Category: Transfer Agency

Forty Years Ago Today


1970s-office---AA032266Forty years ago today, on August 5, 1974, I began my career in the mutual fund industry when I started work at the transfer agent for a fund company. As I look back, I thought it would be interesting to share some observations about how much the world of mutual fund shareholder servicing has changed in those forty years.

The mutual fund business was very different then. At the time, the fund family I supported had 7 equity funds and one money market fund. The money market fund was the first in the industry to offer check writing privileges for redeeming fund shares. That feature, combined with a lackluster stock market, created a lot of demand for the product and gave me the opportunity to get started in this business. It’s ironic that money market funds are again very much in focus, but for an entirely different reason. In addition to the proliferation of products that we see in the industry today, the biggest difference is the technology that we use, and probably take for granted, compared to what was available in 1974.

My first job was in the correspondence department. Back then, we didn’t have workstations with Microsoft Word to create shareholder letters. Instead, each correspondent had a CRT connected to the mainframe to access the shareholder recordkeeping system and a phone that connected to a dictation machine in word processing. Each letter was dictated, transcribed by staff in word processing and then printed on multi-page stationery with imbedded carbons to create copies. We manually signed each letter, inserted it into an envelope and then put it in the mail tray to go out to the post office.

The other key shareholder communication mechanism was the telephone. There were no electronic phone systems or ACDs in 1974. Instead each phone representative had a black telephone with a handset and 8 lines represented by blinking lights for a call. A new call was represented by a slow blink. Calls on hold had a fast blink. There was no console to monitor incoming traffic and staff availability. You knew you were busy when all 8 lines on all of the phones were lit and everyone was already on the phone!

Transaction processing was also very different than what we are used to today. There was no scanning and automated work distribution, so everything was done with paper. Shareholder instructions were interpreted and then entered on the appropriate input form (there was a different form for each transaction type), which was then attached to the shareholder’s request with a paper clip. Completed forms were placed in a wire basket and periodically during the day someone would collect and sort them by fund and transaction type. Groups of like transactions by fund were “batched” into a package with a cover sheet called a batch ticket. This batch ticket included the total number of transactions in the batch and the total of the shares or dollars that were being bought or sold. After the batch ticket was complete, all of the associated documents were put into a plastic “baggie” with the batch ticket as a cover and then delivered to data entry. Data Entry entered the details of the batch ticket followed by each of the individual transactions from the input forms. To close out the batch, there was a system check to make sure that the actual number of transactions and shares/dollars matched what was entered at the start of the batch.

The next day, the baggies were delivered to the microfilm department, that first matched them against a list of expected batches from an overnight processing cycle, then sorted them by fund and then alphabetically by transaction type. Once sorted, all of the documents were removed from the baggie and manually feed into a machine that captured the documents on microfilm. These microfilms were used to research transactions and answer shareholder questions.

Clearly, we live in a different world today, empowered by technology that we couldn’t even imagine in 1974. Social media tools like Twitter and Facebook were the stuff of science fiction then and even email did not exist. I wonder if those of you who are starting your career in the mutual fund business in 2014 will look back in 2054 at the tools we use today with the same sense of amusement and nostalgia that comes to me when I think about the way things were in 1974!

Ken Larsen

Ken Larsen

Ken is a Vice President at Boston Financial with responsibility for the strategy of the Financial Intermediary Administration (FIA) products and services. These offerings include a suite of tools designed to assist broker-dealer distributed fund companies in the oversight and servicing of their third-party relationships. The FIA team provides fund companies with innovative solutions and support to their financial intermediary, trust, and retirement business relationships. Ken's career in the transfer agent business spans the U.S., U.K., and European marketplaces. He began his career at Fidelity Investments in Boston. For the last 24 years, he has worked for several third-party transfer agents including Boston Financial, IFDS (UK), and State Street Bank Luxembourg in operational, management, relationship and product development roles. Ken received his Bachelor of Science degree from Providence College.

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