Monthly Archives: March 2015

Category: Industry Trends, Innovation

Believing in a Vision


Zakim-BridgeVision: The act or power of anticipating that which will or may come to be. Every project begins with a vision; an end-state or goal that drives the journey. Behind every vision is a visionary; someone who believes in the vision and works to make the vision a reality.

Last week I attended the Greater Boston Chamber of Commerce Executive Forum where I listened to John Fish speak. John is not only the Chairman & CEO of Suffolk Construction Company, he is also one of the key visionaries behind Boston 2024 – the effort to bring the Olympics to Boston. While this is a controversial endeavor with many pain points, roadblocks, and naysayers, John believes in the vision for two reasons: he is passionate about the power of sports and he loves the city of Boston.

John’s love for the city of Boston is shared by the rest of the committee and it is the primary driver of their efforts. Their vision isn’t about bringing the Olympics to Boston in 2024, it is about creating a better city for people to live and work in. They have a vision for where they want the city of Boston to be in 2030 and believe the Olympics provide a tremendous opportunity to invest in that vision now.

John outlined the core reasons why an Olympic bid benefits the city:

  • The bid is a catalyst for changes. It forces city leaders to think differently, live up to deadlines, and come together constructively.
  • It is an opportunity to make significant improvements to the city. Boston has a culture of deferring reinvestment. Preparing for the Olympics would force leaders to invest in the city’s transportation system and affordable housing options, all while creating jobs for residents.
  • Hosting the Olympics would further elevate Boston as a global city. Since the conversation started, Boston has seen an increase in international tourism. London has also surpassed Paris as a destination, which is attributed to the Olympic games.

While listening to John, I started thinking about our vision for the future of Boston Financial. As I mentioned in my last blog post, our vision for the next few year is to continue to create future value and evolve from a classical transfer agent to a smart servicer. This vision is about creating a better company prepared for the challenges facing our industry. Yes, there are pain points, roadblocks, and naysayers to contend with, but the benefits of working towards this vision outweigh the drawbacks.

  • Becoming a smart servicer is catalyst for change. It requires our leaders within our company to think differently, live up to deadlines, and come together constructively.
  • It is an opportunity to make continued investments in our tools, technology, and people. These investments will increase efficiency across the organization and position us to deliver on the customer experience.
  • It further elevates Boston Financial as an industry leader and as a resource to help our clients solve their problems along their road to success.

Having a vision is the first step towards investing in the future. Regardless of your opinion on whether or not Boston should host the Olympics, the Boston 2024 initiative creates a dialogue about making significant improvements to the city of Boston. The research and visioning is a valuable exercise in itself. The actions they are taking now will benefit the city long after 2024. At Boston Financial, we are emulating this model. The actions we are taking now to evolve our business will not only benefit our business and our clients in the immediate future, but for years to come.

Category: Blue Sky, Compliance

Read My Lips – No New Taxes


Remember that infamous quote by George Bush Sr.? A campaign slogan that came back to haunt him when he did raise taxes. It seems states have a similar sentiment, no new taxes for their taxpayers, so the revenue needs to come from elsewhere.

On Tuesday March 17th, I spoke on a State Issues panel at the ICI 2015 Mutual Funds and Investment Management Conference in Palm Desert, California. Aside from the amazing weather, I was impressed with the elevated attention on state regulatory issues at an event that typically discusses SEC regulatory issues. Certainly, a majority of the presentations carried a theme that the federal regulators are becoming aggressive, but one of the general sessions actually uttered the word “blue sky”, which is a nod to the state regulators.

My panel, “State Issues Affecting Mutual Funds: Wait, Didn’t NSMIA Preempt the States?” concentrated on blue sky, state tax, state sponsored plans, and abandoned property. (For an explanation of the session title, refer to my last blog post “Why Does Blue Sky Compliance Remind Me of the IRS?”.) The message was clear from all the panelists. States are looking at all possible channels to generate revenue without upsetting key constituents (in other words – don’t tax the residents). Blue sky, in states with no-cap on the fees to file, represents substantial revenue. See chart for some examples.

*Texas source – ** Nebraska source -

*Texas source –
** Nebraska source –

The same can be seen with abandoned property and business taxes for out of state companies operating within the state. These sources of revenue have zero impact on voters in the state, so they have become areas of focus.

We feel the trend toward aggressive fee collection and investigation will continue and we work to prepare our clients for all that may come. To do this for blue sky, we perform annual reviews of client filings, data sources and system settings. We are currently in the process of developing a best practice document reflecting what we believe to be the standards for a successful blue sky compliance program.  Our goal is to educate our clients on the regulatory environment, and help them maintain compliance, manage costs, and mitigate risk.

Category: Conferences and Events, Innovation

“If you’re not failing you’re not trying hard enough”


Mia Froio, Age 10

Mia Froio, Age 10

Do you take risks? Big risks, or small risks? If you’re like me you take calculated risks. Ones where I feel fairly confident I’ll be successful.  I must admit, I’m pretty confident, but do I have a fear of failing?

Recently, I attended the DST Advance Conference. This was a multi-day, multi-track event with top industry speakers and panelists providing many key takeaways. However, given my role and ongoing quest for innovation, the speaker that left the biggest impression on me was not an industry expert at all, but rather an artist.

Eric Wahl is an internationally recognized graffiti artist and best-selling author who incorporates his business background and artistic talent into corporate speaking engagements. He delivered not only an interesting keynote, but a thought provoking show.

As I sat, captivated by a mesmerizing scene of pure artistry and creativity by a modern day Picaso, set to the sound of Bono’s “It’s a Beautiful Day,” I couldn’t help but think:

  • Do we take enough risks in our jobs?
  • Do we have the mentality “Fail first, fail often?!”
  • Or, are we more likely to respond to ideas with every reason why that idea won’t work?


During his presentation, Wahl challenged us to allow our creativity to flow without fear of failure. As children, we create through play as we have little to no experience with failure, and therefore, our ideas are uninhibited -as illustrated here in my daughter Mia’s artwork. Mia’s innocence and freedom to create something that reflected her own personal style without adhering to preconceived expectations is priceless. As we get older, we often inhibit our creativity as experience tells us all the reasons why the idea won’t work. It’s time to reawaken our childhood creativity!

Every day in business and in life we are faced with the challenge to proceed without fear of failing. As a product manager, I’m continually faced with identifying product opportunities that are profitable, valuable to our clients and come with reasonable risk. But, it does take risk to move these product ideas forward. For me, the exciting challenge is figuring out how to present opportunities to the executive team illustrating that the opportunity is good for business and the reward offsets the risk.

One of our most profitable new businesses came with risk. Despite having a strong business case that captured critical factors such as market analysis, value proposition, market differentiators, growth projections and financial benefits it failed due to risk.  As a matter of fact, my second and third pitch didn’t make it over the finish line either.   With each pitch, I had takeaway lessons that helped balance the market demand with a risk profile that was acceptable to the enterprise.  And in the end, I didn’t have much to lose; ‘persistent’ could have been the worst adjective used to describe me.

So, maybe I’m really not afraid to fail after all.  And, yes, I believe that every great business has risks.

As business solutions providers, our success depends upon us building and amplifying trust with our clients. Instead of measuring success by starting with economic results, we need to determine what matters to our customers in terms of building their trust, and drive idea creation towards exceeding their expectations.

Will we fail from time to time? Yes, but as Wahl explained through his work, we need to reprogram our minds…to look for ways to build back an emotional connection for customer loyalty. If we fail nine times out of 10, chances are that one success story could be a game changer!

Category: Creating Future Value, Industry Trends

The Impact of Megatrends to the Transfer Agent Model


Thought leadership is more than marketing jargon at Boston Financial. What really matters is what we are doing to adapt to changes in the industry, not just what we think about them.

Boston Financial’s Creating Future Value series will discuss how we are responding to industry megatrends by moving away from the classic, transaction-driven transfer agent model in favor of a smart servicing model that positions clients for growth in the changing economy.

Follow this monthly series by subscribing to the Perspectives blog.


The classic definition of transfer agent focuses exclusively on shareholder recordkeeping, transaction processing and phone servicing. Analysis of industry megatrends tells us that this definition is no longer sufficient to capture the value transfer agents must provide to clients in order to provide them with an edge in the market.

Industry Megatrends

Research by industry experts like KPMG, ICI and Deloitte, along with extensive interviews with our clients; have made it clear that there are several megatrends shaping our industry. These include:

  • Rapid evolution of technology: Changing the way we live and work, technology continues to be an enabler and a disruptor.
  • Changing consumer behaviors and values: Technology evolution and changing demographics have led to empowered consumers who demand easy access to information and deeply personalized experiences.
  • Demographic stressors: With over 50% of the mutual fund assets, baby boomers are moving into retirement and asset managers are focused on retaining assets and sufficient return. Millennials represent only 5% of mutual fund assets. How can they be converted into mutual fund investors?

It is likely you have heard these trends before. Boston Financial has gone one step further and analyzed how these trends will likely impact the way we do business.

Guided by more than 40 years of industry experience, Boston Financial has concluded that the transfer agent of the future needs new product solutions and continued operational innovations in order to meet expected client challenges:

  • Shifting compliance and regulatory environment: Given the pace, pervasiveness and complexity of the regulatory environment, our role is to ensure we are staying ahead of regulatory issues and preparing for implementation and compliance on behalf of our clients – in both the retail and intermediary space. The regulatory environment is one of the top challenges – if not the #1 – for mutual fund companies.
  • Empowered consumers with high expectations: There is a high demand for mobile, web-based self-service across all demographic groups. But, consumers want access to both tech-powered investing solutions and the human touch. We need to ensure our clients’ consumers – shareholders and intermediaries – have the optimal experience through our contact center interface.
  • Leveraging the power of data: Data analytics is an industry buzz phrase – everyone has to have it, but few really understand what it means. The transfer agent is uniquely positioned to help clients gain valuable insights about investor and intermediary trends and behavior, while addressing complicated issues of data ownership, strategy and security.

These challenges do not spell the end of the transfer agent function in mutual fund processing. In fact, as more investors enter the market place, volumes are increasing. What is changing is the complexity of the work and expectations about the way work is managed.


Smart Servicer: The transfer agent of the future

In order to make the transition from classic transfer agent to smart service provider, transfer agents must expand digital capabilities, accelerate technology development cycles and adjust both the staffing model and professional development programs to ensure staffing teams have the optimal mix of technical, analytic and operational professionals serving clients and intermediaries.

The pursuit of alpha has contributed to the development and introduction of complex products that tend to have lower volume and higher risk. With this increased risk profile, transfer agents must invest in people and technology to ensure they deliver the highest level of quality and mitigate risk, without compromising the standardization and scalability that are chief advantages of the classic transfer agent model.

Finally, a more consultative and collaborative style is needed with clients. The transfer agent of the future must be prepared to demystify new regulations, data presentations and digital advances in order to help clients on their road to success.

We believe that what really matters is what we do about the challenges facing the industry, not just what we think or say about them. Boston Financial’s Creating Future Value series will bring experts, like Chief Compliance Officer Craig Hollis; Managing Director of E-Business Solutions Brian Melter; Managing Director of Investor Services, Trish Crockan; and Managing Director of Transfer Agency Services, Tracy Shelby to discuss how we are taking action on these and other challenges today to create future value for our clients and the mutual fund industry.


Read other blog posts in the Creating Future Value series:

Prepared for Whatever Comes Next: Creating future value in compliance programs

Have It Your Way: Meeting the Needs of Empowered Consumers

Looking at the Big Picture: Leveraging the power of data

Facing Industry Challenges Together

Category: Financial Intermediary Administration

Achieving Intermediary Fee Transparency


Fund-Board---453887503The SEC has conducted several sweeps to gather information for determining whether payments to financial intermediaries were for shareholder servicing and recordkeeping or for distribution, often called “distribution in guise”. Recently, there has been much speculation about potential enforcement actions against some funds as a result of these sweeps. What can funds do to protect themselves on this issue? Three suggestions come to mind:

  1. The Board first needs to set policies, consistent with the funds’ 12b-1 plan, about what the funds will pay for intermediary based shareholder services.
  2. Funds should be as specific as possible in their agreements about the services that the intermediary firm will perform specific to SubTA, Servicing and Retirement Fees.
  3. Funds then need to establish a repeatable process to allocate funding of intermediary fees to the funds, up to the levels agreed by the Board, and then allocate the remainder to another corporate entity.

This approach is supported in our FIA Payment Administration (FIATM) business. Many of our clients have established funding rules for these payments, limiting the amounts to be paid by the individual funds. After validating the fee amounts, we provide reporting to the client splitting the funding of the fee between the fund and a corporate entity, typically the distributor. For example, the fund may agree to pay a SubTA fee up to $19/account or 25 bps, and anything over that is paid by the distributor.

Retirement fees are often allocated into three buckets. Say there is an aggregated 60 bps Retirement Plan Service Fee on a single invoice. It would be split into its underlying components , such as 25 bps for servicing (same as a SubTA fee) paid by the funds, 25 bps for 12b-1fees paid by the funds (under the Board approved 12b-1 plan) and finally 10 bps paid by the distributor.

All of these funding rules can be customized at the fund share class level to accommodate different fee structures for different products. In addition, the process is systematic and results in full documentation to help demonstrate that the policies established by the board have been satisfied.

As the attention of the SEC continues to increase around distribution in guise, the above suggestions may help to provide clearer internal direction relative to payments and their processing. The focus remains on disclosure, transparency and ensuring that intermediary payments are allocated appropriately, correspond to the functions being performed, and follow the guidelines established by the Fund Board.