Transfer Agency P&L Survey
Over the past decade, the transfer agency landscape has changed dramatically. There has been a massive shift to omnibus accounts, so fund companies now hold only a small number of direct retail accounts on their books. With this account migration and shift in responsibilities to intermediaries, transfer agency costs have been replaced by the payment of shareholder servicing fees.
Barrington conducted our Transfer Agency Cost Survey from 2004 through 2011. Because of the transition of the business, we retired the survey in 2013; at the behest of fund companies that wanted to evaluate transfer agency costs by distribution channel, we re-launched the survey in 2015. In 2018, firms want to understand not only their costs but also the profitability of whatever portion of transfer agency they retain in-house.
As with all Barrington benchmarking surveys, only participating firms receive a copy of the final report; each participant’s report is customized to allow comparisons against randomized representations of the other participants’ anonymous responses.
The survey is constructed like a Profit and Loss statement …
- Top-level: AUM, underlying beneficial accounts.
- Channel: Direct, Direct Registered Brokerage, L3, Omni/DCIO where the number of underlying accounts is known, Omni/DCIO unknown underlying accounts and other (institutional)
- Revenue: the survey considers the structure under which the funds pay the TA ($ per Account, BP, Cost Plus etc.) Then revenue is broken out by the category and type of revenue. Sub-TA is addressed as included or paid separately.
- Expenses: are broken out into 10 categories for each channel. While firms have told us that this is the toughest part of the survey data collection process, all firms agree that this information will be very valuable.
- Profit Margin: 3 years of data
- Sub-TA Payments are traced through the process on both the income and expense side
… and the resulting report can be useful in 15-c meetings.