Accessor Capital Management, a Seattle fund company, has found an asset hoard among bank customers that other asset managers shy from - the smallest ones.
"We are going down, as opposed to going up after the wealthier customers," said Tony Whatley, the president and chief executive officer of Accessor. "We are trying to take the crumbs that fall off the table."
The fund company was started in 1992 with seed capital from Zions Bancorp, and it has developed $2.5 billion of assets under management by distributing its family of funds through bank trust companies and bank broker-dealers. Mr. Whatley said he expects to add $500 million of assets a year as Accessor expands distribution through the bank channel.
"This is where we see our niche," Mr. Whatley said. "When you look at the array of mutual fund families that now remain, most are much bigger than we are. There is not much left at our level that has a whole family of funds. We are trying to grow from $2.5 billion to $10 billion, where large fund families are trying to grow from $200 billion to $250 billion. We have different business objectives." Accessor Funds are sold in 50 regional and community banks nationwide.
Some analysts said they are skeptical about the concept. Historically, they say, it has been difficult to earn revenue from customers with small accounts.
"It can be difficult for banks to slide too far down-market to sell funds," said Burton Greenwald, an analyst at BJ Greenwald Associates in Philadelphia. "There is opportunity, but it can be a costly opportunity."
Mr. Whatley agreed that small accounts can be difficult to handle.
"Banks have to carefully consider their value proposition," he said. "They have to look at small accounts. Whether we are talking about a bank broker-dealer or a bank trust adviser, accounts with less than a few hundred thousand are expensive to maintain. Our niche is to take over the maintenance and make these accounts profitable."
Accessor's mission since its founding has been to work with "intermediate" investors at banks. It describes these as customers with as little as a few thousand dollars to invest. It began by working with bank trust departments and offering a series of accounts that were subadvised by institutional money managers.
Mr. Whatley admitted the difficulty for banks of trying to micro-manage for each small 401(k) investor or holder of a small investment account. "It is too labor- and time-intensive," he said. So five years ago Accessor started a series of funds of funds, which are products that offer asset allocation and balancing solutions appropriate to customers at various life stages.
Banks use these products within their broker-dealer businesses, Mr. Whatley said. He said the six funds of funds have $400 million of assets in the bank channel and he expects they will add $200 million to $300 million this year.
"We still do a lot of business through many trust departments, and they are growing, but what we really see as our opportunity is the smaller accounts with less than $250,000. Hardly anyone wants that money," Mr. Whatley said. "That is where we see our greatest growth."
Accessor is unique in that it offers a private-label product that banks can sell as their own, he said.
Mr. Whatley said Accessor had to do more than just offer products to distribute successfully in the bank channel. For example, he said, his company built Alloset Web, an asset allocation software vehicle that brokers and advisers can use as a point-of-sale tool.
The next step will be expanding distribution, he said. Accessor began selling through independent broker-dealers two years ago and has developed $200 million to $300 million of assets. It expects to add $100 million this year through the channel, he said.
