As NationsBank Corp. prepares to become the only major banking company to offer its funds directly to customers without commissions, experts warn that the task won't be cheap.

Offering proprietary mutual funds without sales commissions will require the North Carolina banking company to build a costly infrastructure - an effort that might not pay off for many years, observers said.

NationsBank should expect to spend 5 to 10 basis points of its mutual fund assets a year to create a direct marketing apparatus, according to John Keffer, president of Forum Financial Group, Boston, a firm that helps fund companies administer their portfolios..

In the case of NationsBank, that could come to $8 million to $16 million annually - and that's just to get the program rolling.

"It's expensive, and you need to build massive (sales) volume in order to be profitable in this business." said Mr. Keffer. "Jumping in with a $50 million marketing program isn't necessarily something that I would look forward to doing if I were a CEO."

Most experts agree marketing is the cornerstone of a successful no-load fund program.

Robert A. Hering, managing director of Furman Selz, New York, said that NationsBank has a distinct advantage that other mutual fund companies don't have - a wide-ranging collection of financial data on customers.

"If NationsBank goes with the Fidelity model - the direct route - then their bank structure is an inherent advantage,' said Mr. Hering. "They have defined customers lists with more financial information on them than any mutual fund company will ever have."

However, without brokers to pitch the funds to potential investors, direct mail and advertising in newspapers and magazines become necessary ways of generating interest in a fund family outside of bank branches.

"Building brand name recognition is absolutely essential," said A. Michael Lipper, president of Lipper Analytical Services, Summit, N.J. "You need a concept, or a personality, or the perception of great performance to market (no-load funds) successfully."

According to the Investment Company Institute, a Washington-based mutual fund industry group, 28% of investors that buy mutual funds directly get their investment information from books and magazines, compared with 14% who get their advice from banks.

"Most no-load buyers are comparison buyers, so you need something that will stack up well in their minds." Mr. Lipper said.

Once the orders start to come in, however, banks will need to have the systems and personnel in place to handle telephone calls and the resulting paperwork.

No-load mutual fund companies handle tons of applications and requests for information from would-be investors - most of which come on paper and must be scanned into computer systems for easy retrieval by customer service representatives.

By comparison, said Jeffrey Niss, president of the shareholder servicing unit of Federated Services Co., electronic orders on networks used by brokers, such as a Fund Serve, are one-fifth the cost of those processed by hand.

Fidelity Investments, often heralded as the most successful direct fund marketer, averages 361,900 phone calls a day from would-be investors, a spokeswoman said. The company has 2,270 telephone representatives on hand, but 74% of the calls are handled by an automated telephone voice-response system.

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