Work-site marketing, common in the insurance industry, is starting to make its way into the banking and investment businesses.
Mellon Financial Corp. revealed last week that it will use Bankmark, the third-party marketer it bought May 1 from Conseco Inc., to offer financial planning and investment products to employees of its shareholder services clients.
In a similar move with a twist, earlier in the week an insurer Cigna Corp. said its just-chartered thrift would sell banking products and services to employees of the companies whose retirement and group life insurance plans Cigna manages.
A large part of Mellon Investor Services business is the administration of employee stock plans. James D. Aramanda, its president and chief executive officer, said financial planning is a natural extension of the business, since more and more employers include stock and options in compensation.
The actual financial planning will be provided online by DirectAdvice Inc., an online financial planning service in Hartford, Conn. Mellon Investor Services has created a broker-dealer, FutureShare Financial Services LLC in Ridgefield Park, N.J., to handle this business.
Pittsburgh-based Mellon would not say what it paid for Bankmark. The Morris Plains, N.J., company sells mutual funds, annuities, and insurance through banks. It will retain its name but operate as part of Mellon Investor Services, part of Mellons global investment services business.
(Mellon Investor Services, which has 1,700 clients, was originally half-owned by Chase Manhattan Corp. now J.P. Morgan Chase & Co. but last year Mellon bought Chases stake.)
Charles E. Naddaff, president and chief operating officer of FutureShare, is responsible for Bankmarks day-to-day operations. Merlin R. Gackle, a third-party marketing veteran who spent more than 10 years at the helm of Invest Financial Corp., is national sales manager. (Mr. Gackle left Invest in 1998; in 1999 he was fined $20,000 by the National Association of Securities Dealers for failing to adhere to supervisory procedures while at Invest.)
Mellons model differs from most work-site marketing relationships. Employees of firms that offer financial planning generally pay for it, Mr. Naddaff said. Mellons service will be free to the employees; the companies will pay for it. The employees would pay for any investment products purchased.
FutureShare financial planners will supplement the DirectAdvice service by going on-site at the offices of the corporations, answering questions, and helping employees implement their financial plans.
Mr. Aramanda said Mellon bought Bankmark because of its expertise in creating customized sales programs. Just as different banks request different services from a third-party marketer, different client companies may want different levels of service, he said. Some may want only financial planning, while others may want brokerage and financial planning, he said.
Mr. Gackle said the third-party bank marketing business is similar to the corporate business on which Mellon is embarking, in that in each case the end client is an individual rather than a client of the marketer itself.
Mr. Naddaff said Mellon will curtail Bankmarks third-party marketing business. Bankmark sells investments in about 40 banks and will continue to service and expand that business, he said.
Mr. Aramanda said Mellon has no clients yet for the financial planning service, but that several companies have shown interest. He declined to reveal specific goals or expectations for the unit but said he expects it to start serving its first financial-planning clients by the fourth quarter.
Mr. Aramanda also declined to discuss rumors that Mellon is negotiating to buy another third-party marketer.
Conseco sold Bankmark because it wants to sell only its own products not those of other vendors through banks, a spokeswoman for the Carmel, Ind., insurer said.
