First Interstate Bancorp is scrapping its longtime practice of using hundreds of bank employees to sell investment products in California.

The Los Angeles-based banking company will now rely on brokers who are solely dedicated to offering mutual funds, annuities, and individual stocks.

The shift - prompted by regulatory pressures and a desire to better manage operations - is part of a broader revamping of First Interstate's ambitious investment products program.

In other changes, the company has replaced the head of its investment sales operation in California - where 326 of First Interstate's 990 branches are based - and is reviewing its list of mutual fund vendors.

By Jan. 1, First Interstate will have 35 stockbrokers covering its California branches, said Michael Johnson, a senior vice president at the banking company.

Until now, First Interstate used a mixture of about 20 brokers and a cadre of so-called platform employees to offer investment products. The platform employees were First Interstate bankers who were trained and licensed to sell investments in addition to their other duties.

First Interstate already uses brokers who are solely dedicated to selling investment products at programs in 12 other states. But the company initially had no plans to change its biggest operation in California after going to the trouble of getting platform people licensed.

Now, however, the banking company believes its California program can be better managed, and perform as well, by deploying a smaller number of brokers instead of using hundreds of bank employees who only sell investments as part of their jobs.

First Interstate's decision is opposite to the approach some other financial institutions are taking. For example, Fidelity Federal Bank, in Glendale, Calif., is licensing all 225 of its platform employees to offer mutual funds. And First Union Corp. is culling a sales force from the ranks of its bankers to serve branch customers.

But First Interstate, after traveling that path, prefers a change.

"We believe (a dedicated sales force) is the best way to deliver investment products to our customers," Mr. Johnson said.

He also noted that the shift is in keeping with regulators' belief that customer confusion is more easily avoided when platform people stick to offering bank products.

The banking company has found that many of its platform people are pleased to be relieved of their investment sales duties. "It was a lot to ask in addition to their other responsibilities," Mr. Johnson said. Now the group will serve as a well-trained source of referrals, he added.

First Interstate has brought in a new vice president to oversee the California effort. Sandra Cavanaugh joined the company from American Savings Bank, Irvine, Calif., where she was involved in retail investment efforts. Ms. Cavanaugh is picking up responsibilities that were handled by Ron Levacy, who left the bank and is now a consultant.

In other shifts for the retail effort, First Interstate is paring down the number of outside mutual funds it sells. First Interstate will continue offering its own Westcore and Pacifica mutual funds. But a list that now features 10 outside companies will be slimmed to five or six in coming weeks, Mr. Johnson said.

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