Banks, in their rush to make mutual funds available, sometimes overlook lucrative opportunities to offer individual securities, says Stephen Fischer, president of Primevest Financial Services.
Some customers will deal with nothing but stand-alone equities and bonds, said Mr. Fischer, whose St. Cloud, Minn., company supplies products and support to banks with investment programs.
But banks tend to neglect these customers, he said.
Primevest believes banks should focus on offer stocks and bonds to a narrow segment of their customer base, while delivering mutual funds and annuities to a broader group.
40% of the Business
Certainly, Primevest's clients appear to be practicing what the company preaches. Individual stocks and bonds account for 40% of the business done by Primevest, which distributes investment products exclusively through banks and thrifts.
The percentage is high compared with those for other marketers of investment products through financial institutions, industry experts say.
Primevest, which is owned by Kinnard Investments, a financial services organization in Minneapolis, does another 40% of its business in mutual funds and the balance in annuities.
Mutual funds and annuities appeal to more investors because they tend to be less volatile than individual stocks.
Safe Harbors
But individual securities like municipal bonds can be relatively safe harbors, Mr. Fischer said. "This is going to be a key for a lot of banks - community, midsize, or large."
Indeed, banks can earn commissions by selling individual equities, instead of losing this revenue to the broker down the street, Mr. Fischer said.
Banks' share of commissions depends on the type of program they operate and the amount of volume the program generates.
The vast majority of Primevests' clients are midwestern community banks. Some 550 of these clients receive basic discount brokerage services. Customers place orders through a branch employee or by calling a toll-free number that connects them to Primevest.
Another 100 clients have full-service programs, with dedicated sales representatives in branches offering investment advice as well as products.
During the past year, Primevest has added 30 full-service clients, about half coming from new business. The rest were existing clients who moved up from discount brokerage programs, said national sales director R. Stuart Warner.
Primevest expects the pace of customers converting from discount brokerage programs to heat up as banks become more comfortable with investment products.
Expansion Planned
The company also plans to add clients by expanding marketing efforts to both coasts.
No matter how big Primevest gets, Mr. Fischer vows to continue the unusual practice of making himself available to every customer who purchases securities through his company's program.Primevest FinancialAt a Glance Head- St. Cloud, Minn.quarters Established 1984 Parent Kinnard Investments, Minneapolis Business Helps banks runline investment product programs Clients 100 banks with full-service programs 550 banks with discount brokerages Asset size $15 million to $3 billion
