Study Says Mutual Funds Would Be Wise Investment for Banks

By Morris, John | American Banker, September 4, 1984 | Go to article overview

Study Says Mutual Funds Would Be Wise Investment for Banks


Morris, John, American Banker


CHICAGO -- Reaction to a study exploring consumer's interest in buying mutual funds from banks and thrifts has surprised even the firm that made the survey.

"It's been staggering, way beyond expectations," said Richard B. Ross, executive vice president of the Chicago-based research company, Market Facts Inc. "It shows just how much interest there is in banks and thrifts offering mutual funds to the public."

Market Facts had expected to sell about 100 copies of its $745 report to major banks over the next year. But already 127 have been snapped up since the report came out at the end of May. There is interest not only from the big banks, it seems, but also from smaller regional banks and thrifts, and from investment companies and brokers who take the topic seriously enough to be worried about the potential competition. "We made sales to banks we never would have believed would pay $745 for a study," Mr. Ross said.

The report forecast that a major shakeout could hit the investment industry in the next few years as a growing number of banks and thrifts offer stock and bond mutual funds. Their sales of these products could top $40 billion annually, and those institutions that do not retail mutual funds could be at a severe competitive disadvantage.

Market Facts found in its survey that about one in five U.S. households wants to buy mutual funds through banks or thrifts, and 60% of those households would switch banks to get mutual funds.

"Few banks or thrifts offer mutual funds today, but that is expected to change as more and more begin to understand and capitalize on rising consumer interest," Mr. Ross said. "We expect several thousand banks and thrifts to offer mutual funds along with discount stock brokerage services in the next two to three years."

Most consumers, it seems, do not want the banks or thrifts to manage the funds -- they just want to buy them there. …

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