Magazine article American Banker

ABA President Knows Firsthand about Marketing Mutual Funds

Magazine article American Banker

ABA President Knows Firsthand about Marketing Mutual Funds

Article excerpt

Given the boom in bank mutual fund activities, Daniel R. Smith's term as president of the American Bankers Association could not have come at a more

fitting time.

Mr. Smith is chairman and chief executive of First of America Bank Corp., Kalamazoo, Mich. - one of the industry's leaders in

managing and selling mutual funds. The bank's proprietary Parkstone Funds hold $4.5 billion in assets.

Q.: Why is the mutual fund business so important to banks? SMITH: By some estimates, mutual funds now hold more assets than banks do. That is market share that has been going away from banks. It's critical that banks get some of that market share back. Q.: How long has First of America managed mutual funds? SMITH: About six years, and that's about as long as any bank has been in it. We have 14 funds.

A lot of our mutual fund assets came out of the trust department and conversions from common trust funds. But our list of retail customers is growing fast. These are customers who would otherwise be going elsewhere with that money. Q.: What's your advice to banks that sell mutual funds? SMITH: The big issue right now is making sure the customer understands that funds are not insured by the Federal Deposit Insurance Corp.

Take a look at every single piece of printed matter you have on mutual funds. Make sure that everything has a disclosure that the mutual fund is not FDIC-insured.

It would be a good idea if all of your advertising had that universal "no" sign - a little circle and slash overlaid on the FDIC logo. …

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