The new provider of retirement services to America's Community Bankers wants small banks and thrifts to use its 401(k) plan - and sell it to their small-business customers as well.

Diversified Investment Advisors, Purchase, N.Y., plans to peddle its wares to members through Shay Financial Services Co., a partner of the thrift trade group's investment services arm. The joint venture will be announced at the group's annual convention in Atlanta later this month.

The 401(k) product was tailored for small institutions, many of which have small business-clients who would be ideal candidates for the plan, said Gintaris Kastys, senior vice president at Shay. Diversified's pricing and service made it an attractive partner, Mr. Kastys said.

"While everyone is out looking for big accounts I think we've found a way to service the small community bank market," Mr. Kastys said. Diversified's 401(k) plan is affordable for small companies, like community banks and thrifts, while offering 13 different funds, he said.

The arrangement is attractive for Diversified because it puts the company in a strategic position to market its 401(k) product to its bank clients' customers, said Mark Mullin, vice president of marketing. He said Diversified was looking for value-added relationships, which it found in Shay.

"We'd like (members) to try the product on to see our commitment and the value of our 401(k) product. They have to first be comfortable with the product before the pass it along" to their customers, Mr. Mullin said.

Diversified had a multi-site distribution plan in place from past affinity relationships, and keeps its costs low by doing much of its customer service in-house, Mr. Kastys said.

Diversified Investment is marketing its program to about 2,000 thrifts and community banks, Mr. Mullin said, and expects to sign up between 100 and 200 of those institutions a year. About 10% of those that enroll are likely to seize the cross-selling opportunity Diversified's 401(k) plan offers, he said.

"We're excited about the opportunity to deal with financial institutions and eventually access their clients," Mr. Mullin said.

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