These are trying times for third-party marketers, the firms that provide brokers and technical support to help banks sell mutual funds and annuities through their branches.
A upturn in certificate of deposit rates over the past year has lessened the allure of funds and variable annuities.
As a result, many of these firms are launching direct mail campaigns and pushing their brokers a little harder to make up for the weaker investment climate. At this point, the verdict is out on the success of these efforts.
"It's much more difficult to get people to talk about investing than it was two years ago," said Porter Morgan, president of Liberty Financial Cos., the holding company of third-party marketer Liberty Financial Banking Group. "Back then, there were people lined up at the investment center desk who were trying to find something better than a low-yielding CD."
Boston-based Liberty, for example, is encouraging its representatives to hit the seminar circuit, explaining to prospective investors athat mutual funds continue to make sense in spite of higher CD rates.
Mr. Morgan added that Liberty has stepped up efforts to help bank reps break into the market of the affluent.
Liberty has designed mailings in which it touts its Stein Roe Personal Counselor program, which provides no-load mutual funds that take a minimum investment of $50,000. And Liberty reps are also attending seminars of the wealthy.
Mr. Morgan said four new banks have joined the program since it started last year with three banks. He expects several more to come on board this year.
Banks have had some success are keeping current mutual fund investors from switching their money to CDs, said Mary Anne Houlahan, senior vice president, marketing and distribution at Bisys Investment Services Group, an owner of a third-party marketing firm.
But, according to Ms. Houlahan, banks have persuaded only about 5% of their customer base to invest in mutual funds. In response, Bisys has launched a market campaign tailored to different investor groups. For instance, one mailing pitches banks' retirement planning services to baby boomers.
Bisys also has a mailing about college education planning directed to bank customers with teenage children.
"We have been so busy just keeping up with the demand over the last five years that we haven't had to really focus on a marketing plan and move forward," Ms. Houlahan said.
Third-party marketers are also pushing reps to pursue the 401(k) retirement market to get the business of executives and their employees, Ms. Houlahan said.
One reason the marketers have had trouble penetrating customer bases is that banks are struggling with the placement of brokers in branches, Ms. Houlahan said.
Some of the larger banks, she said, don't have enough brokers in their large branch networks. One third-party firm, Invest Financial Corp., has been offering computer technology support to make brokers more efficient at prospecting.
The Tampa company has exclusive rights to large data bases with profiles of potential investors and current bank customers.
To improve efficiency, these reps don't bother with financial advice. They merely jot down a customer's profile and send it via facsimile or E- mail to an expert at Invest's home office who comes up with a financial plan.
"We utilize the financial planning process to give the broker the opportunity to be in front of more prospects," said Merlin Gackle, Invest's president.
The style has worked so far, Mr. Gackle said. His firm has prepared 35% more financial plans in the first quarter alone than in all of 1994.
But despite these efforts, one consultant questions how valuable these third-party firms can be to banks, given the banking industry's historic aversion to marketing.
"Initially the retail side of the bank didn't embrace turning over its customer list," said Geoff Bobroff, a mutual fund consultant in East Greenwich, R.I. "As a result, third-party marketing firms have been at a disadvantage."