Magazine article American Banker

Amcore Financial's No-Load Bet Seems to Be Paying Off

Magazine article American Banker

Amcore Financial's No-Load Bet Seems to Be Paying Off

Article excerpt

Amcore Financial Inc. committed a very unbanklike act 15 months ago when it began selling its proprietary mutual funds without a sales charge.

But the bet now looks like a winner.

Executives at the $2.4 billion-asset Amcore, which is based in Rockford, Ill., said the switch to no-load pricing has been the springboard for a big jump in retail investment sales.

"Considering where we were and where we are now, we've come a long way," said Patricia M. Bonavia, marketing director for personal investor services and head of retail mutual fund marketing.

Retail sales of Amcore's Vintage Funds hit $29 million in 1995 - nearly double the bank's $15 million goal. By contrast, retail sales in 1994 amounted to $4.5 million.

Only a handful of banks offer their funds to consumers without loads, with NationsBank Corp., Charlotte, N.C., and Trustmark Financial Corp., Jackson Miss., joining the clique earlier this month.

Most banks continue to rely on the mutual fund sales fees, known as loads, to compensate brokers for their efforts.

During the past few years, more banks have added sales fees than have dropped them. Among them: Fleet Financial Group and Firstar Corp. Finding a way to adequately compensate brokers for making no- load sales has limited the appeal of the no-load approach.

But at the same time Amcore dropped its sales charge, it also shifted sales from the brokerage to the platform.

By relying on branch workers, the bank minimized its compensation headaches and expanded its sales force tenfold.

Now 79 bank employees - instead of five brokers - sell mutual funds when they aren't opening checking accounts or handling customer questions in 34 bank branches throughout northwestern Illinois.

Amcore still restricts annuities sales to brokers, unlike some other banks that had moved everything but retail sales of individual stocks and bonds to the platform. …

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