms help banks sell investment products.
Joseph S. Dolock, who until three months ago headed Crossland Federal Saving Bank's in-house brokerage program, joined CPI Financial Services last month. As senior vice president, he will spearhead the firm's plans to market products through banks.
A decorated Vietnam War veteran who likes to play tennis in freezing weather, Mr. Dolock has spent his career in a variety of banking posts.
He worked at Chemical Banking Corp., New York, where he was in charge of mergers and acquisitions. He also was head of investment services at New Hampshire Savings Bank. He ran Crossland's brokerage until the Brooklyn, N.Y.-based thrift transferred those operations in October to GNA Corp., a Seattle-based marketing firm.
Mr. Dolock said his experience running a brokerage and working as a banker will help him in his new post at CPI. He said his background will also be an asset in helping bank-based brokers understand the market.
"The ideal is to give the investor a full range of products, not just government funds or bond funds," he said. Customers should also be offered no-load mutual funds, in addition to products with sales fees.
Unlike many marketing firms that have already cemented alliances with bigger banks, CPI, which managed about $100 million in assets at the end of 1994, is mostly targeting New England credit unions and small banks that have $1 billion or less in assets.
The Providence, R.I.-based firm also positions itself as a full-service brokerage business, distinguishing itself from the crowd with a wrap- account type of asset allocation product and better trained brokers, Mr. Dolock said.
Even so, Mary McAvity, a consultant with Cerulli Associates in Boston, said this is not a good time for investment marketing firms start-ups like CPI's.
"Good luck to them," she said. "They're going into a very tough market. Most banks have thrown out their third-party marketers.''
CPI's investment representatives will be required to have two licenses from the National Association of Securities Dealers. A series 7 license will permit brokers to sell securities, along with mutual funds, and annuities. A series 65 license will allow brokers to act as investment advisers, enabling them to charge a fee for investment advice.
The investment advisers will update individuals who hold assets in wrap accounts on a quarterly basis. Wrap accounts are newcomers among investment marketers, and some who follow the industry say they pioneer a concept large brokerage houses have used for more than a decade.
"There is a real movement in the brokerage industry in the direction away from selling transaction-based products," said Kenneth Kehrer, who heads Kenneth Kehrer Associates in Princeton, N.J. This trend, he said, is in response to declining sales.
CPI's asset-allocation program is based on a theory that won the Nobel Prize in economics in 1990. The strategy seeks to diversify assets in order to minimize risk.
"It's a quantitative way of measuring risk," and increasing returns at the same time, said Todd LaScola, CPI's president.
Using this system, investors answer 18 questions to determine their risk tolerance and investment goals. Then CPI's representatives use the answers to "customize" investors' portfolios.
Several other investment marketers have come up with similar asset- allocation packages. Tampa-based Invest Financial Corp., one of the largest marketing companies, recently launched its own asset allocation software. And Boston-based Fidelity Investments last year unveiled three versions of software that help bank-based representatives develop portfolios using computer models.
Some companies, such as Wayne, Pa.-based SEI Corp., have even come up with mutual fund wrap accounts, which "wrap" money management by well-known fund companies and trading and financial planning services.
SEI, a diversified financial services company, makes money from built-in mutual fund fees, and banks charge a one-time "wrap" fee that can vary between 1% and 1.5% of the assets under management.
CPI executives say that what distinguishes them from other marketing companies is that CPI does not have to rely on any one manager. The company that runs CPI's asset allocation program, Wilson Associates, in Woodhills, Calif., only performs a quantitative, not a management-type, role.
"We can use any manager we want," said Mr. LaScola.