How a Transfer Agent Partner Helps Save You Money

The impact of relieving management of transfer agent distractions is enormous and there are other ways in which third-party transfer agent services benefit the bottom line.


How a Transfer Agent Partner Helps Save You Money

Outsourced transfer agent services provide numerous and varied benefits to investment funds. The overall impact of relieving management of the distraction of back-office/transfer agent functions is enormous. However, there are several other ways in which third-party transfer agent services benefit the bottom line.

Savings on Payroll

As your fund succeeds and grows, the expenses and hassles of keeping an in-house workforce for transfer agent and other back-office responsibilities increase. Recruiting, training, sick time, vacations, employee perks and paid leave are all significant expenses and problems for a growing company. In-house transfer agent teams face constant and costly issues such as hiring and firing, overstaffing and understaffing. All back-office functions are completed with professionalism and without human resource concerns for management by a good third-party transfer agent services provider.

Efficiency in Transfer Agent Expertise

Every transfer agent task is accelerated and streamlined by specialized transfer agent systems in the hands of skilled and experienced operators. Using expert transfer agent services, hours spent on new investment entry, error resolution, reporting, maintenance, transfers, distribution payments and commission calculations are reduced. Controls built into transfer agent systems that ensure data consistency, reduce errors, track activity and provide audit trails also help to improve efficiency. Far more is accomplished at far less expense by an outsourced transfer agent partner.

Services Integration

A full-service transfer agent uses innovative and integrated transfer agent and accounting systems to handle capital calls, distributions, tax form generation, compliance reporting and investor transparency by mail, email or online portal in real time. This improves data flow, increases data security and lowers the cost of all transfer agent functions.

Savings on Audit Costs

Auditors charge for their services based on each client’s organizational history and readiness for the audit. A transfer agent services provider provides correct and flexibly available data on a regular basis, making the audit process more efficient, less disruptive and less expensive for fund management. The process is a simple matter of routine for a transfer agent firm that has met the audit criteria of many client funds.

Benefit of the Specialization of Transfer Agents

All parties focus on their core strengths when there is a proper division of labor. On the transfer agent side, a transfer agent services provider concentrates on executing administrative responsibilities and staying up-to-date with industry legislation, trends and best practices so fund management can concentrate on sales and investments. This reduces operational risk, as well as the expense and distraction of dealing with unforeseen issues on the transfer agent/back-office side.

Reputation for Efficient Operations

The use of a professional third-party transfer agent leaves a lasting impression. When daily back-office activity is rapid and correct, queries, requests and concerns are answered quickly and accurately and deliverables are of high quality and professional appearance, investors, financial advisors, auditors, institutions and regulators notice. Professional transfer agent services aid in the development of a reputation for stability and competence in asset management. Investors have confidence in their investment decision when both the investment return and the transfer agent’s operational responsiveness are excellent. Reinvestment and referrals of fresh investments are encouraged by such a reputation.

Enhanced In-House Productivity

In-house back-office staff can be re-deployed to sales, research and other activities that contribute to increased returns by outsourcing transfer agent functions to a third-party provider. Furthermore, having a transfer agent partner who can provide sales reporting, financial reporting, web portal solutions, fulfillment services and investor/advisor phone support helps to support and empower these activities, amplifying the benefit of reassigning the in-house transfer agent services staff.

Saving on Compliance Costs

Regulatory action is avoided by maintaining smooth and effective back-office services. Fund management can be alerted to potential red flags by an experienced and involved transfer agent services provider, preventing costly mistakes and infractions. A forward-looking transfer agent will set up procedures and policies to protect funds from costly mistakes, saving time, money and disruption from regulatory investigations. The transfer agent system of the better providers will automate compliance with AML, KYC, OFAC, FACTA and other investor related compliance requirements while fund accounting systems will monitor compliance with regulatory requirements and any investor restrictions.

Savings from Industry Knowledge

A transfer agent firm’s experience allows client funds to skip steps and streamline functions. Because a seasoned transfer agent services provider has learned from the errors and innovations of many clients, funds can benefit from the mistakes of others instead of making costly blunders and learning difficult lessons themselves.

Economies of Scale

Transfer agents allow funds to benefit from one provider’s consolidated processing for several clients. The economy of scale not only focuses transfer agent experience and knowledge where it is most beneficial, but it also lowers the hourly cost of all transfer agent functions and eliminates the waste of salaried in-house transfer agent employees who have more paid time than work to do.

The decision to engage with an experienced transfer agent firm from the start of a fund or at any time thereafter is a wise investment. The services of a transfer agent represent money well spent on behalf of investors. Transfer agent services are an investment in efficiency, managerial focus and smoother interactions with all stakeholders, all of which have a significant impact on the bottom line.

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