Community banks usually jump into the investment products business by selling to retail customers, but one mutual fund executive suggests that they take a different tack.

Gerald T. Morda, a senior vice president at Zweig Securities Corp., counsels community banks to leverage their ties to small business owners in order to market qualified retirement plans that utilize mutual funds and other investments.

"It's an easier way for banks to get their feet in the water and gradually wade into the investment market," Mr. Morda said.

But some bankers question his novel strategy. While most agree that community banks are in a strong position to make the most of small business relationships, some still think competition in the retirement plan market is too fierce for them to carve out a niche.

"If large banks are having trouble competing in this market, then certainly a community bank would have a tough time," said Roger Thomas, president of Thomas Marketing, Columbus, Mo. "Selling qualified (retirement) plans is kind of jumping off the deep end."

Mr. Thomas said most small banks have neither the expertise nor the resources to effectively manage and market retirement plans.

The naysaying hasn't stopped Mr. Morda. A former banker and chief marketer for the Zweig Funds in Boulder, Colo., he has been teaming up community banks in the Rocky Mountain region with investment product marketers that help them package and sell 401(k) and pension services.

The unusual strategy helps keep costs down for small banks, and keeps investment sales from draining bank deposits, Mr. Morda said. It also gives the Zweig Funds, a small mutual fund company based in New York, a chance to expand it distribution through banks.

Mr. Morda hands out referrals and advice for free, as long as the banks promise to consider selling the company's funds through the bank, he said.

"There isn't any coercion, but I do ask that they look at our funds objectively," Mr. Morda said.

Financial Network Investment Corp., a Torrance, Calif.-based investment products marketer, is current working with at least one bank that Mr. Morda has referred to them.

J. Lynn Gingrich, regional sales manager for the company, said that many small banks are delaying selling investments to retail customers in order to first concentrate on servicing small business owners.

"It allows them a focused way to get into the business, and a way to get out, if need be, without affecting the entire bank program," Ms. Gingrich said.

Richard A. Ayotte, president of American Brokerage Consultants, in St. Petersburg, Fla., agreed: "Focusing on commercial accounts has always been an important part of investment sales."

"We would take a look at it," said Douglas Crichfield, president and chief executive officer of Concord Savings Bank, Concord, N.H. "Our commercial lending is growing rapidly, and this might be a good fit."

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