The Independent Bankers Association of America is beefing up its investment services program for members.

Beginning Oct. 1, clients of IBAA Financial Services Corp. will be able to sell about 120 mutual funds from four companies: Franklin Templeton Group, AIM Management Group, Alliance Capital Management, and Massachusetts Financial Services.

Today, IBAA Financial offers about 50 mutual funds exclusively from MFS.

The new funds will "add variety," said William W. Reid, president of IBAA Financial in Memphis. "We live in a day when consumers are becoming more brand conscious even as it relates to mutual funds."

The Independent Bankers Association of America, a trade group of about 5,500 community banks, launched IBAA Financial in 1994 to offer broker- dealer services to its members. The unit now has 130 bank clients.

The additions to IBAA Financial's preferred list come amid consolidation and heavy competition among third-party marketers of investment products. The move reflects a realization by IBAA Financial that it puts itself at a competitive disadvantage with a limited fund lineup.

"We continued to hear that bankers wanted more choices to offer their customers," Mr. Reid said, "and basically that's our purpose-to serve those bankers."

He declined to disclose IBAA Financial's sales volume.

The unit is also beefing up its discount brokerage service. These changes would let investors buy funds from families not on the preferred list, as well as individual stocks and bonds, which have been offered since 1996. The Internet service has been available since April, Mr. Reid said.

Executives at some banks that use IBAA Financial as their broker-dealer said they are pleased with the changes. "It gives us a few more flavors to add to our offerings," said Gary Chiusano, a vice president at Sussex County State Bank, Franklin, N.J. "While I have complete confidence in MFS and their history, it's always good to have more than one product offering."

Because of the additions, Sussex County soon will be able to sell a New Jersey bond fund, which some clients requested but MFS did not offer, he said.

Despite potential competition from other funds, Lisa Jones, a senior vice president in charge of MFS' financial institutions division in Boston, said she does not expect to lose business. Instead, she expects to increase sales as IBAA Financial gains clients.

"MFS' market share will obviously grow as a result of the new business coming on board," she said.

Executives at the mutual fund companies also expressed excitement about the new relationship.

"We're really going full steam ahead in the bank channel," said Kevin A. Rowell, managing director of the financial institutions division at Alliance Capital, New York.

"We're delighted to be a part of their program," said Michael C. Vessels, a senior vice president and national sales manager for AIM, Houston.

Mr. Reid said he does not expect to add another fund family to the marketing firm's list, and some bankers agreed that four is enough.

"We don't have to have 300 different mutual funds you can buy from," said Jeffrey L. Gerhart, president of First National Bank of Newman Grove (Neb.). "The real key is to know and be comfortable with those funds we're selling to our customers."

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