Although the cost of transfer agent services should not be the most important factor in your decision, it should be taken into account. When a transfer agent firm makes a proposal for services, very low prices could be a sign of outsourcing, poor service quality or a small, under-equipped transfer agent trying to break into the industry. Expensive prices may reflect the brand recognition of a well-known transfer agent rather than represent real value to you. Value pricing in transfer agent services shows a clear relationship between charges and the real time and effort required by the transfer agent to properly fulfill administrative operations.
Questions to ask a transfer agent about their fees:
- What is your fee structure for transfer agent services?
- Is your price determined by a percentage of assets under management (AUM), the number of investors, time and effort taken or something else?
- Do you have separate pricing for different transfer agent services, or do you have a flat rate for everything?
- How does the pricing of your transfer agent services change as my fund increases in size or more funds are added?
- Is your pricing model straightforward and easy to understand?
Pricing is critical if you want your transfer agent fees to be money well spent on behalf of your investors.
The importance of a transfer agent’s pricing model:
- By engaging a low-cost transfer agent, you may well pay for it with bad service and frequent mistakes.
- Larger transfer agent businesses may not provide the same quality of service to their smaller transfer agent clients as they do to their larger transfer agent clients. What you pay for is not always what you get.
- There should be more to your relationship with your transfer agent partner than just money.
- Compared to hiring an in-house transfer agent team, pricing for outsourced transfer agent services should offer a significant savings while providing professionalized service to investors.