Servicing Shareholders

Service: The Customer Perspective
• What is important to you when doing
business with a mutual fund sponsor?
• What do you expect from that company
when you call or walk into one of their
• What are some of the key customer service
satisfiers that you might require from a
mutual fund sponsor?
Service: The Customer Perspective
Automatic Investment
Check Writing Privileges
Dividend and Capital Gains Reinvestment
Exchange Privileges
Information Via Telephone and Internet
Investment Help
Low minimum Investment Amount
Reinstatement Privileges
Service: The Customer Perspective
Shareholder Report
Simplified Record keeping
Systematic Withdrawal Plan
Tax-deferred Retirement Account
Web-based Screening Tools
Wire Transfer
Mutual Fund Customer
Service Satisfiers
• Typical high priority services
– Accurate transaction processing
– Knowledgeable representatives to turn to for help
– Full array of products
• Other desired services
– Easy-to-read communications and statements
– Effective problem resolution processes
– Easy ways of doing business
Organizational Position
of a Transfer Agent
Role of the Transfer Agent
• Process accurately all shareholder transactions
• Handle all customer service inquiries and requests
• Send out transaction confirmations, periodic
account statements, and tax summaries/reports
• Maintain books/accounts to ensure proper share
• Ensure that transactions are in compliance
with regulations
• Resolve customer problems
of a Transfer Agent
• Shareholder services segment
– Performs front-office operations and interacts
with customers
– Responds to written correspondence
• Transaction processing segment
– Ensures accurate account transactions
– Posts dividend payments
– Reconciles cash daily
of a Transfer Agent (cont.)
• Operations support segment
– Maintains accurate records of customer accounts and
– Sorts and distributes mail
– Produces confirmations and periodic statements
• Fund administration segment
– Provides audit support
– Bills and tracks fees between the fund and the transfer
– Monitors blue sky registration fees
Technology and Shareholder
Servicing Trends
• Typical technological aids to phone reps include
– Intelligent workstations that allow access to complete
account information and provide instant answers to
many questions
– “Imaged” or scanned customer documents that allow
the phone rep to call up and view documents on-line
– Advances in voice recognition and automated systems
may help free phone reps’ time to respond to more
complex queries
Technology and Shareholder
Servicing Trends (cont.)
• Internet
– Has transformed the delivery of service to fund
– Has begun to merge with other consumer media, so
phone reps may have an interactive chat with a
customer; moving toward voice and video capabilities
– May be utilized for more transactions as security
advances are made and older investors become more
comfortable with this technology
Technology and Shareholder
Servicing Trends (cont.)
• Other servicing trends include
– Programs to reduce mailing/production costs
(e.g., installing high-speed sorters)
– Moving transfer agent operations to lower cost
Decisions for Directors
• Internal versus external transfer agent—
factors to consider
– Costs of in-house support versus external
– Quality of customer service
– Size of the mutual fund complex
– Nature of the sales arrangements
Decisions for Directors (cont.)
• Quality control
– Directors must monitor performance and
establish acceptable level
– Objective measures and customer satisfaction
• Pricing
– Must agree on structure of billing arrangement
– Should fairly compensate transfer agent, while
fairly allocating costs among shareholders
Transfer Agent
Pricing Strategies
• Per account charges
– “Flat fee” is charged per account
– May depend on factors such as account size, mandatory
reports, and ancillary services
• Transaction charges
– Based on the number of purchases, redemptions,
exchanges, etc.
• Basis point charges
– Based on the average amount of assets per account
Transfer Agent
Pricing Strategies (cont.)
• Combinations/Other strategies
– Relatively low flat fee per account plus
transactional charges
– Relatively low flat fee per account plus basis
point charge
– “Variable” or “allocated” methods