1

Service: The Customer Perspective

• What is important to you when doing business with a mutual fund sponsor?

• What do you expect from that company when you call or walk into one of their offices?

• What are some of the key customer service satisfiers that you might require from a mutual fund sponsor?

2

Service: The Customer Perspective

• Automatic Investment• Check Writing Privileges• Dividend and Capital Gains Reinvestment• Exchange Privileges• Information Via Telephone and Internet• Investment Help• Low minimum Investment Amount• Reinstatement Privileges

3

Service: The Customer Perspective

• Shareholder Report

• Simplified Record keeping

• Systematic Withdrawal Plan

• Tax-deferred Retirement Account

• Web-based Screening Tools

• Wire Transfer

4

Mutual Fund Customer Service Satisfiers

• Typical high priority services– Accurate transaction processing

– Knowledgeable representatives to turn to for help

– Full array of products

• Other desired services– Easy-to-read communications and statements

– Effective problem resolution processes

– Easy ways of doing business

5

Organizational Position of a Transfer Agent

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Role of the Transfer Agent

• Process accurately all shareholder transactions• Handle all customer service inquiries and requests• Send out transaction confirmations, periodic

account statements, and tax summaries/reports• Maintain books/accounts to ensure proper share

allocation• Ensure that transactions are in compliance

with regulations• Resolve customer problems

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Organization of a Transfer Agent

• Shareholder services segment– Performs front-office operations and interacts

with customers– Responds to written correspondence

• Transaction processing segment– Ensures accurate account transactions– Posts dividend payments– Reconciles cash daily

8

Organization of a Transfer Agent (cont.)

• Operations support segment– Maintains accurate records of customer accounts and

transactions– Sorts and distributes mail– Produces confirmations and periodic statements

• Fund administration segment– Provides audit support– Bills and tracks fees between the fund and the transfer

agent– Monitors blue sky registration fees

9

Technology and Shareholder Servicing Trends

• Typical technological aids to phone reps include– Intelligent workstations that allow access to complete

account information and provide instant answers to many questions

– “Imaged” or scanned customer documents that allow the phone rep to call up and view documents on-line

– Advances in voice recognition and automated systems may help free phone reps’ time to respond to more complex queries

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Technology and Shareholder Servicing Trends (cont.)

• Internet– Has transformed the delivery of service to fund

shareholders

– Has begun to merge with other consumer media, so phone reps may have an interactive chat with a customer; moving toward voice and video capabilities

– May be utilized for more transactions as security advances are made and older investors become more comfortable with this technology

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Technology and Shareholder Servicing Trends (cont.)

• Other servicing trends include

– Programs to reduce mailing/production costs (e.g., installing high-speed sorters)

– Moving transfer agent operations to lower cost locations

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Decisions for Directors

• Internal versus external transfer agent—factors to consider– Costs of in-house support versus external

vendor– Quality of customer service– Size of the mutual fund complex– Nature of the sales arrangements

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Decisions for Directors (cont.)

• Quality control– Directors must monitor performance and

establish acceptable level– Objective measures and customer satisfaction

• Pricing– Must agree on structure of billing arrangement– Should fairly compensate transfer agent, while

fairly allocating costs among shareholders

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Transfer AgentPricing Strategies

• Per account charges– “Flat fee” is charged per account

– May depend on factors such as account size, mandatory reports, and ancillary services

• Transaction charges– Based on the number of purchases, redemptions,

exchanges, etc.

• Basis point charges– Based on the average amount of assets per account

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Transfer AgentPricing Strategies (cont.)

• Combinations/Other strategies– Relatively low flat fee per account plus

transactional charges– Relatively low flat fee per account plus basis

point charge– “Variable” or “allocated” methods