Signet Banking Corp. is planning to drop the bank's moniker from its mutual fund family name, a bank official said.
The Richmond, Va., banking company's chairman said he believes the change will distance the bank from any lingering controversy over the appropriateness of including bank names in fund family names, said James M. McCoy, vice president of Signet's financial services unit.
Speaking at a Bank Securities Association conference in Washington, Mr. McCoy said Signet chairman Robert Freeman wants the bank "to be seen as squeaky clean," especially since he became a director of the Federal Reserve Bank of Richmond in January.
No. 60 in the Nation
The new name for the bank's proprietary fund family, now called Signet Select, is likely to be announced within three months, Mr. McCoy added.
Signet, with $12 billion of assets, had the 60th-largest proprietary mutual fund program among U.S. banks at the end of March, with $899 million in funds, according to Lipper Analytical Services, Summit, N.J.
Regulators have expressed concern that including a bank's name in a fund family name could could confuse consumers about the difference between insured deposits and uninsured investments.
But Mr. McCoy said the name change could also help Signet market funds through other financial institutions, an avenue the bank is interested in exploring. Some banks and brokerages are said to be reluctant to sell funds named after a current or potential rival.
Changes in Sales Fees
In his presentation, Mr. McCoy also outlined marketing innovations said to be boosting Signet's fund sales.
For example, he said, the bank's proprietary fund sales doubled last year because of a rejiggering of sales charges that included the elimination of front-end loads.
Mr. McCoy said that Signet started its proprietary funds in 1991, with a front-end sales charge of 4%, and a sold $100 million of funds in 1992.
At the end of that year, Mr. McCoy said, Signet eliminated the front-end charge and replaced it with a redemption charge of 2% of the original principal, excluding appreciation, for shares sold within five years. Afterward, redemptions are free.
Mr. McCoy said that bank sales agents believed the change gave customers a better value and became more enthusiastic marketers.
This helped proprietary fund sales double in 1993, to $200 million. The bank also sells a range of mutual funds managed by other companies.
An industry expert noted that the bank's customers probably preferred the change.
"The common wisdom is that bank customers are not accustomed to buying funds with a front-end load, because putting money in [certificates of deposit and similar instruments] doesn't apparently cost anything," said Dennis D. Dolego, a partner of Financial Research Corp., Southport, Conn.
Mr. McCoy added that Signet is finding great success with software installed only a few weeks ago that suggests asset allocation strategies for customers.
He declined to name the software but said the first asset allocation product being marketed with it is a variable annuity. The software helps customers balance investments in a range of funds in accordance with their objectives and risk tolerance.
More products in Pipeline
Mr. McCoy said variable annuity sales have jumped four-fold since the software was given to sales agents in May. Signet plans to begin selling three other asset allocation products with the software in coming weeks.
Annuities are tax-advantaged investments designed to produce retirement income. Mr. McCoy said Signet's 27 dedicated investment product sales agents had average sales of $12 million last year, well above the average annual sales of $4 million to $4.5 million for most sales agents in the industry.
Signet also has 200 branch employees trained to sell investment products, and another 200 are now being trained.