Q: What's the toughest thing about marketing mutual funds through banks? Henry Schulthesz National account manager for banks Kemper Corp., Chicago

It's a convergence of three major factors.

(Firstly,) the typical bank client is still too willing to choose certainty of performance over safety of performance. For instance, there was a hemorrhage of deposits out of bond funds and a flight of deposits into investments into CDs.

The second factor is the regulatory environment. Banks are unsure of how aggressive to be. With all the uncertainty over what the regulators are going to make banks become, it isn't surprising that banks are giving mixed messages to their brokerage unit about how aggressive they want to be.

Thirdly, banks have to decide between dedicated sale representatives versus platform reps. Are they going to offer financial planning or single- product sales? Jerome S. Contro Manager, national bank division John Nuveen & Co., Chicago

Banks for the most part have preferred lists - a very narrow group of vendor firms they do business with. Many broker-dealers will sell anyone's fund families so they will have about 100 fund families. A bank will only offer three or four, so we have to make sure we're on that preferred list.

There are many forms of support they are looking for in the relationship - the brand name of the company they are selling, statement stuffers, and technology support.

Also, we tend to sell to a higher net worth individual in general, and at times it has been difficult for us to target and segment to our desired customer with such a broad base that the banks have. Michael Vessels National sales manager AIM Management Group, Houston

(Regulatory issues at banks) have become increasingly challenging. Disclosure has to be front and center for every piece of marketing material we now produce.

Banks now have to have due diligence documentation updated regularly. They also get into much more depth in describing the funds and the fund companies they are offering.

For example, about once a week we'll receive a questionnaire from one of our major accounts that will be anything from 20 to 50 pages, asking for financial data, information on the senior management team, portfolio management style, and operations and back-office support. Barry Knight Vice president for financial institutions sales Pioneer Mutual Funds, Boston

A fundamental issue in terms of marketing to banks, as opposed to other distribution channels, is that bank sales representatives are often spread out among many branches. So it's difficult and time consuming for the wholesalers to call on bank reps.

That was one of the driving factors for us to go to dedicated wholesalers. We have 10 Pioneer employees who work exclusively with banks that sell our funds. We found that trying to call on existing banks with our existing sales force made it just too hard to penetrate banks.

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