In an effort to strengthen its sales through bank trust departments, a leading no-load mutual fund company has joined a computer network designed to help simplify customer record keeping.
Bank trust officers who work with fund giant T. Rowe Price Associates Inc., Baltimore, can manage the accounts of their customers more speedily and efficiently, said Mark E. Rayford, managing director and president of T. Rowe Price Services.
Many mutual fund families that sell their funds through brokers are already on the system, called Networking, but T. Rowe Price, which manages more than $60 billion, is one of first no-load firms to join, he said.
Bank trust departments can now perform back-office functions for Price funds via computer. These functions include reinvesting clients' dividends, and settling accounts more quickly, Mr. Rayford said.
In addition, trust officers can get updated information about each customer's account through a computer link-up instead of through a customer representative on the other end of a telephone line.
Without a computer system, banks must perform all transactions by mail. Previously, trust officers had to telephone the fund company to retrieve information about an account. Simply setting up an account with Price had trust officers wasting time and awash in paperwork, Mr. Rayford acknowledged.
"Before, they had to call us up and fill out an application - it was quite ugly," he said.
T. Rowe Price is trying to make itself more appealing to bank trust departments because the fund giant is limited in how it can access the bank distribution channel, Mr. Rayford said.
As a no-load company, Price doesn't pay commissions. Thus, brokers won't offer the company's funds to customers.
Trust officers are paid differently- either receiving a flat fee or a percentage of the assets they manage - so there is no disincentive to selling no-load mutual funds.
Mr. Rayford said his fund company serves 258 banking clients and manages $1.6 billion through bank trust departments.
Networking is run by a New York-based nonprofit organization, National Securities Clearing Corp. Owned by the three major stock markets, the organization is the leading processor of brokerage transactions of mutual funds and individual securities.
Networking is an enhanced version of Fundserve, an electronic system set up in 1986 by National Securities Clearing so brokers can more easily make mutual fund transactions.
To use the service, the fund companies and the banks pay 50 cents for every transaction, Mr. Rayford said.
About 32 other no-load and 249 load companies are on the system, said a spokesman for National Securities Clearing.
Other mutual fund companies on Networking include, Franklin Templeton Group, Putnam Investments, American Capital Family of Funds, and the Aim Family of Funds.