Get ready for an explosion of fresh offerings from investment product marketing firms.

These companies, which help banks sell brokerage products, are broadening their product lines and devising innovative services in a bid to attract and retain clients.

For instance, Invest Financial Corp. intends to begin unbundling its services, enabling banks to order a la carte from a menu that includes training, compliance, and financial planning.

Across the board, marketers contacted in the past two weeks said they plan a strong emphasis on annuities and insurance products in 1995. Asset- allocation products are also a popular addition.

And not surprisingly, marketing companies are homing in on small banks as prospective customers. Surveys suggest that most banks with $1 billion or less of assets don't currently offer investment products, making this a ripe market for expansion.

Though investment product marketers traditionally gussy up their product lines each January, they seem to be outdoing each other this year.

One reason is that rising interest rates have sapped banks' enthusiasm for investment products. New business, which once flowed freely to marketing companies, is now harder to come by.

"Three years ago it was pretty easy for firms like ours to work with banks," said Porter P. Morgan, president of Liberty Financial services, Boston. "Banks had a stream of customers who wanted to exchange low-yield CDs for mutual funds. That environment has changed."

Bankers attest that they are becoming much pickier about their marketing partners.

For example, Cincinnati-based Star Bank's contract with Financial Horizons, a White Plains, N.Y., marketer, is up in June. The $5 billion- asset bank plans to review proposals from "about 15 of the major third- party vendors," said B. Randolph Bateman, a senior vice president.

Indeed, he said Star Bank is already declining "uninvited" solicitations from several companies, which "have been quite aggressive."

In response to heightened competition, marketing companies are doing some soul-searching about what their clients want.

"As banks become more experienced at selling annuities and securities, they start asking themselves, "'What else are we going to do for our clients?,'" said Denis Kaplan, chairman of Independent Financial Services, also of White Plains.

Here's what six leading investment marketers have on tap for 1995:


Invest Financial Corp. has small banks on its radar screen. The Tampa, Fla., company, which manages sales programs for 240 banks, last year signed up about 35 clients for two new programs aimed at community banks.

"We just got our feet wet in 1994," said Merlin R. Gackle, Invest's president. "There are 7,000 banks out there with less than $100 million in assets who want to be in business."

One program alone, dubbed the correspondent program, is expected to attract 50 new clients this year. It links hard-to-serve banks with $150 million or less of assets to larger Invest clients.

The other small-bank program, the community program, allows banks to share a central service space with larger Invest clients in the same metropolitan area. Invest currently has five service centers for 40 community banks, 30 of which were added last year.

Not that Invest has forgotten about larger banks. By unbundling its services, the Kemper Financial Services unit hopes to interest large banks that don't want the full range of services Invest normally provides. For instance, banks that have their own brokerage subsidiaries may still want help with training, marketing, compliance, financial planning, or due diligence.


Seattle-based GNA Corp. also plans to "pursue community banks aggressively," said Hans Carstensen, the company's senior vice president. Last year GNA added about 50 such banks, bringing its roster to 150.

Mr. Carstensen expects annuities to be the hot offering in 1995. Fixed annuities have been particularly strong sellers in the past year, and will provide growing competition for mutual funds if interest rates continue to move up, he said.

This month, the General Electric Co. subsidiary will introduce its first proprietary variable annuity under the label "Power Portfolio." GNA had initially set the launch for October 1994.

And early this year, the GNA plans to test a point-of-sale software program, Clienttrak, at four banks, including Premier Bancorp., Baton Rouge, La.

Financial Horizons

Financial Horizons, a unit of Nationwide Corp., an Ohio insurer, plans a two-pronged push into annuities in 1995.

The company, which serves 75 banks, intends to expand sales of its Best of America annuities beyond the 10 banks now offering the products. They brought in $100 million last year. "That isn't going to cut it for us," said a company spokeswoman.

Financial Horizons is also pairing up with banks that manage their own annuities. The company, which helped Banc One Corp. enter the field last August, will help First Union Corp. bring out the Evergreen Variable Annuity in April.

Finally, Financial Horizons will launch an asset-allocation program, VisionTrak, which it piloted at Cincinnati-based Star Bank last year.

Liberty Financial

At Boston-based Liberty Financial Services, executives are getting ready to roll out an asset-management service for investors. Dubbed Counselor, the program was piloted in 1994 at three banks, including First Federal Bank, Waterbury, Conn., and San Francisco Federal Bank.

Mr. Morgan, the president, said he hopes to sign up 20 more banks for the service in 1995, and expects it to generate $100 million in sales.

"New banks are the lifeblood of our business," Mr. Morgan said. "We have to constantly be on the prowl, so to speak, for new relationships."

The company, which has relationships with 75 financial institutions, sold $1.6 billion in mutual fund and annuity volume in 1993, Mr. Morgan said. Final numbers for 1994 aren't in yet.

Looking forward, Mr. Morgan said he expects annuities, which accounted for nearly half of Liberty's business last year, to remain strong in 1995.

He is not as optimistic about mutual funds. "We're going to do everything we can to deliver fee income to our banks, but given the environment, I guess I would not tell banks to count on major (sales) increases," he said.


Essex Corp., which sells annuities and mutual funds though 220 banks, is entering 1995 with an eye on life insurance products, according to Kevin Crowe, chairman of the New York company.

Mr. Crowe said that he expects his company to get involved in both low- end insurance products, such as mortgage protection insurance, and more upscale offerings like business insurance.

Essex already offers term-life insurance through two clients, Summit Bancorp, Chatham, N.J., and NBD Bancorp, Detroit. Mr. Crowe hopes to begin offering the policies, underwritten by First Colony Life Insurance, though 12 to 14 more banks in 1995.

The company is also freshening up its annuity offerings. Its Bonus annuity, introduced in 1989, now sports a double-indemnity feature: if the person covered by the annuity policy dies, the benefit is doubled. The revamped annuity will be available this month at no additional cost to Essex's annuity clients.

But the biggest changes at Essex are still unfolding. The marketer expects to merge this month with CUC International, a Stamford, Conn., firm that offers "account enhancement services," such as travel discounts and on-line shopping, to 32 million consumers through financial institutions nationwide.

Independent Financial

Independent Financial Marketing Group is also making a big splash in life insurance.

Two client banks - KeyCorp of Cleveland and Fidelity Federal of Glendale, Calif. - will use Independent Financial to sell life insurance as soon as the first quarter of this year, said the chairman, Mr. Kaplan.

Variable annuities are also a focal point for 1995. Mr. Kaplan said Independent Financial has tapped a major life insurance company, which he refused to name, to underwrite a new variable annuity, dubbed "Personal Portfolio."

Mr. Kaplan said that his company is also looking into developing financial planning systems for three of his company's clients, including Fidelity Federal.

White Plains-based Independent Financial has 110 bank clients, 20 of which came aboard in 1994.

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