One of the greatest strengths of Betsy Connolly, president and chief executive officer of Funds Distributor Inc. of Boston, is her ability to make the mundane side of the mutual fund business - operations, compliance and distribution - interesting, according to industry executives who know her.

Connolly herself said she found accounting and operations compelling and opted to remain in the back-office side instead of moving to the more glamorous investment and marketing sides of the business because she saw great potential to be creative in operations.

Connolly has also advanced her career as she has tackled one challenge and searched for another. However, even though she has been in her current position at Funds Distributor for nine years, Connolly still does not see her job as yet accomplished.

Connolly decided to remain at FDI and expand it from a solely back office services firm into a marketing and communications firm as well in 1995, when it was spun off from Mellon Bank of Pittsburgh. Connolly's counterparts, on the other hand, had no interest in the back-office part of the business.

"There is still a lot to do here," she said, in a recent interview from her office in Boston. "We have a number of other businesses that we want to get into . . . [namely] marketing, wholesaling and broker training. We have been talking to a number of firms that we want to acquire in that area. We also feel that compensation of marketing, wholesaling and sales personnel is going to be an important, specialized service that we can provide, whereas other firms certainly already address the issue of portfolio managers' compensation."

In addition, by the end of 2000, FDI plans to expand into Europe and Canada, she said.

Connolly views Funds Distributor as a company in the making, and she finds it continues to offer interesting work because it is a full-service marketing and operations firm that can offer clients a unique, inside perspective on marketing funds, Connolly said.

FDI does sales, marketing, advertising, distribution, straight-through-processing, research, competitive analyses, product development, telephone support, compliance and legal sales consulting, and compensation packages, Connolly said. Of these, the most lucrative is marketing-related activities, she said. FDI now receives substantial revenue from its marketing services. When those marketing services attract additional assets under management, FDI's trailer fees will increase, Connolly said.

Beyond marketing and research, Connolly most enjoys "taking all of these moving parts and putting them together so that they work seamlessly, in order for us to have success in raising assets, and, sometimes, that is more difficult when pieces of it are out-sourced."

Mutual fund companies will have to cope with several trends in the coming years, she said. They include a significant shortage of wholesalers, an increasing demand for fee-based advice and guidance to help the average investor decide how to manage his money, a flat demand for broker/dealers and a continued decline in the direct market. Also, financial advisors will move away from mutual funds to separate accounts because of the higher fees and the novelty of separate accounts, Connolly said.

As a result of the shortage of wholesalers and as a way of exerting greater control over this critical sales force, Connolly foresees companies moving towards having more internal wholesalers, she said. To combat market share competition from separate accounts and the increasing popularity of exchange-traded and index funds, mutual fund companies may opt to get into these businesses, Connolly said.

Besides leading FDI, Connolly is the founder and head of the Women's Financial Services Network, a five-year-old, 75-person women's support and networking group. Connolly got the idea for her group after traveling several years to participate in a group of women attorneys. As she got on the shuttle to attend one of these meetings one day, Connolly said to herself, Why do I need to travel to New York, and why can't I expand the group to mentor women and help them with career and new business development since there are not that many women involved in the sales' and top management sides of the mutual fund business?" Connolly said.

The Women's Financial Services Network has been particularly important to Connolly for giving her the opportunity to hear top female executive speakers, from such places as the New York Stock Exchange, the American Stock Exchange, State Street Research and PaineWebber, all of New York.

Connolly got into the fund business after earning an accounting degree in 1979 from Boston College. She took a job first in the Hartford, Conn. office of PricewaterhouseCoopers of New York, and later in Boston.

"There weren't that many women in the business school, and only a handful in accounting, and it seemed to me that accounting was perceived as the hardest program for the guys, so it seemed that if you made it in accounting, that people would know that you are smart and capable," said Connolly. "I have always felt that if I am learning something new every day, that is good, and PricewaterhouseCoopers was just a phenomenal experience. There aren't that many jobs where you get that much great exposure to something new all of the time that it keeps you thinking about going on."

It is this diversity and interest in moving on to the next new challenge that keeps Connolly at FDI.

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