Magazine article American Banker

IRA Funds Added at Manufacturers: Bank Offering Federated Products in Time for This Year's Tax Deadline

Magazine article American Banker

IRA Funds Added at Manufacturers: Bank Offering Federated Products in Time for This Year's Tax Deadline

Article excerpt

NEW YORK -- Manufacturers Hanover Trust Co. is selling mutual funds through Federated Investors Inc.'s individual retirement account program.

The Bank began advertising the mutual funds last Sunday and has received approximately 200 inquiries so far, according to Robert J. Hutchinson, vice president for retail banking at Manufacturers.

The addition of Federated's mutual program, known as Bankers Choice, continues the expansion of Manufacturers' IRA product line this year. In addition to offering its regular time deposits, the New York retail banking giant expanded its discount brokerage service recently for IRA customers to buy securities and Zero coupon Treasury receipts.

"Our research showed we were losing customers to nonbanks because we didn't have all the investment options," Mr. Hutchinson said. "The Federated program is just a piece--an important piece -- of our program to focus on all the different selections we have."

The loss is attributable, he said, to the rising account balances in many IRAs. "Consumers are going to hit a critical point where they start tinkering with a portion of their investment. It's getting close to that time, so when they do that, we want them to do it here," he said.

Federated claims to have signed up 240 banks for the program, which debuted last October by offering up to five mutual funds, with the option of a discount brokerage program as well.

The program had originally been designed for mid-size banks that lacked the resources necessary to build their own funds. But Edward C. Gonzales, chairman and director of Federated Administrative Services Inc., said, "The fact that they [Manufacturers] selected us demonstrates that the Bankers Choice products has appeal to banks of all sizes."

Mr. Hutchinson said Manufacturers may still decide to build its own private-lable funds, but it chose to go with Federated this year "because the timing allowed us to get it running for the current IRA season. …

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