Transfer Agency - Challenges Ahead

Transfer Agency has come a long way from its traditional offering of dealing, registration and settlements services for unitised funds.  Constant change has been driven by continued outsourcing, globalisation, regulation and client demand.  Automation has been key in the struggle to eradicate manual processes as far as possible, in particular in terms of communicating instructions.

Given the investment in change that has already taken place, what are the challenges lying ahead for the sector?

Regulation – the effects of implementing the European directive MiFID II, remain unclear but will be extensive.  The implementation date has been put back to 3^rd January 2018 to “take account of the exceptional technical implementation changes” and a number of industry commentators have described the directive as a “monster”.  The challenge for TPAs will be to stay ahead of the regulatory game on behalf of clients.

Changing Expectations – TA service providers face heightened expectation from the dual client base of fund manager and end investor.  Corporate and retail consumers have become accustomed to receiving information at the end of their fingertips, but still want the flexibility of human contact.  Transfer Agency has evolved into a “value added” service that needs to offer more than automated solutions.

Globalisation – the modern TA offering addresses institutional and retail requirements for cross-border and domestic funds.  It remains to be seen if multi-currency administration and accounting solutions will stand the test of time.  The extent to which providers are using workarounds alongside “one size fits all” systems is unknown, but may mean that further investment is required to meet service requirements on a cost effective basis.

Distribution Chain – over recent years an additional client base, made up of the distribution chain, has risen in importance to the TA provider.  It is now common for a fund’s investor register to comprise various distributor nominee accounts, with the distributor holding its own sub-registers.  This provides both a challenge and an opportunity in terms of both satisfying demand and having the ability to cross sell additional services.

Many of the challenges to come will be met by system solutions, but TA remains a people business manned by career specialists.  The sector continues to evolve, taking us ever further away from the vanilla TA service of 25 years ago.

If you would like to discuss the recruitment of Transfer Agency specialists, please contact Steve Johnson on 01277 263578 or via steve@acfinancial.co.uk.