Shawmut National Corp.'s expanded focus on the investment products business is paying off, a senior official at the banking company says.
The measures taken include the launch of a retail mutual fund family in early 1993, the hiring of 125 branch-based investments marketers, a reentry into the institutional asset-management business, and a revamping of retirement planning administration services.
The payoff has come from rising sales of most investment services, said Michael J. Rothmeier, executive vice president of the Hartford, Conn.-based banking company.
For example, retail mutual fund and annuity sales so far this year are twice last year's pace, Mr. Rothmeier said in an interview.
These sales include Shawmut's proprietary mutual funds, a few Fidelity Investments mutual funds, and fixed and variable annuities from a handful of other companies. Annuity sales are outstripping mutual fund sales by 20%, he said.
Sales of investment services to high-net-worth customers -- those with at least $200,000 of yearly income, $500,000 of investable assets or a million dollars of total net worth -- have risen 34% so far this year over last year's pace, Mr. Rothmeier said.
He credited this jump to a new focus on asset management and a deemphasizing of traditional trust services.
Sales of 401(k) plan administration services are up 28% so far this year, Mr. Rothmeier added. Sales in this area have been helped by the launching of a new 401(k) service aimed at small to midsize companies and improvements in retirement planning administration capabilities.
Shawmut also pulled in more than $1.5 billion of institutional assets by reentering the institutional investment management business, which the banking company had exited a few years ago.
Shawmut now has investment discretion over about $16 billion of assets, close to half of which is institutional assets.
Shawmut's investment management and trust revenues are on pace to total about 9% of Shawmut's corporate revenues, according to company officials.
But despite the sales growth, profit margins are shrinking because of outlays for new computer systems and personnel. Mr. Rothmeier said he is confident that margins will rise again, once the company finishes redesigning workflows and computer systems to make the investment management and trust units more efficient.
As for the future, Mr. Rothmeier said that Shawrout, like other banking companies, is interested in acquiring mutual fund complexes to build the "critical mass" of at least $10 billion needed to be viable.
As of June, Shawmut's proprietary funds had $1.2 billion of assets, including about $600 million transferred from Shawmut managed employee benefit trust funds.
The most attractive acquisition candidates are likely to be firms with specialized expertise and minimal retail distribution capabilities, which Shawmut can supply.
Shawmut also is potentially interested in acquiring specialized money management firms, Mr. Rothmeier said.
"We're definitely a buyer, not a seller," he said.