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Can Banks Attract New Assets?

Bank-sold fund assets may be stickier than other channels, but banks are not doing as well as most other channels when it comes to attracting new assets, according to a new study issued last week by Cerulli Associates.

Including proprietary and non-proprietary funds, banks' market share of long-term mutual fund sales has slipped from 19% in 1992 to just 10% as of year's end in 2000, according to the study. And despite a 15% growth rate between 1996 and 2000, bank proprietary funds hold just 5.1% market share, the study found.

A large part of the reason that banks have been having difficulty bringing in new fund assets is because most of them still charge transactional fees instead of asset based fees, said Cerulli analysts and co-authors of the study, Rachel Maltesta and Jean Sullivan. Less than 3% of bank brokerages' retail clients are fee-based clients and that needs to change if banks want to add products like managed accounts and wrap programs, they said.