Massachusetts Financial Services, one of the nation's oldest mutual fund companies, is making a push to market 401(k) retirement plans through its alliance with the Independent Bankers Association of America.

The Boston-based company has been working with the IBAA's brokerage subsidiary, IBAA Financial Services Corp., to offer community banks full- service and discount brokerage services for more than a year now. But this month, it began offering 401(k) plans that banks can sell to their small business customers.

MFS, which sold 15% of its mutual funds and annuities through banks last year, is wagering that small town banks' ties to the small business community will be a natural source of new 401(k) business.

"We're moving much more aggressively," said Jeremiah Potts, an MFS senior vice president and marketing director. "There is a lot of opportunity in the small-plan market."

The fund company had been offering community banks 401(k) plans since late 1993 but with limited success, Mr. Potts said.

The product, dubbed Fundamental 401(k), is comprised solely of MFS mutual funds, for which MFS provides all record keeping and accounting services. MFS also helps banks market the plans to prospective customers and plan participants.

Banks must offer either the full-service or discount IBAA brokerage service in order to market MFS's 401(k) product. More than a dozen community banks currently use the IBAA's brokerage service. However, Mr. Potts declined to say how many are marketing 401(k) products.

MFS and the IBAA had planned to unveil the 401(k) service in the year 2000, Mr. Potts said. The launching was moved up because of overwhelming demand from bankers, he said.

"Some banks wanted to move ahead with 401(k) before they even started selling the retail (brokerage) product," Mr. Potts said.

One industry analyst said tapping small businesses through community banks is a smart idea.

"It's a difficult market because you need a strong distribution network to reach these small businesses," said Adele Langie Heller, associate director of defined-contribution services for Rogers Casey, Darien, Conn.

Several community bankers said the 401(k) business is an area in which more of them will soon be active.

"I would say community banks would be able to compete very well in offering retirement plans," said H. Clark Goodwin, president of Bank of Union, Monroe, N.C. "We have considerable loyalty from our small business customers."

"This is no longer something that has to be sent upstream to our correspondent banks," said Michael C. Miller, president of First National Bank & Trust, Asheboro, N.C. "It's a business we can perform well in."

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