Even as mutual fund advisers better define their target audiences and craft marketing campaigns directed at those audiences, advisers may be missing out on the most logical audience of all- their employees. Advisers may be best suited to educate their employees about the very mutual funds they offer and find ways to encourage investments of discretionary, non-retirement assets.

At advisory firms, increasing emphasis has, logically, been placed on helping employees understand their company's retirement plan options and how to maximize contributions to defined contribution plans. But not as much emphasis has been placed on giving employees incentives to invest non-retirement assets in a fund group's proprietary funds.

"Historically, the industry has been so focused on the customer' that we fail to realize some of our best customers are under our nose," said Betsy Rudden, vice president human resources at Phoenix Investment Partners in Hartford, Conn.

While advisers may have to tread carefully to avoid being accused of using strong-arm tactics to compel employees to invest hard-earned dollars with the fund group, savvy advisers will understand the value of learning to do so.

At John Hancock Mutual Funds in Boston, employees, at their six-month employment anniversary, are handed a $50 credit, good toward the purchase of any of Hancock's funds. The firm is now considering raising that stipend to $100 and possibly making it an annual benefit for all employees, said Meredith Bowden, a Hancock spokesperson. It is now routine for new employees to go through an orientation on investing and payroll deductions for direct investments in John Hancock funds and to attend discussions of funds given by portfolio managers. John Hancock employs approximately 700 individuals.

At Calvert Group in Bethesda, Md. employees who are new parents receive a special gift of a $1,000 to establish a custodial account for their new dependents in any combination of Calvert's funds.

It has become the industry standard for funds with sales charges to waive them for employees and their immediate family members and allow them to invest at net asset value. But some plans are more liberal than others. Some allow for more distant relatives to be granted similar rights.

Several firms offer net asset value investment privileges as long as an employee is working for the advisory firm, but add on the regular sales charges to subsequent investments when employees leave. A few grandfather employees for extended periods even after they leave a firm. At Hancock, retired employees can purchase shares without paying sales charges for life.

Incentives to employees also come in the form of discounts in the minimum amount employees must invest to start fund accounts. At Dreyfus Corp., in New York, the usual minimum initial investment of $2,500 is reduced to $50 if an employee agrees to make direct deposits of at least $100 at regular intervals from his paycheck into his fund account.

At Fidelity in Boston, all of the firm's 28,500 employees are offered several "insider" advantages, said Jessica Johnson, a company spokesperson. Fidelity's usual $5,000 capital requirement to establish a brokerage account is waived for employees, as is the usual $30 annual account maintenance fee. Employees also automatically qualify for "Gold Circle Pricing," usually reserved for only the most active Fidelity traders. For employees, brokerage trades executed online cost $14.95. Regular customers pay $25, said Johnson. Representative-assisted trades cost only $25, a fraction of the $150 fee retail customers pay. And for all employees, individual fund minimums are cut to $1,000 from $2,500.

At Putnam Investments, employees can invest at net asset value in any of Putnam's 113 funds. But employees also get to invest in so-called "incubator" funds. These are new funds that are not yet being offered publicly. Employees may also purchase shares of Marsh & McLennan, Putnam's parent insurance company, commission-free.

Some advisers have recognized that existing programs geared toward helping employees become better 401(k) plan participants can be easily adapted for use in the non-retirement arena as well.

"You can't just look at the 401(k) plan assets" in order to advise an investor on how to best allocate his assets, said Laura Thurman of Financial Engines of Menlo Park, Cal., a 401(k) plan participant advisory service. Non-retirement assets must be viewed alongside retirement plan assets to provide the bigger picture.

Some advisers understand that the key to reaching out to employees is in education. At Federated Investors in Pittsburgh, a three-year-old educational program originally geared toward employee 401(k) plan participants was, a year later, seen as just as applicable to employees' non-retirement assets. The firm's original goal was to achieve a higher level of plan participation. But, it formed a LIFE committee (Lifestyle Investing for Federated Employees) to provide similar educational initiatives beyond retirement assets. Free services, including seminars, are now available to all 1900 Federated employees. And there is no arm twisting, said Carole Popchock, director of organization development at Federated. The key is in providing information, not trying to sell funds.

"We don't push product, we teach skills such as asset allocation," she said. The firm is now considering what additional topics to offer seminars in and whether to have the seminars taught by employees or outsiders.

Federated, which had its initial public offering this past May, reserved a block of its stock for employees to purchase, but no discount was offered on the stock price.

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