As dozens of specialized marketing companies can attest, there's a tidy living to be made in helping banks sell mutual funds.

But what happens when the pupils have mastered their lessons? Third-party marketing firms are starting to find out.

The boom in fund sales at banks over the past two years has accelerated many banks' development in the field, making marketing firms less important.

With more experience under their belts. big banks increasingly are choosing to manage investment-product sales programs on their own.

Breaking It Off

Some of the biggest banks in the business have already loosened or cut their ties to marketing firms. Among them: Dime Savings Bank, which dropped Invest Financial Corp.; Bank of America, which has reduced its reliance on GNA Corp.; and Wells Fargo Bank, which plans to bring in-house a mutual fund program that is now managed by Marketing One Securities.

And more such changes are on the way.

"The next three to five years will be a critical period" for third-party marketers, said Ronald Robbins, president of Liberty Financial Bank Group, Boston.

The business of providing investment-product sales programs to banks and thrifts is dominated by about a dozen firms. Among them: Liberty, Invest, GNA, and Essex Corp. Collectively, they serve more than 1,000 banks.

Smaller Marketers

There are also hundreds of marketing firms operating on a much smaller scale, many serving just a few banks in their backyards.

Some industry observers predict megamergers between large marketing firms as a way of fortifying franchises.

Others see large and small firms simply falling by the wayside, unable to adapt to a changing market.

"Some of these marketing firms will go under and disappear," said Kurt Cerulli, head of Cerulli Associates, a Boston consulting company.

Though many marketing firms are handling record business right now, they know that the good times won't roll forever.

Eye on Fee Income

Banks see ways of boosting fee income, not to mention control, by taking over brokerage, personnel, and marketing responsibilities.

Marketing companies are also seeing some of their clients merged out of existence,

"That's the call you don't want to get," said Kevin Crowe, chairman of Essex Corp., New York. "You don't want to hear that your bank was bought by someone bigger with their own program.

The pressures can be a rude awakening to marketers who have gotten used to calling the shots. Industry sources say these firms are much more inclined to take less of a cut from commissions in order to retain customers.

Fresh Approaches

Marketers are also being forced to find new ways of doing things. Liberty's recent joint venture with Chemical Banking Corp. reflects this.

Both companies supplied capital and assumed responsibility for creating and operating Chemical Investment Services, a retail investment products marketer.

It's a matter of being flexible, said Mr. Robbins of Liberty.

Marketers also appear to be taking off their gloves as competition spawns a vigorous pursuit of rivals' business. Firms woo key people from competitors, hoping to capture their expertise - and their client relationships.

Smaller Banks Targeted

Marketers are also heading downstream, targeting banks with $10 billion, or even $1 billion, of assets or less.

"You still have thousands of banks that are not in a position to build their own broker-dealer," said Richard Ayotte, managing partner at American Brokerage Consultants, St. Petersburg, Fla.

But larger marketers face some formidable competition, in the form of smaller firms that have snared a few clients and are eager to expand.

"Nothing is certain," said Daniel Darst, executive vice president at Optima Group, a Milford, Conn., consultant. "Except that the industry is evolving."

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