It's been a rocky year for Invest Financial Corp.
First, the marketing company lost some of its biggest clients, including Chemical Banking Corp. Then, just this week, its high-profile chairman abruptly resigned.
D. Mark Olson, the departed executive, had been credited with making the Tampa Fla., company a leader in the business of helping financial institutions set up and run mutual fund sales programs.
Kemper Corp. of Long Grove, Ill., Invest's parent, said only that Mr. Olson left "to pursue other opportunities." Mr. Olson himself has been unavailable for comment, with his home phone in Tampa disconnected.
The turbulence at Invest underscores changes that are sweeping the ranks of similar firms, known as third-party marketers.
The problem for many of the firms is that their best clients are becoming big enough and skilled enough to operate with little outside, marketing support. As a result, the firms as being forced to reinvent themselves for the '90s.
Portland-based Marketing One, for example, is currently watching its largest customer, Wells Fargo & Co., bring its sales program in-house. And, like Invest, it has undergone some key personnel changes. Most notably, the head of its broker-dealer suddenly quit in September.
Another leading rival of Invest, GNA Corp., has been transformed by different forces. It was acquired earlier this year by General Electric Capital Corp., which swiftly reshuffled key managers.
Exactly what strategies the marketing firms will adopt for the next several years remains unclear. But Invest's plans may well provide a clue.
For one thing, the company plans to step up its business with community banks as they join their bigger brethren in the mutual fund sales boom. The company is also adopting more flexible pricing and contract terms for banks. Finally, it is pushing existing customers to boost volume - and thus Invest's business - through prodigious use of financial planners.
Kemper has tapped Merlin R. Gackle, head of sales at Invest for the last three years, to step. into Mr. Olson's shoes as president dent of the company. James R. Boris, a Kemper executive vice president, has become chairman, at least temporarily.
Some observers think the management shift will serve Invest well. Mr. Olson, they say,, sometimes alienated both bankers and employees with his hard-charging ways.
"Mark Olson was seen by a lot of banks as being inflexible," said Richard Ayotte, managing partner of American Brokerage Consultants, St. Petersburg, Fla., and a founder of Invest's predecessor firm. "Maybe a change in CEO wih soften the touch a bit and give banks a greater selection in products and the way services are delivered to customers," he said.
Bank Leumi Trust Co. will be among the first clients to get a sense of the new Invest, by virtue of a meeting that was planned weeks ago.
"You can be sure [Invest's] future direction will be on the agenda now," said an officer at Bank Leumi, which sells investment products from all 14 branches.
California Federal, Invest's biggest client, says it is not shaken by the change.
"I don't see how this would change things with us," said Kenneth M. Hughes, chief operating officer of Cal Fed Investment Services, which oversees a 170-branch Invest program.
Certainly, anxious clients are about the last thing Invest needs. The company already has lost at least its fair share of banks.
Early this year, the company lost Chemical to a joint venture formed by the New York banking giant and Liberty Financial, Boston.
Invest lost First Gibraltar Bank, Dallas, the nation's 12th-largest thrift, when the thrift acquired by Bank of America.
Then there was Georgia Federal Bank, Atlanta, and Decatur Federal Savings and Loan, both of which were acquired by First Union Corp., Charlotte, N.C.
To be sure, none of the losses represents a fatal blow to 10-year-old Invest. The company says it still serves 174 banks across the country.
But, despite the boom in mutual fund sales by the banking industry, business volume has actually declined for Invest. This year, the company expects to sell around $1.6 billion in mutual funds through banks, down from $1.9 million in 1992.
And so it was that Mr. Olson and Mr. Gackle began to rejigger the company's strategy. The plans they hatched are now expected to be carried out by Mr. Gackle and Kemper's Mr. Boris.
The logic for targeting smaller banks is simple, said Mr. Olson in an interview just before his departure.
"Banks with $150 million to $10 billion [in assets] don't have the capital to make their own broker-dealer," he said.
This makes them more likely to remain dependent on Kemper's brokerage services, such as trading, clearing, and staff support.
One of Invest's plans for the community banking market is already unfolding in Atlanta, helping to offset the loss of Georgia Federal and Decatur Federal.
The Greater Atlanta Community Bank Program, which counts seven banks as members, relies on a single office in Atlanta to clear trades, mail statements, and handle all other back-office support.
Participants share a manager, who runs the service center and offers on-site assistance.
Just two of the banks have the same sales representative, and that's only because these institutions are in different market areas, Invest said.
James Powell, president of Northside Bank and Trust in Roswell, Ga., calls the program "a very positive addition" to his $ 100 million asset bank.
The fact that Northside shares back-office support and a program manager with other banks doesn't faze Mr. Powell at all. "It's just like outsourcing we do for other things," he said.
Ready for Road Show
The pilot program's success has made Invest eager to take the program on the road. The company expects to approach community banks in metropolitan areas such as New York, Boston, and San Francisco.
Meanwhile, Invest continues to offer all clients a broad array of established mutual funds to peddle, including funds from Putnam, Franklin, and Kemper. While some observers say the company has been too aggressive in promoting its parent's funds, Mr. Gackle says that Putnam's funds are the sales leaders.
Recently, invest has sought to lure bankers with increasingly flexible terms for its services.
Among the measures: dropping a $5,000 fee for banks to sign on with the company.
Shorter Contracts Offered
Invest, which previously locked banks into three-year contracts, has begun offering one-year and two-year options. It also has done away with tough penalties for banks that pull out early.
In addition, banks can now receive higher payouts in return for assuming more responsibility for their programs.
To help clients boost sales, Invest is vigorously promoting the concept of financial planning.
"It's the ultimate relationship tool," said Lynn M. Smelt, vice president in charge of Invest's financial planning department