October 30, 2018 | ARTICLE | BY KELLY LYNCH

Many independent broker-dealers that process customer mutual fund accounts direct (the “check and app” process) find themselves spending time and resources retrieving data from the mutual fund companies where their customer accounts are held. This can be frustrating to the IT and operational teams at the broker dealer. After all, the customer data originated at the broker-dealer, but now needs to be processed once again. Technology resources may be deployed to read in data feeds from the multiple mutual fund companies where the customer data now reside. Operational resources may be needed to scrub or reconcile the data. And advisors may be calling the back office to report that their customers’ data are inaccurate or incomplete.

To solve these issues, many firms rely on data aggregation tools to expedite the cumbersome process of bringing customer mutual fund data back in house. However, this is like trying to gather up all your marbles after they’ve been scattered across the floor. It’s solving the direct problem backward.

Rather than send out the data in the first place, many broker-dealers would benefit from keeping their customer data in house—i.e. from eliminating the direct-at-fund business altogether. Historically, however, this hasn’t been an option because most independent broker-dealers like to offer reps flexibility for processing customer mutual funds: Direct-at-fund or conventional brokerage ascertains types of customer accounts, such as relatively simple mutual fund accounts, don’t warrant the fees and complexity of a conventional brokerage platform.

A new alternative for mutual fund processing, FundKeeper, provides a ‘direct’ experience while bringing the customer data in house. FundKeeper is a mutual fund platform that can deliver to a broker-dealer—from a single servicing point—all services currently provided at the mutual fund family level. FundKeeper consolidates existing direct-at-fund accounts onto a single platform. It enables the broker-dealer to execute on new accounts, suitability and compliance, commissions, level load, web access, statements and more—in a single, automated way across fund families. In other words, it solves the mutual fund problem the right way—from the beginning—keeping your customer data in-house and intact. See Figures 1 and 2 below.

Figure 1: Direct-at-fund process


Figure 2: FundKeeper process

As highlighted in the images above, FundKeeper is a more streamlined alternative to the traditional direct-at-fund approach, providing broker-dealers with more control and operational efficiency. This has been the experience at CUSO Financial Services, which implemented FundKeeper in early 2018. “FundKeeper has allowed advisors on the CUSO system to get the benefits of scale and lower cost,” said Monica Daggs, Chief Administrative Officer of CUSO Financial. “We wanted to move beyond the operational ‘status quo’ of paper-based direct business. It’s important for our firm, and the firms we represent, to own the advisor experience, and FundKeeper’s consolidated accounts and API file strategy allow us to control that user experience.”

It is worth noting that for many independent broker-dealers, FundKeeper does not replace their conventional brokerage partner. Firms like CUSO may have a need for both FundKeeper and brokerage. After all, many customer accounts are more complex and perfectly suited for brokerage. But for mutual fund-only accounts and other simple, fee-sensitive accounts, FundKeeper may be the ideal solution. It certainly beats the cost and complexities associated with direct-at-fund business—and solving the direct problem backward!