Monthly Archives: June 2015

Category: Financial Intermediary Administration

Financial Intermediary Oversight: What the industry is focused on in 2015


Financial IntermediaryAdministrationIdentifying trends and gaining industry insight are key factors in helping Boston Financial continue to evolve and better service our clients. One of the ways we do this is through our annual Financial Intermediary Administration (FIATM) survey of mutual fund company clients. Boston Financial introduced the FIA product suite in 2012 to help fund companies manage the operational and oversight activities of their financial intermediary relationships. The survey is intended to provide valuable intelligence as to what the industry is doing relative to intermediary oversight.

There were four key highlights that emerged from this year’s survey:

  • Risk – Nearly all survey respondents cited legal/regulatory as a risk faced related to intermediary based shareholder activity. Most companies also identified financial risk and reputational risk.
  • Oversight Program Staffing – In most cases intermediary oversight programs are staffed by existing resources. More than half of respondents (56%) indicated that all oversight functions are performed by existing resources and an additional 31% use a combination of existing and dedicated resources.
  • Board Focus – An overwhelming number of fund companies (71%) indicated that their boards have increased their attention on their intermediary oversight program over the past year.
  • Sub-Accounting Fees – More than half of the survey participants indicated that their evaluation of sub-accounting fees has evolved.

Fund companies continue to build intermediary oversight programs. Overall, 94% of fund companies have a formal program in place, up from 88% last year. However, satisfaction levels remain flat. In 2015, 41% indicated they were satisfied with their current program, compared to 47% last year.

You can read more on the key findings from the survey here. Please feel free to reach out to me with any questions.

Category: Creating Future Value, Industry Trends

Facing Industry Challenges Together


Thought leadership is more than marketing jargon at Boston Financial. For us, thought leadership tells the story of what we think about changes in the industry, and what we are doing about them.

Boston Financial’s Creating Future Value series has discussed 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. Read the entire series here.


The term “transfer agent” evokes images of shareholder recordkeeping, transaction processing, phone servicing, and possibly even document movement in plastic bags (if you’ve been in the industry since the 1980s). There was a time when a fund company was able to make a relatively simple decision to either perform these functions with its own employees or to hire a company like Boston Financial to handle some or all of these tasks.

But our industry is changing, and the classic definition of a transfer agent is no longer good enough to encompass the functions that a mutual fund service company must perform (or outsource). In addition to the functions of the legacy transfer agent, today’s service company must also manage multiple sub-TA relationships, provide shareholder service across a wide range of media, and ensure that all activities remain compliant within the ever-changing regulatory environment. To remain viable as an outsourcer of these functions, a third party transfer agent must also be ahead of the curve in anticipating what fund companies will require both tomorrow and in five years.

Thought Leadership

Boston Financial has been thoughtfully analyzing the most recent industry megatrends to understand their impact on our clients and our business. We’ve identified five disruptive trends any shareholder and intermediary servicing business needs to be prepared for if they are to be successful in helping clients manage the challenges of the industry:

Demographic stressors iconDemographic stressors: Marketplace competition and diversity among the investor population is contributing to the emergence of niche investment products with more targeted demographics and higher risk. This is coupled with a need for more highly segmented shareholder marketing and service channels.

Rise of the intermediary iconRise of the intermediary: The upsurge in subaccounting means that intermediaries have become both valued clients and vendor partners subject to intense regulatory scrutiny. Balancing these relationships has become much more challenging and fraught with increased costs and risk.

Evolution of technology iconRapid evolution of technology: Technological innovation is both enabling and disrupting the way we do business. Digital capabilities must be rapidly and securely expanded to better serve the end client and the intermediary, while still remaining focused on improving internal efficiencies and capitalizing on data analytics.

Shareholder expectations iconShareholder and advisor behaviors and expectations: The combination of demographic stressors and the evolution of technology is contributing to consumer demand for an increasingly personalized experience with their service providers – on the Web, on the phone and in person. Transfer agents and their clients must be better at leveraging data to provide individualization without compromising data security.

Regulatory scrutiny iconRegulatory scrutiny and complexity: The pace and scope of regulatory reform in today’s political environment is unprecedented. In addition to being prepared for changes in processing and reporting rules, a smart transfer agent should also look at the landscape holistically so they can anticipate and educate clients about future reform.

Over the past several weeks in Perspectives, Boston Financial has shared our current view on each of these five trends. In some cases, we’ve described how products and services either in production or being developed are helping us address a specific requirement. In others, where our path forward may currently be uncertain, we remain committed to staying in front of the need and making the right investment at the right time to ensure that we’re ready before our clients are faced with the new challenge.

So, if you’re a regular reader of Perspectives, you now know our, um, perspective on these trends. If you’re not caught up, please visit the archive and read the other articles in this series.

We’re now extending our discussion to our clients and other readers. Using the comment box below, please share your thoughts about how these trends are impacting your business. Do you agree or disagree with our views and assumptions? Are you seeing other trends that weren’t discussed in this series? You can also contact either me at or your Boston Financial relationship manager to set up a more personal discussion. We look forward to hearing from you soon as we jointly redefine the role of the “transfer agent” in the next decade.


Read other blog posts in the Creating Future Value series:

The Impact of Megatrends to the Transfer Agent Model

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 analytics

Category: Creating Future Value, Industry Trends

Looking at the Big Picture: Leveraging the power of data


Thought leadership is more than marketing jargon at Boston Financial. For us, thought leadership tells the story of what we think about changes in the industry, and what we are doing about them.

Boston Financial’s Creating Future Value series is discussing 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 Boston Financial’s Perspectives blog.


Data-AnalyticsDo you know how many emails are sent every SECOND? Or how many items are ordered through every MINUTE? Or how many hours the average American spends on their smart phones every DAY?

Brian Melter recently reminded us that consumer behaviors are changing. The net result of this behavior change is the unprecedented volumes of data being generated, stored, and leveraged.

We know from our annual client satisfaction survey that asset managers are eager for analytic capabilities to help them use transaction data to improve distribution and sales strategies. They also want to use data to personalize marketing messages and other aspects of the shareholder experience.

So the question facing the shareholder recordkeeping industry is how to manage and leverage our data to help our clients reach these and other goals? And how do we use the data to help our own businesses make better decisions, reduce risk, and improve efficiency. All without compromising the strict security controls in place to protect shareholder data?

These are big questions that require a thoughtful response. This is why Boston Financial, with its enterprise technology partner DST, is choosing to take a methodical, four-step approach to turning data into value for our business and our clients (Figure 1).

Figure 1: DST's Applied Analytics Group recommends a four step approach to leveraging the power of data.

Figure 1: DST’s Applied Analytics Group recommends a four step approach to leveraging the power of data.

So where are we on this continuum?

Step 1: Strategy

If you’ve ever needed to clean your attic or garage, you know sometimes the hardest part of the job is knowing where to begin. Given the often overwhelming volume of information available, the urgency of asset managers’ needs, and the cybersecurity imperative, developing a strategy for tackling data analytics in our industry can feel the same. At Boston Financial, we’ve handled this by looking at the big picture and (a) understanding what data is accessible across the enterprise, and then (b) identifying which of our clients’ questions might be answered with this data. And then, like you would do with any big project, we are starting small by experimenting with more manageable subsets of data.

Step 2: Getting Data Ready

Back office shareholder record keepers like Boston Financial manage enormous volumes of data. But, by and large, this data is actually owned by clients or their technology providers. Concerns about cybersecurity and market competition make many firms reluctant to share data, even if it were stripped of shareholders’ personally identifying information. In examining the big picture, we’ve identified a need to untangle issues of data ownership and data governance. Until these issues are worked out, our capacity to use aggregated client data for activities like industry benchmarking or comprehensive fraud protection may be limited.

Step 3: Data Insights

At this stage in the development of our analytics strategy, the story being told by our data is that we still have things we need to learn in order to completely satisfy our client’s desire for sales and distribution analytics. For example, we are closely examining subaccounting data to determine how we can help our clients achieve transparency so they can achieve their goals of supporting their intermediaries and the shareholders they service.

We’ve also learned that we need to start building our data analytic capabilities using individual client-data to solve individual client problems. And after more than 40 years of experience, it is clear that this data is best used for (a) improving operational efficiency, (b) reducing risk, and (c) shareholder lifecycle management.

As a result of these insights, we’re moving on to step 4 with small, client-driven projects. For example, we are working with one client to package shareholder demographic data to support segmented marketing efforts by clients to specific demographic groups.

Our experience tells us our emergent data analytic strategy is moving at the right pace because of the complicated questions being raised about ownership, strategy, and security. While we wrestle with these big issues, we are still taking bold steps forward to help our clients efficiently leverage data to gain the competitive edge.


2.9 million emails are sent every second (Source: KPMG Investing in the Future, November 2014).

4,374 items are ordered on every minute (Source: KPMG Investing in the Future, November 2014).

Americans spend an average of 4.7 hours of every day on their smart phones. (Source: The International Smartphone Mobility Report, February 2015).


Read other blog posts in the Creating Future Value series:

The Impact of Megatrends to the Transfer Agent Model

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

Have It Your Way: Meeting the Needs of Empowered Consumers

Facing Industry Challenges Together

Category: Conferences and Events, Innovation

Friction is the Enemy of Speed


SpeedSkating“Friction is the enemy of speed.”  I learned this principal racing Pinewood Derby cars with my sons in Cub Scouts.

This principal is relevant for all types of activities where speed is a goal and based on the new financial tech coming out of Silicon Valley, this principal is relevant to customer experience too.

I recently attended Finovate Spring 2015 in San Jose, CA. It was a two day conference focused on new financial technology products. Over 70 new products took the spotlight with a six minute demo; no sales pitches or “Shark Tank” questions, just product demos. One after the other tech companies held the stage in front of hundreds of financial company executives and decision makers. They demonstrated use cases for their products and invited attendees to their booth for more information during the networking sessions.

Two major themes were evident right from the first demo:

  • Frictionless Customer Experience (CX)
  • Mobile is a Must

The new buzz word in customer experience is “Frictionless.” Every piece of Fintech (that’s what Silicon Valley calls the category of products that focus on financial technology solutions) demoed during this conference claimed to be frictionless for the customer. Many of the companies backed up that claim with stories of how fast customer could complete financial activities with their product. One product enabled customers to complete a loan application, on their mobile device, in less than three minutes. They proved it by completing an application during their six minute demo. It was a frictionless experience.

The problem friction causes is customer abandonment. One presenting company claimed that 70% of customers will abandon online activities that have more than three pages of forms to complete. This becomes critical to new business when we consider more and more activities are originating from mobile devices. Financial firms that want to convert customers through web products must have simple, quick, and easy to complete interfaces – in one word, they must be frictionless.

In addition to being frictionless, every demo at Finovate presented a mobile application. Let me repeat that; EVERY financial product demo had a mobile application. Mobile used to be a differentiator, now it’s a must. There were 1.8 billion smart phones sold worldwide in 2013 with an 82% saturation in the millennial demographic. Just take a look around, everyone is on their smartphone, and since this is where customers spend the most time, this is where financial companies need to target their products.

Fortunately, the companies presenting all understood that the financial industry has been around for generations and has some legacy systems and processes that make mobile integration expensive. To address this, products focused on doing one or two things really well and offering frictionless integration with legacy systems. For example, there were a few demos that included inserting 2-3 lines of HTML code into a website and instantly creating a new account application process on any mobile device, compete with photo ID verification and lots of cool bells and whistles.

It was all very frictionless.

The Fintech coming out of Silicon Valley is an indicator of things to come. Speed and convenience is their focus. Traditional websites accessed from a desktop or laptop computer are becoming too slow for customers, if only because they need to physically be somewhere they can use those devices. Mobile access enables customers to perform activities anytime from anywhere, and the new generations expect that speed of access. It is clear that financial activities historically completed in person, on the phone, and/or by mail will need to be self-served  from a mobile device and completed through a frictionless process with very little human action or interaction.

Boston Financial is committed to helping our clients take advantage of the growing mobile market and leveraging industry tools and products to deliver frictionless customer experiences. Staying informed of the new Fintech is one way we continue to evolve from transfer agent to smart servicer.