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Lockwood Woos Advisers With Menu Beyond SMAs

Lockwood Advisors, Bank of New York's managed account subsidiary, is using its alliances with the banking company to broaden its menu of products in order to go down market for wallet share through advisers.

The Malvern, Pa., company said it will offer independent investment advisers mutual fund wrap products, registered no-load hedge funds, a supermarket of mutual funds, passive fixed-income products and mortgage services in addition to separately managed accounts.

Christopher W. Tomecek, president of Lockwood, said his company decided to enhance its wealth platform to meet demand from advisers.

"Right now we are an exception' business," Tomecek said. "Advisers turn to us on the exception when their customers need a managed account. But not many independent financial advisers have an average household size of over $1 million. Advisers like the way we do business. We are just too far upstream. Hopefully, this platform will give us the opportunity to discuss their smaller book of business."

Tomecek said the average household served by a financial adviser has $285,000 of assets. "We want to help financial advisers position themselves with this platform," he said. "We want to help them shore up their base of business. We want to insure that when investors have a major wealth event they turn to us."

Lockwood, which was opened in 1996, manages $6.5 billion of assets through 1,800 advisers nationwide. Tomecek said these advisers manage clients whose assets range from $100,000 to $245 million.

Of the 1,800 advisers, he said, 1,000 use Lockwood along with a mutual fund provider, relying on Lockwood for large transactions and the other provider for smaller ones.

Tomecek said the new platform of products will let Lockwood compete with SEI Investments, Assetmark and Fundquest in supplying mutual funds to advisers, and with Charles Schwab, TD Waterhouse and Fidelity in trading capabilities.

"We never had a good solution for smaller accounts," Tomecek said. "Advisers have been killing us for years," demanding these capabilities.

The mutual fund wrap account is for people making a minimum investment of $25,000, and the hedge fund requires a $50,000 minimum. Lockwood's separately managed account requires a $100,000 minimum investment. The mutual fund supermarket will give advisers access to 1,400 portfolios, including 1,000 no-load funds.

The new products illustrate the synergies Lockwood has developed with Bank of New York since being bought last August. The portfolios in the mutual fund wrap program and the supermarket are processed and handled by Pershing, the Jersey City, N.J., clearing services firm that Bank of New York bought in January from Credit Suisse First Boston. And Ivy Asset Management, the parent company's hedge fund-of-funds subsidiary, manages the no-load multi-manager hedge fund. BNY Capital Markets runs the fixed-income portfolios, and the mortgages are provided through First Alliance Bank and BNY Mortgage.

Tomecek insisted, however, that Lockwood is not just pushing Bank of New York's proprietary products.

Yes, they own Pershing, and we are giving [advisers] access to the Bank of New York mutual funds. But I am just taking advantage of the access," he said. "We did not, and would not, go through Bank of New York and force advisers to pick and choose just from among their products."

Analysts said the platform expansion would also help Lockwood reach out to community and midsize banks. Lockwood can offer community banks private-label investment products while acting as a behind-the-scenes money manager, Tomecek said.

Lockwood sells its products through 15 banking companies, including Hibernia Corp. in New Orleans, Commerce Bancorp in Cherry Hill, N.J., Comerica in Detroit, and Cleveland's National City Bancorp.

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