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wealth management services

Change seemed to be a constant in 2014 as industry trends prompted a transformation in how DTCC serves the mutual funds, alternative investment products and insurance products sectors. Ann Bergin, DTCC Managing Director, Wealth Management Services, discusses the realignment of the Wealth Management Services (WMS) business and how client engagement is driving new product development.

Ann Bergin

In 2014, DTCC unified three of its business lines – Mutual Fund Services, Alternative Investment Products and Insurance & Retirement Services – under the Wealth Management Services (WMS) umbrella. What were the business and market drivers behind this decision and what synergies are expected?

We recognize that the markets share similar characteristics and, in many respects, are focused on the same client base. Bringing the businesses together under the WMS umbrella presented us with an opportunity to address our clients’ needs more holistically, ultimately allowing them to serve their clients better. For example, in the distribution sector, these products are traditionally aligned and offered to meet the sophisticated and varied investment requirements of end clients. Because this sector had been supported discreetly at DTCC by three separate businesses, there were challenges to driving a unified strategy to support it more inclusively. Evolving our business offerings in this cohesive way will provide a more comprehensive perspective of our clients and a broader, more complete view of their business.

Another example can be found in the retirement market where we have seen defined contribution plan activity increase greatly, while the trend in defined benefit plans has been to freeze or discontinue plans altogether. A more integrated focus on providers in this market will better ensure that we are providing the services necessary to expand and evolve plan options while addressing any operational challenges.

Collaboration is Key

Mutual Fund Services is WMS’s most mature business, and it has long been recognized as a key factor in helping spur the explosive growth of the mutual funds market over the past several decades. How has this business stayed on the cutting edge in meeting the industry’s needs?

We work hard to anticipate industry needs. We have a Senior Advisory Board that sets strategic priorities for the business, as well as a strong committee structure aligned with the Investment Company Institute. DTCC Payment aXis® is a great example of delivering services to meet the needs identified by our clients. The service automates and standardizes the transmission of fee invoices and payments for various fee types, including for accounts held in omnibus. In 2014, we expanded the service by adding the processing and net settlement of Sub-Accounting, Retirement/Bank Trust and Networking Service fees – a major enhancement that is helping the mutual fund industry further automate key transactional processes and reduce risk and costs.

We also launched a major enhancement to our Mutual Fund Profile Service (Profile) Security Issue Database in 2014 – a new Scorecard Report that encourages clients’ vigilance in data transmission, supporting accuracy of the data in Profile. The fund distribution community accesses the data in Profile to assist in trade execution as well as to comply with regulatory requirements related to data transparency and reporting.

  • mutual fund
    services

    Value of Fund/SERV Transactions

    VALUES ARE IN TRILLIONS

    2014
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    2013
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    2012
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    2011
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  • mutual fund
    services

    Volume of Fund/SERV Transactions

    VALUES ARE IN MILLIONS

    2014
    0
    2013
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    2012
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    2011
    0
  • mutual fund
    services

    Defined Contribution Clearance and Settlement (Yearly Volume)

    VALUES ARE IN MILLIONS

    2014
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    2013
    0
    2012
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    2011
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The alternative investments market has really grown over the past few years. How has WMS’ Alternative Investment Products (AIP) service responded to its growth in the past year?

With the market conditions of the past few years, investors continue to look for new opportunities to generate returns; this has fueled strong interest in alternative investment products. However, operations supporting alternative investments are still very manual and onerous. The AIP service allows straight through automation, providing scale to support the projected continued growth in the market. DTCC has helped support the rapid growth of this market since 2008 by automating manual processes, driving efficiency and reducing costs.

More recently, our focus has been on increasing the speed and scale of the AIP platform – and this has led to greater demand for our products and services. In 2014, our client base grew 37% to 137 firms while 1,190 new funds were brought to the AIP platform for automated processing. We also handled more than 37 million transactions. To manage this surge in volume, we introduced a redesigned system early last year that has reduced processing time while sustaining the capacity to handle the continued growth of this market.

Supporting Growth in the AIP Market

  • alternative investment
    products

    Annual Transactions and Orders

    VALUES ARE IN MILLIONS

    2014
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    2013
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  • alternative investment
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    Total Security Identifiers (CUSIPS)

    2014
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    2013
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What about Insurance & Retirement Services – how do you work with clients to get input on developing new products and services or enhancing existing ones?

The key to our development efforts is getting input and feedback from clients on their specific needs, especially as the marketplace is evolving so quickly. One of our top initiatives in 2014 was to convene a renewed Strategic Advisory Board, which includes senior representatives from across our Insurance client base. This is a group with deep insights into the insurance market and a strong drive to look at innovative ways to address industry challenges. As we look toward 2015 and beyond, this board will align the priorities for the collective group, which will define our focus on delivering services to the market.

  • insurance & retirement
    services

    Settlement Volume for Insurance (STL)

    VALUES ARE IN THOUSANDS

    2014
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    2013
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  • insurance & retirement
    services

    Total Processed Settlement Value

    VALUES ARE IN BILLIONS

    2014
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    2013
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  • insurance & retirement
    services

    Total Transaction Volume

    VALUES ARE IN BILLIONS

    2014
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    2013
    0

How did this collaboration factor into I&RS’s business focus in 2014?

There were two opportunities that were identified by the Board. The first involved an enhancement to our existing money settlement functionality. The enhancement, Settlement Processing for Insurance (STL), automates the settlement of post-issue funding activities between carriers and distributors, and then deposits funds back to underlying clients’ brokerage accounts at the firm, rather than requiring checks to be issued and processed. STL was created as a direct result of client input, and although 2014 was just its second year in operation, STL’s dollar settlement on behalf of our clients’ customers topped $1.65 billion.

The second initiative involved the automation and streamlining of the processing and reporting of retirement plan data for group insurance plans. This is an important first step in serving the insurance side of the burgeoning retirement market, which tends to be hampered by manual processes and multiple proprietary feeds. We’ve introduced some important functionality and solutions for the processing of insurance products in retirement plans, so we plan to extend those capabilities to support the industry more broadly. In fact, we will be establishing an advisory board to focus on the needs and priorities of the retirement market this year.

Meeting the Evolving Needs of the Insurance Market