PORTLAND, Maine -- Tucked away in this coastal community, Forum Financial Group has built a Wall Street-style business.
The company provides an array of investment services to some of the nation's top banks, including Norwest Corp. and Bankers Trust New York Corp.
Forum Financial is perhaps best known as the distributor and administrator of the Norwest Funds. In effect, the company is the Minneapolis bank's partner in managing and marketing the $4.7 billion-asset family of funds.
But Forum is venturing beyond the traditional role of a mutual fund distributor.
Innovation at Bankers Trust
It has helped Bankers Trust create an innovative family of funds that institutional investors use to settle transactions in multiple currencies round the clock.
And Forum recently linked up with the Dais Group, a unit of the Franklin/Templeton Funds, to develop investment services that community banks can offer their customers. (See sidebar.)
Still, Forum's name doesn't spring to banker's lips as quickly as such rivals as Concord Holding Corp. or SEI Corp. - which is fine with founder and chairman John Y. Keffer.
"Our perspective is that the fund is a bank product, not a Forum product," Mr. Keffer said. "We are a service provider enhancing that product."
Northern Exposure
Mr. Keffer, a mutual fund veteran who spent 10 years at Citibank, started Forum in New York in 1985 with just two employees. A year later, the company landed the Norwest account.
In 1987, Mr. Keffer shifted the bulk of Forum's operations to the Old Port district of Portland, though New York remains the company's legal headquarters.
Mr. Keffer, who made the move in part because he had a vacation home in Maine, acknowledges that Portland is an offbeat location for a mutual fund distribution company.
But he says it has advantages. "We get a highly educated work force with a strong work ethic at a very reasonable price."
Rapid Growth
The company has doubled in size about every two years and now has about $8.2 billion in assets under administration.
A decision to develop proprietary fund servicing systems for personal computers, instead of contracting for an existing program, aided the company's growth, Mr. Keffer said.
"We've been able to ride the technological curve in a very powerful way," Mr. Keffer said.
Distribution companies like Forum were spawned in part by the Glass-Steagall Act, which prohibits banks that manage their funds from also distributing them. But Mr. Keffer bristles at the notion that distributors exist only to help banks meet the letter of the law.
Beyond Glass-Steagall
"Our feeling was that we should deliver a quality of service that would endure past the repeal of Glass-Steagall," he said.
Mr. Keffer sees administration as Forum's core business. Transfer agency and other services are "unbundled" to make it easier for banks to pick and choose among services.
Lee Chase, Norwest's vice president of mutual funds, said the banking company has stuck by its distributor for eight years because Forum is flexible and it's good at the essentials.
Forum's low profile is also an advantage, Ms. Chase said. Norwest is comfortable working with a company that isn't "trying to ehnahce its own image in the marketplace."
Eye on Expansion
While Forum is closely tied to Norwest, which accounts for half of its business, it is pushing into other banks as well.
For instance, in 1992 Forum helped Bankers Trust launch the Global Settlement Fund.
The fund was created to enable commodity traders to transfer collateral - and thereby settle trades - at times when the banking system is not open.
In effect, the fund is a linked series of portfolios denominated in different currencies. Commodity traders can post collateral in foreign markets by swapping shares in one portfolio for shares in another at agreed-upon exchange rates.
Although the product has been endorsed by the Chicago Mercantile Exchange, it has not turned a profit for either Bankers Trust, which manages the fund, or Forum Financial, which distributes and administers it. But Mr. Keffer maintains that it showcases Forum's product development talent.
Other Ventures
Forum has also worked with some lesser-known banks. For example, the company launched the Monarch Funds for Imperial Bank, San Francisco, in September 1992. The three portfolios now have $550 million in assets.
Forum also helped launch Crestar Financial Corp.'s proprietary funds, but lost the Richmond banking company when it switched its servicing contract to Fidelity Investments nearly three years ago.
For small banks, the company offers the Forum Funds. The family, which has $100 million in assets, includes several single-state tax-free portfolios.
Lee Schultheis, director of mutual funds management at Forum, says the tax-free funds for Maine and New Hampshire have been especially popular offerings at banks.
