Customers like a frictionless experience when it comes to finance. When a client has decided to transfer their assets, it’s important to educate them as much as possible. This means keeping customers in the loop as to where their assets are and when they are expected to transfer. No one likes getting the run-around, especially not when it comes to making such a big financial move. The key to streamlining the trust customer’s experience in ACATS is to make the process more proactive than reactive.
Two years ago, we had a prospective client say they needed to be able to transfer assets from another bank, but the receiving bank trust was struggling with the ACATS juncture especially regarding the mutual funds. Unfortunately, there are many roadblocks to moving assets around, whether it’s technical, coverage of funds, or the paperwork. Customers expect the process to happen quickly, but it can actually take months to complete.
Kinks in the system
There are a couple of roadblocks that can keep the transfer from executing in a reasonable period of time, one of which is “asset dropping on the floor.” Customers might have a portfolio of stocks, bonds, and funds, but often the standard ACATs workflow required time frame is too short to address multiple issues with the funds included in the transfer. For several recurring reasons, they end up dropping the mutual funds, or worse, the entire ACAT fails.
Moving fund assets often run into the following problems.
- Moving assets from a non-member to a member or vice versa guarantees a multi-week process which is manual and time-consuming.
- Moving non-ACAT eligible funds alongside ACAT assets can often be difficult to communicate to the front office, let alone the end client.
- Accounts at the fund may not exist even if a selling agreement is in place.
- Often there is not a relationship with the fund and creating one and receiving assets within the 24-hour window is not realistic.
All of the above identified issues are usually found to be culprits in hindsight once a transfer has failed and a client has been lost to the incumbent Trust company. There are few tools that can proactively identify eligibility, relationships, and counterparty capability at the point of initial ACAT communication.
With all of these factors in mind, there is a risk that the customer won’t move to you if the process is too long.
What needs to be done to give better support to the front office and the client?
- Transparency around the asset transfer status and the process taking place will be key. Determine the asset’s reputation for how long it normally takes to move and disclose anything that could cause a delay so that you can set expectations with customers about the time it will take to transfer. Let them know how you will communicate that the process has been completed, along with what needs to be done from an execution perspective to provide assurance and consistency in the process.
- Automatically evaluate the assets involved in an inbound transfer at the point of the front office’s request to receive. Be sure to confirm acceptability of the assets based on coverage of selling agreements and cover compliance of the specific security in the trust account it is destined for.
- Ensure ACAT eligibility of the assets, ACAT participation of the sending institution, and verify that any documentation requiring signature is delivered to the funds.
Doing your research and working through all of these items will set a great precedent with your customer, helping you to get off on the right foot with them so that they can receive their assets as quickly as possible. Being upfront with the customer about these processes will help them to better understand the timeline for the process and set their expectations accordingly. And in terms of benefits to your business, the sooner the assets are transferred, the sooner you can begin billing.
At Delta Data, we are setting out to simplify. We want our customers to have the most frictionless transfers possible. That’s why we are committed to using these steps to make the process more proactive, rather than reactive.
Contact us to learn more about how we can help with your asset transfer process.
Certified Public Accountant who has over 20 years of experience in mutual fund distribution services, acting as both a consultant and software solutions architect in Retirement Plan Services, Trust Services and Insurance Services. He also currently serves on the joint ICI-SIFMA committee charged with providing recommendations to shorten the ACATS settlement cycle.