Banc One Turns to Third-Party Distributors to Continue Growth
June 10, 2002
Mark Beeson is chief financial officer of Banc One Investment Management Group and CEO of the One Group Mutual Funds of Columbus, Ohio. In this role, Beeson is responsible for sales and support of the proprietary fund group and annuities. This includes marketing, wholesaling, training, operations and administration.
With 48 funds and assets of $92.8 billion, One Group is the sixth-largest bank-owned fund group. The company's funds are sold through more than 3,000 registered reps at 1,800 retail banking center branches across the country, as well as through most major national and regional brokerage platforms.
Beeson recently spoke with Mutual Fund Market News' Lori Pizzani about the fund group's initiatives and areas of growth. An edited account of the conversation follows.
MFMN: What do you want the One Group Mutual Funds to best be known for?
Beeson: I want it to be known as a great service organization. That means across-the-board support, from our Web site to people answering the phone, to fund managers providing support to our marketing staff.
MFMN: Why is great servicing so important to hang your group's reputation on?
Beeson: I've seen products come and go. It's a given that you have to have products and you have to have great performance. But those with great servicing ultimately distinguish themselves.
MFMN: Has that reputation changed since the One Group Mutual Funds was formed in 1992?
Beeson: It has changed immensely. In 1992, when the funds were formed, we had a collection of mutual funds but not a mutual fund business. We learned that we not only have products but also strategic development efforts and a servicing component. From 1992 through 1995, we were creating the infrastructure to build our mutual fund company. We are now looking to build on that.
MFMN: Your fund complex was one of the earliest bank-sponsored mutual fund groups to operate as a stand-alone unit. Has that position helped or hindered the fund group's progress and growth?
Beeson: Being a separate mutual fund entity rather than a division of a bank has been of tremendous benefit to us in a lot of ways. We've been able to recruit a lot of talent from non-bank areas across the fund industry. It has also allowed us to create products more quickly and to get them to market faster with different distribution options.
MFMN: Do you view other bank-sponsored fund groups as your competition?
Beeson: No. We don't view most of the other banks as our competition. One of the things that is getting murky is what is a bank. On that score, we would go head-to-head with Citigroup, Wachovia, PNC and Dreyfus. But are they banks or asset management companies?
Our real competitors in the marketplace are the other wholesale-sold fund groups: Putnam, OppenheimerFunds and MFS. In the institutional bond marketplace, we compete with PIMCO, BlackRock and Western Asset Management.
They have stronger recognition because they have been there a longer time. They also have developed more relationships. So, we have been playing catch up.
On the flip side, some of those veterans in the industry have burned their bridges with bad products. Some had to do damage control. So being a newer player has some advantages. We have learned from a lot of their mistakes.
MFMN: What have been your biggest challenges to growing the fund group?
Beeson: For us, the 90s presented lots of challenges that were structural issues surrounding what a bank could and couldn't do. But now a lot of those barriers have been dropped with the passage of the Financial Services Modernization Act.
Distribution has also been challenging. Beginning this April, we are now the distributor for our funds. We had used BISYS before. So we are in the process of transferring over selling group agreements with all of the broker/dealers we work with from BISYS to internally.
MFMN: On the product side, you are having success with your institutional money funds, and on the distribution side with third-party distribution. In light of the weak stock market and increasing reliance among investors on financial advisers, has success simply found you, or have you worked hard to achieve it?
Beeson: It would be nice to say that it found us, but we've worked hard to achieve that success. We have had a very clearly defined strategy for targeting institutions and third-party distributors.
On the institutional side, we have always had a great relationship with our banking partner, our parent Bank One. They have developed solid relationships with clients and have introduced us to them as the money manager to consider. Bank One's past merger with Chicago NBD vastly helped increase the client list.