Life Insurance, Mutual Funds, Annuities to Be Offered : B of A Expanding Services Through Weyerhaeuser Unit

Times Staff Writer

Bank of America on Wednesday became the first major California bank to make life insurance, mutual funds and tax-deferred annuities available to customers in its branches.

An arrangement with a subsidiary of Weyerhaeuser, the forest products giant, allows Bank of America to make an end run around laws against banks selling some of these products directly. The investments will actually be sold by employees of GNA Corp., the Weyerhaeuser unit.

The B of A move reflects marketing changes occurring in the once-stodgy world of consumer banking. It also reflects the industry's growing frustration with what B of A executive Richard M. Rosenberg called "archaic, anti-consumer laws" that limit the types of financial products banks can offer directly.

Thrifts have greater latitude than commercial banks in products they can offer, so many savings and loans currently provide insurance and securities investments to customers through their branches.

The commercial banking industry is waging a pitched political battle in Washington to pass legislation easing the Glass-Steagall Act, the Depression-era law that restricts their activities in the securities arena. The fight to offer insurance is not as far along, and prohibitions against its sale by banks are much stiffer.

Federal law allows banks to suggest mutual fund investments to customers seeking advice and to execute them through registered brokers employed by the bank. California's other big banks--Security Pacific, Wells Fargo and First Interstate--have investment advisers to assist individual customers on various levels. They also have discount brokerage subsidiaries to execute trades.

But the addition of insurance investments adds a dimension to the B of A plan that is not offered through branches of the other big banks, although at least one B of A rival plans similar third-party insurance sales in its branches soon.

The use of GNA to also sell mutual funds is partly a necessity for B of A. The sale of its investment management and trust departments over the past 18 months has diminished the bank's ability to provide professional, in-house investment advice. These profitable assets were sold to counter enormous losses by the banking firm.

The company's strongest remaining asset is B of A's branch system, California's largest means of reaching individual bank customers. The new marketing approach is an attempt to regain revenue and momentum by capitalizing on that asset, and the bank said it expects to eventually have GNA representatives covering 750 of its 877 branches.

Starting Wednesday, B of A said, 50 GNA consultants were working through 270 branches in the Los Angeles, San Diego, San Francisco and Sacramento areas. The consultants offer investment advice in the branches and at customers' homes and offices.

GNA has formed a licensed life insurance agency, Securities Annuities & Insurance Services, which will sell insurance products in B of A branches under the program name Investment Network of America. GNA Securities, a broker-dealer, will sell mutual funds under the program.

"We view the Investment Network of America program as a way now (of) providing greater financial value to our customers without waiting for an end to archaic, anti-consumer laws," said Rosenberg, BankAmerica vice chairman and head of its California banking operation.

Trend Among Banks

The program will not generate direct revenue for B of A, except through concession fees paid by GNA. Rather, the bank said, it will benefit by offering more services to help keep customers and possibly by gaining new customers attracted by GNA.

The concept of expanded services for customers has become known in industry circles as "relationship banking." Proponents see it as a way to fight competition from rivals operating under fewer restrictions, such as savings and loans and brokerage houses.

Mark S. Serepca, a spokesman for the American Bankers Assn. in Washington, said an increasing number of banks have turned to outside vendors. "Banks are doing it because they feel an urgent need to meet customer needs so the customers won't turn elsewhere," Serepca said.

An earlier pilot program in which B of A allowed an outside firm to offer basic insurance products through some branches was scrapped as unsuccessful. A B of A spokesman said the new program is more innovative and extensive.

Rival Security Pacific has been aggressively expanding beyond traditional customer products for several years, and the bank has a staff of broker-dealers working through its branches to advise customers on investments.

Also, plans are on the drawing board at Security Pacific to make insurance investments available through its California branches, said Robert R. Morlen, president and chief executive of Security Pacific Insurance Services, a subsidiary.

Conservative Approach

Next month, Morlen said, Security Pacific's banking subsidiary in Arizona will make insurance investments available through branches in an arrangement with an outside firm.

But Morlen said the company is proceeding cautiously. "There is always a concern when you turn an outside marketing organization loose in your branches because you never know exactly what they are saying," he said. "We are taking a very conservative approach."

First Interstate canceled a pilot program for selling insurance in California in cooperation with another firm but is operating a pilot program at its Arizona subsidiary, according to a spokesman.

Wells Fargo offers customers several possible mutual funds but does not market them through its branches. The bank plans to introduce a new mutual fund for customers, the Overland Express Fund, next month in conjunction with the New York investment house of Lazard Freres.


A large retail network is B of A's strongest remaining asset. Year-end 1987 figures for branches in California.

Bank Branches Bank of America 877 Security Pacific 602 Wells Fargo 443 First Interstate 318

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