MassMutual Financial Group's alliance with Hampden Bank in its headquarters city of Springfield, Mass., is the latest in a program that brings financial planning services and investment products to community banks nationwide.
The Hampden Bank alliance, announced Monday, will let MassMutual agent David Petruzzelli of the Novak Charter Oak Financial Group develop a financial services operation for the bank. To be called Hampden Financial, the operation will offer financial planning services and products from a range of providers to the $409 million-asset bank's customers.
Mark E. Burson, an assistant vice president of strategic alliances in Massachusetts Mutual Life Insurance Co.'s individual insurance group, said the company has more than 84 agency offices nationwide working to set up alliances with banks, CPAs, and other partners.
In these arrangements MassMutual agents set up shop in bank branches, as the larger third-party marketers do, and offer services including investment product sales, business and estate planning, life insurance sales, and retirement planning to the banks' business and individual customers, Mr. Burson said.
The arrangements' details vary, he said, because MassMutual tries to be flexible. "Even though we have a platform for alliances, many times we try to really work and tailor it around that bank and that culture," he said.
The host bank and the salespeople share commissions. The split is negotiated in advance for each alliance and can vary depending on how much commitment the bank makes to the venture.
The MassMutual agents sell a variety of products, not just the insurer's proprietary investments and insurance, Mr. Burson said.
"In today's world you really have to give the customer choices," he said. However, "we're certainly hopeful that our products will shine."
The planners in the branches get referrals from bank employees. They are supported by experts on topics such as retirement or estate planning who can be called in to help out in particular instances.
Mr. Burson said the focus is more on financial planning than selling products, which is different than what many community banks do on their own.
"A lot of what we see going on out there is strictly transaction-oriented, a lot of fixed annuities or mutual funds," he said. Banks using the program are able to offer more planning services because of the depth of expertise MassMutual can provide, he said.
In addition, he said, MassMutual has a trust company so that banks can offer trust services to their clients. "Not all community banks have a trust company," he said, and sometimes they must send customers to larger, competing banks for these services. "This gives their clients a full range of fiduciary and trust services," Mr. Burson said.
Each agency devoted to setting up these alliances has the ability to work with several partners, he said. He did not have a number for the total of MassMutual's arrangements with banks but said that all of the more than 84 offices either have bank alliances or are just getting started on them. The company has been seeking out these relationships for five years.
Helping community banks build financial services capabilities gives MassMutual access to their client bases, which match up quite well with its own.
"Culturally in many respects the banks are a pretty good fit," Mr. Burson said. And both MassMutual and the banks have many clients that are small, closely held family businesses.
Hampden Bank spokesman Rick deBonis said it had offered little in the way of investment products besides certificates of deposit before making the alliance with MassMutual. "This took us two years to actually come to fruition here," he said. "We looked long and hard at what our options were."
The products were introduced before Monday's announcement, Mr. DeBonis said, and have already been well-received by the bank's customers.
