A Conversation with Merrill Lynch’s Colleen Daly on Mutual Fund Profile Service

Colleen Daly

September saw the launch of NSCC’s new Mutual Fund Profile Service, the result of a two-year reengineering that metamorphosed it from a wallflower to a strong center-stage celebrity, with the capacity to give the fund industry the first-ever centralized source for rules-based information.

As we went to press, 115 fund companies had uploaded information on close to 16,000 CUSIPs (Standard and Poor’s unique identifiers for financial instrument).

Wealth Management Services Quarterly spoke with Merrill Lynch’s Colleen Daly, director, Global Wealth Management Services on the impact Profile will have on the broker/dealer community and how it can help improve business. Daly is also a member of the Investment Company Institute (ICI) Profile Steering Committee that has been working with NSCC to create the new database.

WMS Quarterly: Merrill Lynch has been involved in the redesign of Profile from the very early stages of development. What do you see are the most important benefits to your firm and to the industry?

DALY: From the beginning, we felt very strongly about the need for a central utility that could contain accurate and current product attributes, which is extremely important to product distribution and processing. In its regeneration, the service offers a great deal of consistency of data, as well as providing the industry with an opportunity to make the data much more readily available to our advisors and, through them, to retail customers.

WMS Quarterly: How do you see it improving your Operations area?

DALY: Today, we request funds to certify all their data elements on at least an annual basis – in terms of new fund setup – and we spend a lot of time conducting due diligence to determine that the data elements are accurate. Profile has the potential to centralize much of that effort, while performing the validation process daily.

We have found that some data elements have been misinterpreted, so some minor adjustments need to be made. That said, the redesign is still in its very early stages, and the ICI Profile Steering Committee is now refining some components and establishing a direction for future releases. [Editor’s Note: Since Profile was launched on September 14, 2007, NSCC has implemented additional functionality for fund companies to update and delete share classes, fund portfolios and security issue identifiers.]

WMS Quarterly: In the short term, and in the long term, how will you use the data you receive from funds through Profile?

DALY: In the short term, we’ll use it for refinement and validation. and to enhance our internal control processes by performing numerous analytics and comparing it to our internal database.

Merrill has a massive back-end mutual-fund database which is used to process the firm’s mutual fund business and provide our financial advisors with information that is predominantly manually sourced today. In the long term, the database will continue to be the source for our advisors, but we will extract the data in an automated manner from Profile.

WMS Quarterly: What would you say was the most critical element in the delivery of the new service, and what has emerged as the most important issue for the industry?

DALY: First, I believe it is mission critical that our fund partners populate their data into Profile for all their securities. It is vital that all this data is provided in a timely manner and updates are made in advance of the effective date, since we are relying on this data being current and accurate as represented by the fund company. The key to Profile’s success, and what is important to any firm, is the ongoing maintenance of the information warehoused.

Second, being able to access through one repository the actual prospectus and Statement of Additional Information, coupled with the SEC proposed short-form client disclosure document, is a huge step in operational efficiency for clients, distribution organizations and fund companies.

WMS Quarterly: Any final comments?

DALY: It’s been wonderful to see Profile evolve into its current state and real potential, and adopted across the industry. I’d like to acknowledge DTCC’s efforts – it was a very difficult rewrite in terms of complexity and scope – and the Steering Committee for ensuring that the most important data elements were included in this initial release.