By all accounts, William Shiebler walked into a mess when he joined Putnam Investments as president of its mutual fund sales unit in 1990.
The venerable fund company was smarting from a series of money-management stumbles. Hefty losses in its Government Plus money market portfolios had alienated many of the wirehouse brokers who had been big sellers of the investments. Business was suffering.
Though the problems were ultimately resolved, they "created a severe backlash" against Putnam, according to a recent study by Cerulli Associates, Boston.
Spurned by a large segment of its clientele, the company under Mr. Shiebler quickly turned its attention to a tiny patch of business that was glowing with possibilities.
"Banks looked like the most promising area we had," Mr. Shiebler recalled in a recent interview at Putnam's corporate headquarters in Boston. "I felt we had to prioritize, and banks looked like the best place to put the limited resources we had back then."
The move has paid off handsomely. Today, Putnam is the top seller of retail mutual funds through banks, according to a ranking by American Brokerage Consultants, St. Petersburg, Fla.
In 1992 and 1993, Putnam's fund sales through banks totaled $3.9 billion and $6.3 billion respectively, accounting for a full third of the company's business.
And though sales through banks have slipped to around 27% of total volume this year, Mr. Shiebler said the company is taking steps to reverse that trend.
"I would like to see bank sales stay in the 30% to 40% range," he said.
In early September, as part of a wider realignment of its mutual fund sales staff, Putnam boosted the number of salespeople who are dedicated to banks from 15 to 18.
The staff additions were a response, in part, to criticism from rivals and some clients that Putnam does not have enough salespeople to serve all the banks it does business with.
"Our clients were complaining they weren't seeing our wholesalers enough," said Louis Tasiopoulos, director of Putnam's financial institutions division.
With the new employees, Putnam should be able to maintain better contact with and provide more consistent service to its bank clients, Mr. Shiebler said.
"We needed a new structure that better reflects our larger size and the geographic concentration of our clients," he explained. Putnam's strongest states are California, Florida, and New York.
The company has also introduced asset allocation funds to provide investors with more diverse product options. And it is testing a new commission structure in a bid to attract fresh business from both brokers and investors.
"Our marketing structure is now catching up with our sales momentum," Mr. Shiebler said.
As senior managing director and chief of retail sales for Putnam Investments, Mr. Shiebler oversees Putnam's sales of mutual funds through financial planners, independent firms, specialty firms and major brokerage firms, as well as banks.
Mr. Tasiopoulos is his right-hand man for the bank-related chunk of the business. Both men also work closely with Stephen E. Gibson, Putnam's national marketing director.
The company's high-powered marketing efforts are much discussed in banking circles. Rival companies often complain that Putnam has "bought" banks' affections by bankrolling marketing campaigns and reimbursing banks generously for their outlays. In a recent report, Cerulli Associates noted that Putnam spends "very heavily on special incentives."
But Mr. Gibson insists that Putnam has earned its position as the dominant player in the bank market.
"We deserve their business," Mr. Gibson said. "Good quality programs cost a lot of money," and Putnam spends heavily on hiring quality people and training bank employees.
Although he acknowledges that the company has more assets than many of its competitors, allowing it to finance programs that those with shallower pockets can't, he said banks demand more of Putnam, which manages over $94 billion.
"Banks are insisting that because we are getting the lion's share of the business, that we spend proportionally," Mr. Gibson said.
But Putnam isn't always willing to bow to those demands, and, as a result, has been dropped from some bank programs.
For example, Putnam was cut from Banc One Corp.'s list of preferred mutual fund products this summer, despite providing the Columbus-based banking company with a broad range of products and services.
"We offered them asset allocation software, marketing support, and training assistance, and we got taken off the list," Mr. Gibson said. "We're not going to just go buy the business."
Putnam still has a number of the country's biggest banks on its client roster, including Keycorp, Barnett Banks, Chase Manhattan Corp., and Dime Savings Bank.
Part of the company's success in capturing banks' business is due to its early focus on serving the bank market. Putnam started a separate bank wholesaling effort to distribute its products through banks in 1987, earlier than most of its major competitors.
Early on, Putnam also dedicated a team of people to serve bank clients. For example, the company has four- to eight-person units dedicated to banks, so when bankers called, they were not just getting "the next person on the phone," Mr. Shiebler said.
"Banks thought that was unique, since none of our competitors were doing it," Mr. Shiebler said.
In 1991, Putnam started providing marketing materials designed specifically for various banks.
"We were the first firm to tailor marketing materials on a bank-by-bank basis," Mr. Shiebler said.
Despite the company's dominant position, Mr. Shiebler plans to keep pushing Putnam's products and services to banks.
"We want to be seen as a solutions company," he said, "so that banks become reliant on us and our services and become somewhat addicted to them."
