Principal Financial Group kicked off a campaign to distribute products through nonagent channels Wednesday by introducing a 401(k) plan package that offers a family of 35 outside-managed mutual funds.

Chris J. Bowman, vice president of marketing at the Des Moines subsidiary of Principal Life Insurance Company, said the funds in the Principal Advantage Retirement Package will enable the company to market its plans more easily to bank representatives and registered investment advisers.

"It is a matter of taking all the things we do well in the 401(k) world and repackaging it for a new audience," Mr. Bowman said. "We have a strong foothold in the insurance channels, but this new set of funds is designed for advisers who favor mutual fund products rather than insurance products for 401(k)."

Until now Principal distributed its 401(k)s only through insurance agents. The next step was to create a product line for securities advisers, registered investment advisers, and other intermediaries more comfortable with a mutual fund-based 401(k) strategy, Mr. Bowman said.

The new package will also help Principal to work more effectively with banks, which tend to be more comfortable offering 401(k)s that include mutual funds, he said.

"Mutual fund products and mutual fund companies have captured a significant part of the market," he said. "We are dealing with tough competitors and other insurance companies are moving in this direction. We have to get more blended and offer more products if we want to remain viable."

The new package's funds are subadvised by investment managers such as Sanford C. Bernstein, American Century Investment Management, Alliance Capital Management, BT Funds Management, Federated Investment Management Company, Invista Capital Management, Morgan Stanley Asset Management, Neuberger Berman Management, and Turner Investment Partners.

The funds, aimed at employers with $3 million or more of retirement assets, come in various sizes and shapes. Principal, which has $117 billion of assets under management, knows it is not the first to offer this type of plan, but the company still expects demand to be high, Mr. Bowman said.

"We aren't trying to fool ourselves here," he said. "Offering mutual fund products in 401(k)s is not new, but when the company with the most 401(k) plan customers gets into the mutual fund 401(k) business in a big way, that is something new."

Principal has more 401(k) customers than any other company, according to Wiesenberger, the fund tracking and analysis unit of Thomson Financial.

Kenneth Kehrer, president of Kenneth Kehrer Associates in Princeton, N.J., said many fund companies are actively pursuing this market. They include Fidelity Investments, which sells the most plans through investment advisers, he said.

Principal, the first company to shift from annuities to mutual funds, "has a good position selling life insurance and benefits to businesses," Mr. Kehrer said. "With its work with employers and their work in 401(k) plans, they are well positioned among other insurers to go after this market."

Mr. Bowman said Principal will continue to add funds to the new family. On Monday it registered to have eight funds - six life-cycle and two subadvised funds - added to the Principal Advantage Retirement lineup. The company is waiting for Securities and Exchange Commission approval of the products.

Principal will market the funds to banks, regional broker-dealers, independent advisers, and registered investment advisers.

"We don't plan to grow indefinitely, but we want to be able to package the right products for the marketplace," Mr. Bowman said. "This is clearly just the next logical step in the growth of our business."

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