A Freebie magazine distributed by S&Ls is packed with money advice

What's the fastest-growing consumer-oriented money advice magazine in the United States? If you bank with the First Federal Savings & Loan Association in Vancouver, Wash., or Majestic Savings in Denver or the Dry Dock Savings Bank in New York, you know: It's a magazine called Dollar nse.

In the three years the magazine has been published, its circulation has soared from 200,000 to more than 800,000. By the beginning of next year, predicts its publisher, Edward F. Baumer, president of E.F. Baumer & Co., the circulation will be nearly 1 million.

Such success has spawned some imitators. Rainbow magazine, published by William Winter and based in Minneapolis, reports it now has 10 or 12 savings and loan associations as customers and a combined readership of 550,000. And various savers' clubs set up by individual thrift institutions have their own publications, most of which have much smaller circulation.

Dollar nse's success stems from its pocketbook appeal: It is a slick, well-written magazine dispensed by savings and loans to their customers for free. W. Barton Cummings, senior vice-president at the Dry Dock Savings Bank, says the bank uses the magazine as a marketing tool.

"This gives us a chance to give personal financial advice without building up a large staff to compete with the commercial banks," he notes. The magazine also allows the bank to "keep in touch" with its customer base -- the 85,000 households that have accounts at the bank.

So far, Mr. Cummings says, reader response has been extremely favorable. "Ninety-five percent of the letters we have received are positive -- either individuals who want more copies of the magazine or want to ensure that they keep getting it.

At Carteret Savings & Loan Association, headquartered in Newark, N.J., customer response has likewise been positive. Charles Cox, vice-president for advertising and marketing, reports the bank has done extensive consumer testing on the magazine and found that "those who do receive it have an overwhelmingly favorable response. Those who read it spend better than 45 minutes on each issue -- a reading time that Time and Newsweek would be delighted with -- and it was rated among their favorable magazines."

Even more important from the bank's viewpoint, Mr. Cox says, is that the magazine "has had a positive effect on people's relationship with the bank, since they have opened up new accounts with the bank after reading articles in the magazine." Mr. Cummings, however, says Dry Dock has yet to see any such concrete examples of the magazine's effectiveness as a marketing tool. Instead, Dry Dock says the magazine has a more subtle effect.

Each quarter the banks receive an 18-page magazine for which they have the sole distributorship in their area. For example, Dry Dock Savings Bank is the only bank in New York City to distribute it. The country has been divided up into 40 to 50 sectors, according to Mr. Baumer. Shortly, the company hopes to produce its first international copy.

Inside the magazine are about seven stories ranging from advice on how to check up on your social security benefits -- including a pre-addressed card to the Social Security Administration -- to stories on saving money while food shopping and advice on buying a condominium. Often the magazine includes work sheets, such as a recent one that showed an individual how to write out a family financial statement. Almost of the stories are written by free-lance writers, since the magazine has a limited staff.

Naturally, it is cheaper for Mr. Baumer to produce the magazine than for a single bank to produce such a magazine itself. Baumer charges the banks 30 to 40 cents per copy, but the banks give it away free. "With our limited staff," says Mr. Cummings, "we could never produce such a magazine. And it allows us to compete with the commercial banks which stress 'personal banking.'"

Along with the magazine, the bank receives a "study guide" for its staff to read so they can answer questions that are bound to come up as a result of the stories in the magazine. Banks report this is very helpful and educational for their own staffs.

In a way the magazine competes with Money magazine, which is one of the publications of Time Inc.

Because Dollar nse caters to the thrift institutions, it can be criticized for a certain myopia. For example, earlier this year when about 40 percent of all the savings and loans were operating unprofitably, there were no indications of this in the magazine. Baumer says this was because of the long lead times required to write the magazine. And, when many consumers were shifting their money out of savings and loans and into higher-yielding money-market mutual funds, again the magazine was silent. However, it did encourage savers to keep some funds invested in shorter-term money-market certificates issues by savings and loan associations to take advantage of the high rates.

Mr. Baumer's magazine did warn consumers that their funds were not federally insured in the money-market funds, as they were in the savings and loans. But he did not point out that no money-market fund has ever gone under. And the magazine raised questions about how valid it was to compare money-market funds with bank money-market certificates, since there is no standardized reporting for the funds.

"Savers can get confused by the funds' tactics," he explains. At any rate, he says, "We'll see a flow back into the thrifts soon."

The magazine got its start in the winter of 1977-78 after Baumer decided that he had not seen any comparable publications in the 16 years he had been advising savings and loans on training programs for Keogh and Individual Retirement Account plans.

"I discovered there was nothing written on money management," he said in a recent interview. So he raised the necessary capital and went into business. Since the first day the magazine went into print, he says, it has been profitable, although he declines to disclose how much money it makes. The magazine alone, however, grosses Baumer publishing more than $400,000.

The company also makes money on its marketing memos to banks, on community public relations efforts, and by organizing conferences.