Search

Strategic alliances with investment firms can assist community banks in keeping their client base from looking elsewhere for more lucrative investments. The growth of mutual funds and annuities has encouraged consumers to reduce their banks deposits and take advantage of the higher returns offered by such investments. Instead of concentrating on deposit-building, banks should get involved in alternative investment activities. One cost-effective way to do this is to form an alliance with an investment firm that offers such services. Such a strategic partnership was successfully formed between Premier Bank N.A. and GNA Corp. The alliance, Investment Centre Network, is owned and operated by GNA, but is led strategically by Premier. This has resulted in the retention of $122 million in investments, which would have been lost to outside providers, and the acquisition of $388 more in new business.

MARY K. STERN Executive vice president, Society National Bank There will be a growing importance as the bank mutual fund market develops on the retail side. I like to think [...]

The banking industry has differing philosophies on whether or not to offer mutual funds with up-front fees known as loads. Bank executives favor loaded mutual funds with a commissioned sales force. Loads enable financial institutions to effectively use their sales force. However, loads also discourage some customers from investing in mutual funds. Mutual fund marketers claim that competition is very important in deciding whether to carry loaded mutual funds., One of the key decisions for banks that sell mutual funds is whether to charge customers the up-front fees known in industry jargon as loads. The fees undoubtedly give banks [...]