Mutual fund giant Fidelity Investments has turned to the nation's largest bank to fill a key a position in its retail business, signaling that bank brokerage programs have come of age.
J. Peter Benzie Jr., president of Chase Manhattan Investment Services, resigned this week to take a high-level post at Boston-based Fidelity. As an executive vice president in charge of Fidelity's retail customer services group, Mr. Benzie will oversee the company's 82 retail offices in 30 states across the country.
In hiring Mr. Benzie, who spent the past four years building a high- profile brokerage operation for Chase, Fidelity is setting the stage for other large fund companies to raid the banking industry for talent, observers said. Such moves would be highly ironic, as banks once looked to fund companies to staff their nascent brokerage units.
"With all the mergers, the banks are going to provide the market with some pretty good talent," said Herbert Hunt, president of H.I. Hunt & Co., a Boston-based executive search firm.
As fund companies continue to expand rapidly, they will seek out managers with experience running large business units and overseeing huge work forces. Banks are the most likely breeding grounds for such talent, Mr. Hunt said.
At Fidelity, which manages $412.5 billion in assets, Mr. Benzie will be charged with expanding the company's network of branches, known as "investor centers." The fund giant, which has historically reached out to investors only after they have asked for information by telephone, now wants to use its branches to capture new customers.
The move comes as banks continue to drive customers away by closing branches in the aftermath of in-market mergers.
Mr. Hunt predicted that mutual fund giants - which have deep pockets to pay high salaries - will continue to mine banks for executives. Players as large as Fidelity are not likely to raid small competitors in their own industry, he said. And though brokerage firms breed good salespeople, they generally do not produce the type of skilled managers that fund giants crave.
"Banks are all that's left," Mr. Hunt said. "It's only logical that a person from a bank with an aggressive personality can easily move into the mutual fund industry."
Chase Manhattan Corp. officials confirmed Mr. Benzie's resignation but declined to comment. A new brokerage chief has not been named, they said.
Observers said Mr. Benzie's resignation took them by surprise, as it came so shortly after the Chase banker was named brokerage chief of the newly merged bank. Mr. Benzie beat out Leonard E. Malkin, his counterpart at Chase's merger partner, Chemical Banking Corp., for the coveted spot, despite Chemical's control over much of the top echelon of the new Chase.
Mr. Benzie currently reports to a former Chemical executive, Jack Stack, who is now managing director of Chase's direct financial services group. Mr. Malkin, Chase's national sales manager, is considered the likeliest candidate to replace Mr. Benzie, but a source inside Chase said that is far from a done deal.
Outsiders said that the combined Chase-Chemical, which has a brokerage sales force of 300, has enough depth of talent to recover from Mr. Benzie's departure - but has lost an important executive. These observers point to Mr. Benzie's most recent success, meshing together the two distinct brokerage cultures of Chase and Chemical.
"It's a setback," said Barry Knight, a vice president at mutual fund company Pioneer Group who oversees sales through banks. He called Mr. Benzie a "visionary leader" and "a real sharp guy."
Mr. Benzie will work at Chase until Aug. 9, a Friday. He is expected to move to Boston and take his place behind his new desk the following Monday morning.
At Fidelity, he will report to Stephen Akin, president of the retail consumer services group, which includes the company's telephone service operations as well as its branches. Mr. Benzie is replacing Thomas Lewis, who was recently named an executive vice president in charge of human resources at Fidelity's parent company, FMR Corp.
Mr. Benzie started at Chase in 1992, after a stint as director of marketing at Lord Abbett & Co., a New York mutual fund company. He was a broker at the old Shearson Lehman Brothers Co. before that.