Transfer Agency Cost 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 With this account migration and shift in responsibilities to intermediaries, transfer agency costs have been replaced by the payment of shareholder servicing fees.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. However, at the behest of many fund companies that want to evaluate transfer agency costs by distribution channel, we re-launched the survey in 2015. (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.)
Fund companies can compare the costs of operating their transfer agency by channel and in like functional cost categories …
The survey focuses on the all-in costs associated with the transfer agency (including direct management and allocated costs), and not the amount the shareholder pays. The survey is agnostic about the business model; data is collected for internal, outsourced or hybrid operations. This approach is critical if a firm wants to analyze the efficiency and economics of the business. In seeking to measure the true all-in costs involved in the transfer agency, our survey examines a variety of metrics, including but not limited to:
- Service model (internal, outsourced or hybrid)
- Distribution of AUM in various channels
- AUM per account
- Cost by channel, measured in both $ per account and BPs
- Costs in BPs and $ by function (e.g., call center or processing)
… and use these comparisons to understand how their transfer agency costs rank against their peers.
- Regardless of service model, fund companies are able to compare the costs of operating the transfer agency in like functional categories.
- Fund companies can contrast costs by channel, including those where beneficial account information is not known.
- The analysis considers AUM per account, which influences the cost metrics.