Alliance Fund Services, Secaucus, N.J., the defined contribution arm of Alliance Capital Management, plans to phase out its relationship with State Street Bank and Trust Co. by year-end. The bank is trustee to 11 of Alliance's original 401(k) clients. The firm recently entered into a new partnership with Frontier Trust Co., a wholly owned subsidiary of The Equitable, Alliance's parent, and has not been doing any new business with State Street.
"We didn't bring them (State Street) as much business as we or they expected. They're as anxious to disengage from us as we are from them," said Gerald Di Salvo, assistant vice president.
Alliance officials told State Street officials they will encourage the 11 clients to switch to Frontier.
In addition, in an effort to target large defined contribution plans that want to offer participants more than one family of mutual funds, Alliance is seeking to provide investment services in alliances with several record keepers and trustee banks.
"We want to be involved in three different alliances by year end," he said. Alliance manages $22 million for 19 defined contribution clients.