Alps Takes High Road with Exclusive Deals
Hensley, Scott, American Banker
While other mutual fund distributors are gobbling up as many banking clients as they can, Alps Mutual Fund Services is meticulously pursuing exclusive agreements with regional partners.
So far the Denver-based company's policy to take on only one customer per geographic area has spared its clients competitive friction.
And besides restricting its offerings of mutual fund distribution and marketing support services to noncompeting clients, Alps has also steadfastly refused to develop its own mutual funds.
"We don't have them and we never will," said Arthur J.L. Lucey, president of the 38-employee firm.
Mr. Lucey adamantly defends his company's passion for exclusivity: "The customer is guaranteed we won't be cross-selling someone else's products or our own products in the same market."
So far the strategy seems to be working. Alps has seven mutual fund clients right now, Mr. Lucey said, and "we've won three of the last three bids we've made."
In marketing and sales support, regional exclusivity may offer value, one mutual fund observer said. "If you really have a novel idea, there is a level of proprietariness to it," said Geoffrey H. Bobroff, an East Warwick, R.I.-based consultant. "When a Bisys is representing two or three banks in a market, it raises some questions."
But exclusivity does have a price. In keeping with its contract as distributor and administrator for western regional power First Interstate Bancorp's Westcore Funds, Alps "turned down business in their area," Mr. Lucey said.
It is in the protection of innovative solutions that the company's executives believe their exclusive arrangements offer the greatest benefit. Mr. Lucey cited the traditional separation of advertising firms and rival clients as the model for Alps' approach.
An advertising firm doesn't work for both Ford and General Motors, he said. "We want to devote our creative resources to being a partner without a conflict," he said.
Alps offers a range of support services to bank-managed mutual fund families, including the Mariner Funds from Marine Midland, Buffalo, and First Funds from First Tennessee National Corp., Memphis.
As a fund administrator, Alps manages such back-office functions as accounting, shareholder services, and regulatory compliance. …