… And Liberty For All

New Orleans bank partners with Edgar Lomax Co. to create mutual fund

lead. For one, smaller banks don’t have the reach or infrastructure to compete with mammoth financial services organizations that control a global marketing apparatus. “The question is whether these institutions can respond to the economies of scale,” says Joe Gladue, an equity analyst with Baltimore-based The Chapman Co. (No. 12 on the BE INVESTMENT BANKS list). “To the extent that Liberty and its partners have the infrastructure, it may prove to be successful.”

Gladue says banks should also be prepared for the marketing challenges inherent with such products. “They will be selling these products to customers who have to understand that their money is open to market fluctuations and will not be federally insured in such vehicles,” he says. “If not, they can leave themselves open to legal challenges.”

Liberty Freedom represents the first plank in McDonald’s mutual fund strategy. He wants to use the network of black banks to build a family of funds that will include fixed-income and more aggressive equity products. Moreover, he will continue to strengthen the bank’s financial services over the next 18 months through the acquisition or development of an insurance company. “We want Liberty to be a true financial supermarket,” says McDonald. “When our customers come to us, we want them to engage in one-stop shopping. It will be the only way for us to beat our competitors.”

Adds Eley, “As long as it is successful, Liberty Freedom will prove to be a model for small banks and insurance companies that never believed they could be competitive in pension funds or mutual fund management because they didn’t have access to billions of dollars.”

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