Planco, which built a multibillion-dollar business by wholesaling annuities to banks and other outlets, has decided to add mutual funds to its product mix.

The Paoli, Pa., company has begun offering its large and small brokerage clients 17 mutual funds managed by Phoenix Home Life. Operating like a supermarket for investment product programs, Planco stockpiles a variety of annuities, and now, mutual funds, for banks to sell to customers.

With the additions, Planco is offering more variety to its 60 bank clients and also hedging its own annuity-heavy operations, company executives said.

"We were worried about diversification," said Joe M. Thomson, who founded the company in 1977 and serves as its president.

Mr. Thomson said he is particularly worried that annuities might lose their tax-deferred status and become much less attractive to investors, and therefore to investment sales programs at banks.

The annuity threat, which crops up annually as federal lawmakers look for ways to make up for revenue shortfalls, would indeed be bad news for Planco. Last year the company's revenues came from $4.6 billion of annuities and insurance products that were sold through banks, brokerages, and financial planners.

Planco's product list includes annuities from ITT Hartford, United of Omaha, and Providian Life and Health Insurance Co.

Phoenix's mutual funds and its variable annuity have now been added to the Planco roster. Planco chose Phoenix, which is based in Hartford, Conn., for its variety and highly rated funds, Mr. Thomson said.

Phoenix also lacks the manpower to serve banks directly, leaving the field wide open for Planco's wholesalers to be sole distributors. There are no current plans to add mutual funds from other companies, Planco executives said.

Planco's new product array supplies bank sales programs with variety, convenience, and potentially more fee income than they could obtain by striking deals with individual mutual fund and insurance companies, Mr. Thomson said.

All told, the company has selling agreements with about 60 banks, including .

Planco's bank clients - which include Citibank, Chase Manhattan, and NationsBank - are well served, according to analysts, who give the firm high marks as an ally.

Planco "has a highly developed ability to effectively provide sales ideas and marketing support to (bank sales) representatives," said Kenneth Kehrer, president of Kenneth Kehrer Associates, Princeton, N.J.

But the addition of mutual funds does serve up a new challenge, Mr. Kehrer said. "Can Planco's field wholesalers and telephone wholesalers supply the same support and ideas to mutual funds as they can to annuities?"

Mr. Thomson said the company has put in place systems that will provide banks with solid home office support and sales training and promotional materials when they offer Phoenix funds.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.