William N. Shiebler, president of Putnam Mutual Funds, has a message for banks in the brokerage business: Lighten up on yourselves.
"Banks are always whipping themselves because they're not very good at dealing with clients. But I think they have done a particularly good job" with mutual fund customers, Mr. Shiebler said in a panel discussion at the annual American Banker symposium on best practices in retail banking.
With the stock market soaring and equity fund sales going through the roof, brokerages of all stripes need to remind customers to diversify, take the long view, and expect some ups and downs.
"Banks are doing a pretty good job managing customer expectations," Mr. Shiebler said in an interview after his panel appearance.
He credited the relatively conservative profile of bank brokerages.
"They offer a smaller range and a simpler menu-they're not selling exotic things," Mr. Shiebler said. "And bank brokers approach the customers with an advice-giving mentality."
Bank brokerages are an important constituency for Putnam, the largest seller of mutual funds through banks. Last year, the Boston mutual fund company sold $10 billion through banks-a healthy chunk of its $35 billion in total retail fund sales.
Mr. Shiebler acknowledged that the bank channel, which was the fastest- growing category of fund sales in the early 1990s, is now simply "growing along with the rest of the industry." But, he added, "It's a permanent business."
Putnam, as a leading provider of mutual funds through intermediaries, is a big believer in the proposition that most investors want and value advice. The advent of do-it-yourself alternatives, such as Internet trading and mutual fund supermarkets, won't fundamentally change that, Mr. Shiebler said in his panel appearance.
"In banking, you people brought machines to commerce before anyone," he said, adding that the rise of the automated teller machine is a testament to the power of technology. "But there are certain services that people want advice on. Buying investments is one."
People are strapped for time and daunted by the complexity of investment choices, Mr. Shiebler said. Many no-load funds-ostensibly for do-it- yourself investors-are being sold through fee-based advisers, he said.
Brokerage customers' need for advice doesn't mean, however, that retaining them is a slam-dunk. Dependable investment performance and customer service are vital, he said.
"We don't think customers are loyal at all to poor service," Mr. Shiebler said. "They're brand buyers, but not brand-loyal. That sounds like a conflicting statement, but they move around among brand names."