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Frank Russell Company Bundles Services


Frank Russell Company of Tacoma, Wa. is hoping to boost its defined contribution business by offering plan sponsors other retirement services. These additional services include defined benefit, deferred compensation and profit-sharing plans, along with investment education programs for plan participants. Russell is offering these services packaged with corporate cash management and strategic consulting services. Russell calls this its retirement savings strategic partnership program.

Although Russell has offered various bundled services since 1980, its strategic partnership program has taken off in the past three years, attracting $7 billion between 1997 and 1999, said Lou Rowan, national director of sales for Frank Russell. This represents about 13 percent of Russell's $54 billion in total assets worldwide, Rowan said.

Since the actual number of strategic partnership clients has only risen from 70 in 1997 to 90 in 1999, most of that increase in assets was due to existing clients expanding their investment and cash management business with Russell, Rowan said. Clients participating in Russell's strategic partnership program have individual assets under management ranging from $20 million to "multiple billions," Rowan said.

Rowan and his staff of seven salespeople nationwide hope to attract new clients to sustain that pace of growth.

A major advantage a plan sponsor enjoys by participating in the strategic partnership program is that with a greater amount of assets under management, it can negotiate management fees, Rowan said. The arrangement also enables plan sponsors to cut back on human resource and treasury personnel, Rowan said.

Out-sourcing cash management and retirement plan services to one firm is also convenient, he said.

"This enables them to concentrate on their core competencies," he said.

There are tremendous advantages for an asset management firm in landing multiple pieces of business from one client, said Dennis Dolego, director of research for Optima Group, a mutual fund distribution consulting company in Fairfield, Conn. Such an arrangement removes the difficulties of "dealing with the separate silos of treasury and human resource departments," he said.

Like Russell, Fidelity is also trying bundled sales. However, Fidelity's strategy is different. It is providing financial advisers who have existing cash management accounts at small businesses, with Fidelity defined contribution products specifically tailored for companies with 100 employees or less. (MFMN, 9/9/99) As with Russell, Fidelity's thinking is that businesses appreciate being able to obtain checking, cash management, loans and retirement plans from one source, in Fidelity's case, through a financial advisor.