Though investment product sales have been booming at banks, many institutions are content to sit on the sidelines.

Take Flatbush Federal Savings, Brooklyn N.Y. "I think, like Adam Smith, that every man should have a specialty - ours is thrift deposits:' said Anthony J. Monteverdi, president and chief executive.

Investment product sales, he suggests, are just another misguided trend in banking. "It's all cocktail time talk," he says.

Plenty of other bankers are similarly dismissive. Of 3,600 institutions that don't offer any investment products, 46% have no plans to enter the field at least until 1996, according to the survey by American Brokerage Consultants. Another 36.2% said they never plan to enter.

"I just think that in general many institutions should not. jump into it just because it's the latest fad," said Richard M. Donovan, executive vice president and treasurer of Stoneham Savings Bank, Stoneham, Mass "It wouldn't surprise me if you saw a lot of those smaller banks who are in it drop back out."

The $140 million-asset Stoneham Savings considered mutual, funds but concluded; after consulting with like-sized institutions, that the business just doesn't make sense, Mr. Donovan said. The margins are slimmer than those of traditional activities, customers aren't running out of the bank to invest elsewhere, and most are confused about the risks, he said.

Of course, not all banks on the sidelines are planning to stay there. The survey found that 307 institutions are planning jump in the business by the end of this year, followed by 331 next year.

More than 80% of those future entrants are quite small - assets of $50 million to $250 million. That helps explain why third-party marketing firms and other suppliers have been competing fiercely for the business of community banks.

Indeed, most banks thinking of entering the business expect to work with third-party marketing firms for assistance, rather that setting up their own brokerage subsidiaries. About 80% of all banks planning debuts say they expect to work with third-party marketers, the survey found.

Third-party marketers provide a range of services, from training bank employees, through supplying a sales force, to providing promotional and advertising material.

Regardless of the help such outfits can provide, many bankers harbor deep fears about the investment products.

The most common reason for steering clear of the field is concern about legal and regulatory issues, the survey found. Next come worries about operational issues and disintermediation.

"A lot of people just don't understand mutual funds," said Mr. Donovan of Stoneham Savings. With so many other more profitable areas to focus on, Stoneham simply doesn't need the problems, he said.

Mr. Monteverdi of Flatbush Federal is decidedly blunt about his plans to offer investment products.

"I'm really 99% in the |never' category," said the CEO, who once worked at Merrill Lynch & Co.

"I'm a staunch believer that brokers have the special training, the special expertise, and the research department to give better advice than a bank," he said.

The risk, he says, is that customers will turn on their banks if investments go sour.

"Money is a very serious business," Mr. Monteverdi said. "I only want the best for my customers."

On the Sidelines

Some 3,600 of the institutions surveyed - or 42% - said they do not offer investment products. Here, in order of importance, are the reasons they cited.

1 Legal/regulatory issues 2 Operational issues 3 Concerns about

disintermediation 4 Concerns about profitability 5 Lack of customer demand 6 Marketing cost

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