Pershing
Making the Move from Direct-to-Fund to Brokerage
Issue 11, 2010
The numbers speak for themselves
More and more, we are seeing investment professionals make the move from direct-to-fund business to brokerage. In a recent conversation with Brendan Sullivan, a Director at Pershing and Manager of its Mutual Fund Operations Department, he noted that, every year for the last seven years, he has seen just over 300,000 mutual fund positions move via the asset movement function in NetX360™ from direct-to-fund to brokerage, with an average of 1,100 to 1,200 positions daily. Why are investment professionals making the move? The initial key driver was an increase in regulatory scrutiny. “The mutual fund world was shaken in 2003-2004 with breakpoint scandals, late trading, market timing, etc.,” said Brendan. “Compliance suddenly became a huge ordeal. The brokerage platform will always offer the broker-dealer and its investment professionals a simpler solution from the compliance perspective—in the direct world, it’s much more complicated.”
How NetX360 makes consolidation easy
Consolidating clients’ mutual funds through the asset movement function is a streamlined process. Brendan noted, “With the asset movement function—accessed via the service and operations tab in NetX360—you set up a direct mutual fund transfer in the same way that you set up an automated customer account transfer (ACAT) or non-ACAT from another broker-dealer, so that all transfers go to the same place and use the same paperwork.” You select an option to indicate if the delivery firm is a mutual fund company and then simply add the instructions. Depending upon the nature of the account and the broker-dealer, the transfer can occur as soon as the same day that the instructions are entered. If paperwork needs to be sent to Pershing, then the transfer can happen in two to three days.
“Generally speaking,” said Brendan, “the transfer is complete within five to seven days which, in the non-ACAT world, is very quick.” In addition, the asset movement paperwork is simple and easy to fill out. You can list multiple assets for the same company on the same form: Asset movement via NetX360 is a “smart” system, which means that it can recognize when Pershing is required to see the actual paperwork and will prompt the initiator to send it to Pershing, if necessary.
Making the move with NetX360
Mutual fund consolidation continues its growth as the solution for investment professionals who need to operate in a heightened regulatory environment, while offering their clients superior service. Consolidating clients’ mutual fund positions from being directly held at fund companies to a single brokerage account offers both investment professionals and their clients a number of benefits —and the benefits begin by using Pershing’s asset movement function available through NetX360.
To learn more about making the move from direct-to-fund to brokerage via NetX360, visit The Learning Center in Resources, where you can find helpful task references and participant user guides, as well as on-demand training.
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