Transfer Agents for Alternatives - What to Look For

Some more crucial criteria to consider when assessing a transfer agent provider, as well as the questions to ask about their capabilities.


Transfer Agents for Alternatives – What to Look For

Transfer agent services for alternative investment funds: a buyer’s guide

Partnering with a Transfer Agent – What to look for and inquiries to make about systems and services.

You’ve made the decision to work with a transfer agent. You’ve taken a big step toward creating the infrastructure to support a scalable and efficient investment fund. Choosing the correct transfer agent is critical. We assessed the transfer agent firm’s experience, depth of service offering, and flexibility of services in Part 1 of the buyer’s guide. Here are some more crucial criteria to consider when assessing a transfer agent provider, as well as some questions to ask about their capabilities.

The Transfer Agent’s Technical Expertise and Their Transfer Agent System

The systems of your transfer agent partner should maximize back-office productivity and give reporting that simplifies your life. To satisfy your business goals, transfer agent systems should be high-quality and versatile. If your fund requires specific programming, enhancements or bespoke system features, you want your transfer agent partner to be able and willing to implement them. The transfer agent system will be at the heart of your back-office process. An advanced transfer agent system centralizes data, documents and functions and connects with all the relevant participants in the industry.

Questions for a transfer agent on the sophistication of their systems and their technological expertise:

  • Can your transfer agent systems be tailored to my asset type and company needs?
  • Is it possible for your transfer agent system to accept files from other systems or service providers?
  • Does your transfer agent system have digital connections to wire houses, broker-dealers, RIAs, the AIP platform, DST FAN Mail, custodians and family offices?
  • To assist my sales teams, what kind of sales and transaction reporting can I get from your transfer agent system?
  • Do your systems customize financial reporting for GAAP accounting, auditors, transaction teams and fund management?
  • Can your systems product reporting that adheres to the ILPA reporting template for my institutional investors?

Why a Transfer Agent’s Technology Is Important:

  • Advanced transfer agent systems save on costs by reducing execution times and minimizing mistakes.
  • Custom reporting based on data from your transfer agent allows you to better manage your fund.
  • The transfer agent system’s sales and transaction reporting improves your ability to source new investment capital.
  • Data links to industry entities in a transfer agent system make transaction execution easier and faster.
  • Your brand’s reputation among financial advisers and investors is bolstered by the efficiency of your transfer agent system.
  • A transfer agent system’s controls, approval stages and audit trails can increase overall accuracy and helps streamline audits.

A Transfer Agent Should Prioritize Customer Service

It’s important how your transfer agent partner serves you, the client. When you call your transfer agent partner, you should not be made to leave voicemails or engage with multiple departments. You should not have to wait in phone queues. The treatment of your investors by your transfer agent partner is critical. It’s a matter of your reputation and the likelihood of subsequent investments. Your transfer agent partner should prioritize both serving and representing you.

Questions for a transfer agent on their dedication to customer service:

  • When will my transfer agent team be accessible, and how will they be organized?
  • With whom will I interact on a daily basis? Is there back-up personnel in place?
  • What is the level of experience in your transfer agent teams?
  • What is your rate of employee turnover?
  • Will the person with whom I speak be familiar with my fund and how we operate?
  • What will my investors and their advisors experience when they contact my transfer agent team?
  • Is any of your customer service staff outsourced?
  • What criteria do you use to evaluate client service for your transfer agent teams?

Why a Transfer Agent’s Customer Service is important:

  • Your transfer agent account team should be as much as possible like your own personnel, responsive, knowledgeable and familiar with your requirements.
  • The transfer agent’s job is to save you time and keep you from being distracted by back-office issues without sacrificing professional service.
  • Your transfer agent partner’s treatment of your investors and their financial advisors is the public face of your brand and leaves an impression.

Clear and Reasonable Pricing for Transfer Agent Services

The cost of transfer agent services should not be the most essential criterion in your decision, but it should be considered. In considering a transfer agent provider, very low prices could indicate outsourcing, poor service quality or a small, under-equipped transfer agent attempting to grab a foothold in the market. Very expensive prices may reflect a well-known transfer agent’s brand prominence rather than represent real value to you. In transfer agent services, value pricing represents a clear relationship between charges and the real time and effort required by the transfer agent to complete administrative activities effectively.

Questions for a transfer agent on their pricing:

  • How do you charge for your transfer agent services?
  • Is your pricing based on a proportion of assets under management (AUM), investor count or on time and effort?
  • Do you break out pricing for certain transfer agent services, or is everything covered by a base fee?
  • How does your transfer agent pricing alter as my fund grows or as more funds are added?
  • Is your pricing model clear and simple to comprehend?

You want your transfer agent charges to be money wisely spent on behalf of your investors, thus pricing is important.

Why a Transfer Agent’s Pricing is Important

  • You don’t want to pay for poor service and frequent mistakes because you hired a low-cost transfer agent.
  • Larger transfer agent businesses may not provide the same level of service to their smaller transfer agent clients as they do to their larger transfer agent clients. What you pay for isn’t necessarily what you get.
  • Your relationship with your transfer agent partner should be more than simply about the money. But pricing should represent significant savings over staffing an in-house transfer agent team while providing professionalized service to you and your investors.

A Close Back-Office Partnership

If you were developing an in-house transfer agent team you would hire responsive, experienced and technically savvy professionals. The answers to these questions will help you determine whether a transfer agent provider is qualified, equipped and willing to be the right partner for you, the team you would hire yourself. Outsourcing transfer agent functions is a wise business move, an efficient division of labor, but only if both sides are capable and on the same page. The answers to the above questions should provide you with a good idea of whether a transfer agent firm will be a good operational partner for you.

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