Securities Industry Assn. Creates Lobbying Panel For 3d-Party Marketers

Companies that help banks set up and run investment programs have gained a panel that will lobby for them in Congress, statehouses, and even an industry-related regulatory body.

The Securities Industry Association said it has formed a committee of executives from these so-called third-party marketing firms to help monitor proposed legislation and study related business trends.

Some executives with these firms have long felt they needed representation on a variety of proposed rules and legislation.

"The timing right now is certainly very critical for us to be heard," said Rick Rogers, president of BFP Financial Partners, a Baltimore-based marketing firm.

Mr. Rogers is one of nine members of the trade group's committee. The panel's chairman is Brewster Ellis, president of Robert Thomas Securities, Kansas City, Mo., and the rest of its members also are executives at third- party marketing firms.

Mr. Ellis could not be reached for comment.

Third-party marketers are closely watching rules under review by the National Association of Securities Dealers, the securities industry's self- imposed regulator.

The NASD is trying to keep bank investment programs clearly separate from traditional bank business in the minds of customers, who it fears may think that mutual funds and annuities are federally insured.

But third-party marketing firms criticize the proposed rules as unfairly burdensome and costly. They also complain that some areas have already been addressed by bank regulators and that NASD rules would only confuse consumers and those trying to obey the regulations.

Among the proposed rules is a provision that would bar securities firms - many of which own third-party marketing subsidiaries - from using confidential bank customer information to solicit business. The NASD also wants to add to disclosure requirements in sales literature regarding the potential risks of investments such as mutual funds and annuities.

Mr. Rogers said his firm had spent $20,000 in the last two months to revise brochures in anticipation of new disclosure rules.

The NASD, moreover, is considering prohibiting securities firms from paying fees to bank employees such as tellers or loan officers for referring customers to brokers.

The NASD proposals could have "a direct impact on our business," said Jack Handy, senior vice president at Financial Network Investment Corp., Torrance, Calif.

Third-party marketers had always talked about forming a lobbying group, but release of the NASD proposals in December was "the galvanizing event," Mr. Handy said.

Marketing firms are also monitoring potential changes in state and federal laws related to the sale of insurance through banks. About 40% of revenues generated by third-party firms come from selling life insurance and annuities, Mr. Rogers said.

The Securities Industry Association, the leading trade group for securities firms, will represent about 65 third-party marketers out of the 150 in operation, said Mr. Rogers.

He said some of his marketer colleagues had considered linking up with banking associations such as the Bank Securities Association or the American Bankers Association.

But these executives concluded that the Securities Industry Association, which is based in New York, has a mission that is closest to meeting their corporate goals. Also, many third-party marketing firms are subsidiaries of securities companies that are already in the trade group.

Mr. Rogers said committee members will meet June 1 in association headquarters to discuss dues and how to recruit other firms.

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