Market Responds Favorably to New Service for Managed Accounts

By Karen Clarke

Ann Bergin, DTCC managing director and generalmanager, Mutual Fund Services

DTCC’s September announcement that it will build a new service to streamline the processing of managed accounts, partnering with Citigroup Smith Barney and Global Transaction Services, the industry’s leading sponsor and outsourcer, received ample coverage in the financial media.

"I think this has the potential to push the industry to the next level," Robert Del Col, president of FundQuest Inc., a Boston-based provider of wealth management solutions, told InvestmentNews (9/18/06).

Automating a new market segment

DTCC’s service is the first of its kind to link managed accounts firms to a centralized platform through a single connection. It will automate and standardize the exchange of information on these accounts in near straight-through processing. Testing is expected to begin in November.

In an article about the new service in The Asian Banker (9/15/06), Ann Bergin, DTCC managing director and general manager, Mutual Fund Services, said, "This is a powerful partnership of world-class capabilities. The combination of Citigroup’s leadership position in this market, coupled with our operational capabilities and infrastructure, will bring an unprecedented level of efficiency to this growing segment."

Managed accounts – investment portfolios customized for high-net-worth investors – still rely on paperwork, faxes and phone calls to set up and maintain the account. This is a challenge for managers and sponsors with $740 billion in assets under management. With the industry poised to reach $1.5 trillion in assets in five years, market participants agree that greater efficiency is vital.

Marketplace reactions

Here are some of the other published comments about DTCC’s new managed account service.

• "Industry experts are hailing the DTCC's announcement and Citigroup's involvement, calling it one of the largest victories to date in the effort to build a centralized, SMA-focused system."
  - FUNDfire, 9/13/06
• "Under the DTCC initiative, managers plugged into the organization’s scalable hub would see processing and administration costs decrease and distribution opportunities increase. The time and cost savings will be welcome news for SMA managers struggling with low profit margins and high cost margins."
  - Jeff Strange, senior analyst at Cerulli Associates, FUNDfire, 9/13/06
• "This collaboration is an important step forward in the industry’s drive for adoption of the MMI message standards. It moves it from an idea that the industry supports to the reality of implementation."
  - Gary Jones, vice president, Industry Operations, the Money Management Institute, 9/13/06.
• "This announcement shows some real muscle and commitment by this industry, and ultimately, the consumer gets a better product."
  - Jamie Waller, chief operating officer, Fugent Inc., InvestmentNews, 9/18/06
• "Ultimately, this is about growing the managed accounts industry and helping investors reach their goals."
  - Paul Hatch, managing director, Smith Barney, Securities Industry News, 9/18/06.

[For more information on DTCC’s managed accounts service, call the Mutual Fund Services helpline at 212.855.8877.]