Consolidation and pressure to cut costs are forcing executives at mutual fund companies to consider wholesale changes to the way they work through wholesalers.

Most of these companies have separate salespeople for the bank, broker, adviser, and insurance agent channels. But those channels are contracting, and that can make it costly to have a fragmented sales force. The problem is, if fund companies respond to that consolidation by consolidating their sales teams, they run the risk of damaging sensitive client relationships.

MFS Financial Services and Zurich Scudder Investments are among those that have gone beyond thinking about it. Zurich Scudder Investments, a Chicago unit of Zurich Financial Services, consolidated its bank and brokerage distribution divisions 12 months ago, though it still distributes to insurance agents separately.

Mike Harrington, managing director of Zurich Scudder's bank-brokerage division, said the wholesalers generally have had no problems with the change. One reason for this, he said, is that Zurich Scudder trained its wholesalers to understand new types of clients.

Boston's MFS Fund Distributors Inc. combined its bank and financial adviser wholesaler channels last October to give them more regional focus. Jim Fitzgerald, director of the financial institutions and advisers division, said this has enabled MFS to deliver "two to three times the number of wholesalers to each company than our competitors."

Since the consolidation, MFS has boosted sales through 16 of the 20 largest banks through which it sells and has had similar improvement in selling through advisory firms, Mr. Fitzgerald said.

Matthew McGinness, a consultant at the Boston research company Cerulli Associates Inc., said midsize mutual fund companies have the most to gain by centralizing because covering national territories without an extensive sales force is expensive.

Some midsize firms and larger companies, he said, have reorganized their wholesaler forces around regions rather than sales channels.

Houston's Aim Management Group Inc. is one of several mutual fund firms studying the idea. Michael Cemo, president of Aim Distributors, Aim Management's wholesaling arm, said that whether or not it consolidates its distribution channels depends on how multichannel financial services giants such as Citigroup Inc. structure and combine their own banking and brokerage operations.

Cerulli Associates' Mr. McGinness said some banks, brokers, and financial advisers actually prefer this form of centralization. He said the reason is versatility: these people can provide more insight into what other types of companies do and how they are selling the same products.

Not everyone is ready for this change, however. H.G. "Toby" Mumford, bank channel head at Franklin Investments in San Francisco, said, "Most big firms still feel that keeping [wholesaling] channelized makes the most sense."

Banks particularly appreciate the extra service that comes from having a sales force dedicated directly to them, Mr. Mumford said. Also, some combined bank-brokerage entities have not decided how they want to structure their brokerage divisions, making it difficult for a fund company to determine which wholesaling model is better, he said.

Franklin has no plan to unify its wholesaling. "We don't see a compelling reason to do so," Mr. Mumford said.

Some companies are doing the opposite of centralizing. Pioneer Investment Management Inc. announced last week that it had set up that it set up three separate sales divisions to handle broker-dealers, insurance companies, and advisers and banks. Previously it had a strictly regional wholesaler framework.

KeyCorp, the Cleveland holding company that owns both Key Bank and the brokerage McDonald Investments, is a case study in the dangers of this type of centralizing.

William Dent, director of asset advisory services at McDonald, said a number of mutual funds lost business with his firm after KeyCorp's 1998 acquisition of his firm because the funds' bank wholesalers neglected to call on reps once they were moved into McDonald brokerage offices.

"The bank channel may have won the battle internally, but the fund companies lost the war," Mr. Dent said.

For large regional bank brokerages, he said, fund companies should have wholesalers who cover all intermediaries in a given territory. Such a system can be difficult to implement - and would not suit every bank - but more fund companies will adopt it sooner or later to avoid losing business, he said.

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