FundKeeper vs. Direct-Held and Conventional Brokerage Mutual Fund Accounts

FundKeeper solves longstanding business problems associated with accounts held either directly at mutual fund families or on a conventional brokerage platform. Benefits include:

  • The ability to tap into a revenue stream
  • Automated suitability checks on the front-end
  • Account opening, transaction and funding is online and real time

Current State with Direct-Held Mutual Fund Accounts

The FundKeeper Alternative

FundKeeper

The FundKeeper mutual fund offering is branded for the broker dealer, while still retaining the marquee fund brand names as holdings. Direct marketing communication from the fund to the shareowner is eliminated.

Account opening, transaction and funding is online and real time. A new account can be opened and a transaction made on the same day.

Prospectus delivery is automated. Rights of Accumulation (ROA) calculations for FundKeeper positions and any held away positions known by FundKeeper is also automated.

Commission information on new trades is available back to the firm on the day following trade date.


Direct Held

Investors’ relationship with reps may be clouded by marketing messages from the fund that are included in mailings and other communication from the funds.

Completion of account opening and funding is manual and delayed due to handling and mailing of physical paperwork and checks.

Reps often are responsible for a number of manual processes including prospectus delivery and ROA calculation.

Reps may have less access overall, as well as less timely access to compensation information compared to accounts held in-house.

Advantage: FundKeeper


Conventional Brokerage

Explaining the discrete mutual fund fees may be uncomfortable and could make smaller or mutual fund only accounts not ideal to open as a conventional brokerage account.

Advantage: FundKeeper

FundKeeper

All commission data for FundKeeper accounts is available in a single feed with daily new transactions and at commission payment time.


Direct Held

Firms are required to accommodate multiple feeds and multiple differing commission timing schedules across fund families, increasing technology and operational resource requirements.

Advantage: FundKeeper


Conventional Brokerage

Conventional brokerage systems acts similar to FundKeeper.

Advantage: Neutral

FundKeeper

All fund family positions are serviced at a single point.


Direct Held

Reps may be poorly positioned for client interactions compared to accounts held in-house, because the mutual fund families’ policies, procedures and actions impact the account.

Advantage: FundKeeper


Conventional Brokerage

Reps may also need to field questions regarding account fees; for example, conventional brokerage providers may apply fees for small accounts, transfers and delivering paper statements.

Advantage: FundKeeper

FundKeeper

FundKeeper has no transaction, statement, inactivity or other mandatory investor-level fees, other than an IRA custodial fee.


Direct Held

Firms recognize that the direct approach is attractive to reps who are seeking to avoid the investor-level fees at traditional clearing firms.

Advantage: Neutral


Conventional Brokerage

Investors may be subject to a myriad of fees including transaction fees, costly IRA fees, transfer fees, statement fees etc.

Advantage: FundKeeper

FundKeeper

Account opening online or via API includes data validations that can eliminate not-in-good-order (NIGO) due to paperwork issues.

Only one new account application is required to open an account that can hold any fund family. The form is available online and so is always current.


Direct Held

Reps must manually complete paperwork, which can be time-consuming and can require multiple interactions with the investor and the back office to resolve NIGO items.

High NIGO rates increase operational costs.

Firms may experience other difficulties, such as controlling the fund lineups and ensuring reps have access to the most current forms.

Advantage:  FundKeeper


Conventional Brokerage

Paperwork can be lengthy and complicated and likely includes many sections that do not apply to a mutual fund only investor.

Advantage:  FundKeeper

FundKeeper

Account changes can be made on line by the rep and, optionally, by the investor. Account changes such as address are affected across fund families with a single change.

Any changes requiring a form can be accomplished across fund families with one form that is available and current online.


Direct Held

Investors’ account changes can be awkward: reps cannot implement account changes without contacting each fund family, so the rep’s service to clients is only as good as the fund company’s responsiveness.

Advantage: FundKeeper


Conventional Brokerage

Investors with only mutual funds may experience brokerage self-service options as overly complicated—often resulting in additional calls.

The rep or rep’s assistant may end up taking primary responsibility for account updates.

Advantage: FundKeeper

FundKeeper

Access to the broker-dealer branded FundKeeper website makes available inquiry, transaction and account maintenance across fund families for reps and investors.


Direct Held

Investors holding multiple fund families must access each family’s website to complete inquiries or update their accounts.

To have a consolidated view of a clients’ holdings, for reps and investors the firm would have to offer aggregation capabilities. Such aggregators add cost to either the firm, the rep, or both. And the timeliness and accuracy of this data can be a challenge.

Advantage: FundKeeper


Conventional Brokerage

Investors may experience navigation to mutual fund-specific information as lengthy or complex.

Advantage: FundKeeper

FundKeeper

A single IRA fee for each TIN across fund families is supported. The BD firm can provide input into the amount of the fee.


Direct Held

Investor accounts are often limited by reps to a single fund family in order to avoid the investor having to pay multiple custodial fees.

Advantage: FundKeeper


Conventional Brokerage

Investors may pay excessive custodial fees compared to other options available for mutual fund-only investors, even if these investors limit their accounts to a single fund family.

Advantage: FundKeeper

FundKeeper

Firms specify compliance and suitability rules that are then checked in an automated fashion upon account opening. Exceptions can either be ‘hard stopped’ or routed for principal review.


Direct Held

Firms may need to employ manual or partially-manual review processes for compliance, suitability and completeness.

 Advantage:  FundKeeper


Conventional Brokerage

Similar to FundKeeper, automated compliance and suitability is performed.

Advantage:  Neutral

FundKeeper

All position and activity data for FundKeeper accounts is available daily in a single feed.

All data conventions, such as transaction codes, are consistent across fund families greatly minimizing scrubbing requirements or data translation errors.

All data is available to the firm for reporting and analysis purposes.


Direct Held

Firms may either feel uncomfortable that they do not receive data back on direct positions; or, they must incur the expense of an aggregation technology and associated operational efforts.

Managing a myriad of position and activity files requires technology and operational resources.

Advantage:  FundKeeper


Conventional Brokerage

Firms can view all of the mutual fund positions at the custodian; however, access to this data for other business reasons such as sales reporting or commissions may not be as straightforward as firms would like.

Advantage:  FundKeeper

FundKeeper

FundKeeper provides a single statement, branded for the broker-dealer firm, consistently displaying holdings across fund families. Statements can be delivered electronically, by mail or both. A single 1099 across fund families is also produced.

The statements are consistent with mutual fund, rather than brokerage statements, simple and easy to understand for mutual fund investors.

There is no need to maintain and reconcile a separate data set to combine data across fund families for reporting for FundKeeper accounts.


Direct Held

Investors with accounts at multiple fund families will receive multiple statements.

Investors will not receive consolidated statements, confirms and tax forms across fund families—unless the broker-dealer employs and maintains a second set of books and records that is clean and thorough enough to produce consolidated client statements.

Advantage: FundKeeper


Conventional Brokerage

Investors may find the brokerage presentation of mutual fund data is overly complicated and confusing—such as movement to and from a cash position and cost information about reinvested dividends.

Advantage: FundKeeper

FundKeeper

Firms do share in the shareholder servicing fees that are received as a result of the fund no longer having to perform shareholder servicing.


Direct Held

Firms do not receive service fees from mutual fund families for direct-held positions.

Advantage: FundKeeper


Conventional Brokerage

Firms may (but in many cases do not) share in fund servicing fees received by the clearing firm.

Advantage: FundKeeper

FundKeeper

Single account changes or global rep-to-rep changes can be completed once, implementing the change across fund families.


Direct Held

Firms must deal with time-consuming, manual processes separately with each fund family to reassign accounts whenever reps depart.

Advantage: FundKeeper


Conventional Brokerage

Like FundKeeper, single account and global rep changes can be done once across fund families.

Advantage: Neutral