
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 8, 1995                   TAG: 9506090044
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: MAG POFF STAFF WRITER
DATELINE:                                 LENGTH: Medium

BANKER DEFENDS QUALITY OF ADVICE GIVEN TO INVESTORS

Signet Banking does a "Draconian" job of informing customers about the risks and rewards of mutual funds, a company official said Wednesday, reacting to newly raised concerns about regulatory reform that would allow banks to move deeper into the securities industry.

James McCoy, vice president and director of marketing for Signet Financial Services, made the comments while he was in Roanoke to meet shareholders of Signet's Virtus funds and to listen to the concerns of people who have invested in Signet's mutual funds.

Tuesday, Securities and Exchange Commission Chairman Arthur Levitt told a congressional committee that proposed legislation to repeal major portions of Depression-era barriers that separate banking from Wall Street firms falls short of balancing interests of investors with those of the stock market.

Some members of Congress have questioned whether customers understand that mutual funds sold by bank brokers are not insured by the Federal Deposit Insurance Corp.

But McCoy said language is on every document related to the sale of Signet's funds stating that mutual funds are not products of the bank and are not guaranteed against loss, as are most bank deposits. In addition, the customer must sign a disclosure form that lists the conditions and risks in simple language.

"Not that many people are confused," McCoy concluded.

There was support for that position in a study released Wednesday by the American Bankers Association. The study, conducted for the bankers' trade group, said bank brokers do a better job than stock brokers and insurance agents when it comes to informing customers about investment risks.

The study suggested that sophisticated investors are better off using stock brokers, while average investors may be better served by banks.

McCoy said the banking industry has room for improvement, but the greatest problem he sees is that some banks put investors into a single mutual fund. Brokers do it, too, he said.

People need the right mix of investments, not just one fund, McCoy said. "Nothing does well all the time."

Each Signet customer creates his own program by answering questions - such as tolerance for risk - on a computer, McCoy said.

McCoy said 700 households in the Roanoke Valley own Virtus funds.

by CNB