Magazine article American Banker

First Security Takes Aim at 401(k) Market

Magazine article American Banker

First Security Takes Aim at 401(k) Market

Article excerpt

First Security Corp. is creating a family of mutual funds to lay the groundwork for a broad drive into the 401 (k) plan market.

The $3 billion-asset banking company, based in Salt Lake City, will launch six of its own funds and will place its name on several outside funds. Its aim is to boost its sales of the retirement savings plans in Utah, Idaho, and New Mexico.

By setting its sights on 401(k) plans, First Security is taking a somewhat unusual path into the proprietary mutual fund business, according to industry experts.

"It's not the most typical way of rolling out proprietary funds," said-Glen Casey, a consultant at Cerulli Associates, Boston.

Many banks first create funds for their retail customers, and only later make these products available for 401(k) plans and proprietary variable annuities.

'They may be realizing that banks are having trouble raising assets in the retail channel and are looking to the 401 (k) market as an alternative," Mr. Casey said.

Indeed, First Security believes its best opportunity lies with the thousands of small- and medium-sized businesses in its market area. That's why the bank will roll out the 401(k) product by year-end, followed by a retail program sometime next year, said Patricia A. Richards, executive vice president at First Security's lead bank.

Executives at First Security believe that offering mutual funds as part of the 401 (k) program will attract more business, partly because customers like being able to track the value of their investments in daily newspapers. …

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