Disrupting the ’40 Act Transfer Agent and Fund Administration Services Landscape

Even before the events that have transpired recently with unstable financial markets and worries over the coronavirus, fund sponsors have been increasingly evaluating their current mutual fund transfer agent (TA) and fund administrator relationships due to a few developing factors.

Larger bank-affiliated providers, as well as those affiliated with larger and more diversified financial services firms, have seemed even less focused on delivering the quality and service levels fund sponsors were used to in the past (particularly before the fallout from the 2008 financial crisis).  Investments in technology that help improve user experiences for fund sponsors and their shareholders, have also lagged significantly behind.

This lack of attention at larger institutions is a result of various events and activities including cost/staff reduction mandates, numerous acquisitions, competing organizational strategic initiatives, aging proprietary technology, and a focus on growing other business lines/investments with higher margins. In addition, the investments are required to comply with growing regulatory requirements.

All this while the market continually pressures fund sponsors to aggressively price their funds – resulting in lower investment advisory returns. The corporate capital investments required by companies to deliver comprehensive value-add services in a complex regulatory landscape is complicated, and doesn’t allow much room for providers with competing business lines and those who view fund services as just a hobby.

Getting to the point, ‘40 Act fund sponsors should look more closely at the remaining independent service providers of registered fund administration services in the U.S. To move business forward in a post-virus environment, fund sponsors will need a provider that continually invests in core technologies that enhance the overall user experience, for the fund sponsors themselves and their shareholders.

Enhanced Technology and Service

For example, Ultimus offers two highly responsive shareholder/investor platforms (U-Invest^™ and U-Portal^™) to meet the unique needs of its clients and their investor base. Both platforms use up-to-date application programming interface (API) technology, allowing for easy integration with multiple client platforms. These open, modular portals have been developed to allow fund sponsors to easily customize and update the platform for marketing and investor education-related purposes.

The applications also have smart and interactive user messaging. The intuitive and easy navigational layout of U-Invest is designed specifically for direct shareholders and the advisor community. U-Portal is an internally developed application to meet the special requirements of investors within Local Government Investment Pools (LGIPs).

High-End TA Tech Features

In today’s environment where investors are utilizing more self-service models while working from home, and the industry overall is evolving into a more tech-based service environment with a focus on efficiency, increased quality, and enhanced security, fund sponsors and advisers need a committed provider that is continually investing in TA technologies.

From a fund sponsor perspective, that means looking for providers who continue to upgrade their TA systems with improvements that might include shareholder mobile applications to meet the needs of future investors to ensure an accessible, intuitive experience for all users on a broad array of devices.

Fund sponsors should look for providers who are also incorporating other creative technologies that allow them additional opportunities to grow assets, and provide their customers with leading edge technology solutions. Some of these solutions are a digital advice investment platform with robo-adviser tools that expand capabilities to allow customers a self-directed user experience.

Additionally, Ultimus has implemented a leading fraud prevention software from a well-known vendor to enhance security with the goal of preventing bank fraud for online transaction activities. The company also continues to support specialized structures such as interval and tender offer funds, collective investment trusts (CITs) or strategies in the Environmental, Social, and Governance (ESG) space – which have their own unique shareholder servicing and reporting requirements.

These are just a few of the value-add offerings fund sponsors should expect from their TA provider, delivered with institutional controls and flexible, individualized boutique service levels.

Planning for What’s Next

Asset managers and fund sponsors coming out of the crisis want to work with a partner who can help them deliver on operational goals and long-term objectives for the remainder of 2020 on short notice, while having a positive impact on the funds’ total cost of operations. For fund administrators, that will require drawing on a deep bench of experienced industry and technology experts who are able to work directly with clients, prospects, and centers of influence to solve their unique challenges as everyone plans for the next chapter.

Ultimus Fund Solutions provides comprehensive and compliant shareholder recordkeeping, as well as investor services to registered investment companies and other pooled investment products. Our dedicated transfer agent, shareholder services, and dealer servicing teams utilize leading-edge technologies including new WCAG guidelines, the latest web portal enhancements, and bank fraud prevention software.

Our comprehensive services, flexible, open-architecture format, and team of professionals with years of experience in the industry offer advisers, fund sponsors, and shareholders unparalleled levels of transparency. Click here to learn more or send an email with your questions to imartin@ultimusfundsolutions.com.

2196-NLD-5/15/2020
8347-UFS-5/15/2020