Funds offering affinity marketing programs need to have realistic expectations and exercise caution in how they offer such programs to investors, said Dennis Dolego, director of research for the Optima Group.

Funds cannot expect to attract assets using a promotion with an affinity group, he said. "I think the public is hesitant to make decisions on a promotional value."

Offering promotions and incentives to invest in a fund can actually tarnish a fund's image, he said. If an offer "has the flavor of a promotional effort," investors may become suspect of the program "even to the point that they may consider the product to be less value because they have to have an added promotional gimmick."

Affinity marketing is best done when the fund aligns with a professional organization that has some logical tie in to the product, Dolego said. For instance, SunAmerica's alliance with the U.S. Chamber of Commerce to sell 401(k) plans to small business members with less than 100 employees.

Other business alliances that have had moderate success are the former Scudder Kemper's partnership to offer retirement funds through an alliance with the American Association of Retired Persons, he said.

The effectiveness of those alliances in attracting and retaining assets will be explored in the second part of this story appearing in next week's issue.

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