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'Straight-Through Processing' Coming to Mutual Funds

Event: The representative for a broker of mutual funds goes to a customer's home. On her personal computer is a form, half-filled out. It's got the fund buyer's name, address, current account information, and contact details in the right interactive fields. All that remains is to fill out is the name, symbols and amounts of new funds to purchase.

Question: When was it first possible for the rep to go to the home with everything filled out electronically, but the fund purchase information and the client's signature?

Answer: A month ago.

At least, if you're a customer of H. Beck, Inc., a an independent broker of mutual funds and other securities, based in Rockland, Md.

More telling: This $100 million-a-year securities and investment advice arm of the Securian Financial Group is at the forefront of using tight integration to pull information from customer relationship management software and account recordkeeping software, to speed up and smooth out the on-the-spot sale of new fund purchases.

Typically, an investment advisory group that has hundreds of independent brokers selling stocks, mutual funds and other investment products allows each to pick their own tools to manage their businesses and their relations with customers.

Not so, at H. Beck. Its roughly 1,000 registered representatives each have access to two core pieces of software.

In customer relationship management, the product is a web-based CRM service from Redtail Technology. The software was designed from the start to focus on what financial advisers need to support customers and automate much of their marketing and sales efforts.

For opening accounts and entering orders, the go-to product is Onboard from SunGard Data Systems, along with a commission reporting and viewing system known as Compensation. Like Redtail, the SunGard products are online services. SunGard, for its part, is writing code that will integrate its applications with Redtail.

But there's a third piece that will make on-the-spot use of the two products effective, in the playbook of James Dresselaers, H. Beck's executive vice president and chief operations officer.

This is a piece of software that pulls duty for the most prosaic of practices in the mutual fund business: filling out forms.

It's been a long time coming, but H. Beck and other brokers of mutual funds are just getting to the point of replacing paper with portable screens and keyboards when they visit customers in their homes or offices.

Even when reps began taking portable computers with them to visit customers, it still remained practice to print out and send paper back to central offices of mutual fund companies and the investment services firms they worked for, for re-keying into their systems.

That's cumbersome, even for a firm such as H. Beck, which might process 10,000 or 12,000 transactions each day.. The rep not only would fill out forms, try to make sure all fields were filled out correctly and bring them back to the office, the rep would have to collect a check and mail that in.

"It's very, very paper-, manual-intensive," Dresselaers said.

Now, Dresselaers is trying to implement what the nation's stock exchanges and trading firms have long referred to as "straight-through processing." From procuring the name of the newest client to sending in the latest check, every piece of information will be taken in electronically and processed the same way.

This not only saves time, but, of course, cuts errors. Dresselaers figures he still has to reduce a NIGO rate of as much as 60%. That is to say, almost three out of every five forms put together by H. Beck brokers are "not in good order." This increases processing costs as each document (new account form, sponsor application, customer disclosure form, etc.) is checked for correctness and follow-up contacts must be made with representatives, reducing processing time and increasing costs.

"Straight-through processing is the Holy Grail, and in order to get that, you have to have the right data, and the right data has to be in the forms that are filled out manually," he said. "Or you have to have some way of electronically filling those forms."

That's where the third piece comes in, form-filling software from a company called Laser App.

In the project that just rolled out in July, Laser App "pre-populates" interactive forms that brokers take with them in the field, with as much background as possible from the Redtail and Onboard customer records. This typically applies basics such as name, address, Social Security Number, employment status, income and net worth.