Part I | Distribution Trends and Best Practices for Service Providers

Part I of II. CLICK HERE | Read Park II

The shifting landscape in asset management distribution is changing how managers define share class structures, leading to evolving operations and technology needs. Transfer agents and record keepers are particularly affected by shifts in service needs and pressure to reduce costs.

Panelists from BlackRock, BNY Mellon, and EY discussed these issues during a recent NICSA webinar. First up was a discussion of changing demographics, evolving advice models, and changing economics of distribution – all of which are forcing operations to become more efficient and cost conscious.

Implications of distribution and share class structural changes for TAs and record keepers:

According to a recent EY survey, six growing trends have led to a state of flux:

  1. Demand for fee transparency and clarity about eligibility and minimums
  2. Dominance of the fee-based revenue model
  3. Importance of the DC/DCIO channel
  4. Role of the intermediary in relation to how investors pay for services
  5. Demand for the lowest cost share class
  6. Regulatory and board focus on the impact of share class choice on investors

Best practices for operations include:

  • Use technology to deliver insight to help product and distribution channels quickly assess the viability of share classes.
  • Promote flexible, responsive processes to easily introduce new and eliminate old share classes.
  • Enhance reporting to keep pace with new competitively priced products with more information-intensive requirements (such as beta products).
  • Invest in internal integration of information to ensure timely sales insights.
  • Enhance controls for regulatory compliance, monitoring and oversight.

Next up: Part II of this post will examine the implications for mutual fund complexes.


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