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Industry Task Force, DST Promote Electronic Statements


Judging from the stacks of files that litter our desktops, the truly paperless office remains a thing of the future. But the Investment Company Institute's Broker/Dealer Advisory Committee (BDAC) task force on paper suppression and DST Systems are working to move the industry further in that direction.

The goal of the committee, which includes representatives from fund families, major wirehouses and regional broker/dealers, is to identify operational efficiencies and best practices. For the past two years, the committee's task force on paper suppression has investigated opportunities to curtail the delivery of paper statements from management companies to their independent distributors.

The availability of electronic statements is not new. But even among fund companies that provide access to "e-statements," it is still not uncommon for them to also send quarterly paper statements to the dealers for each shareholder in their advisors' books-of-business. This practice costs mutual fund companies millions of dollars each year in printing, postage and handling charges. Advisors and branch offices, meanwhile, expend their resources filing and providing physical storage space for these customer records.

Pressure to drive down costs has ultimately compelled a number of fund companies to start "turning off," or suppressing, the paper statements they provide to broker/dealers and advisors. The BDAC task force has worked with fund companies and the broker/dealer community to promote the practice and to address concerns. For example, in turning off paper statements, fund companies have recognized the need to replicate the service of providing that documentation in an electronic environment. And advisors, striving to achieve an efficient paperless office while maintaining comprehensive customer records, are asking for a streamlined method to access electronically stored client statements.

DST Systems has worked closely with the BDAC task force on paper suppression to understand the issues surrounding electronic statements. DST Vision, recognized as the industry's leading online account management solution for financial intermediaries, has emerged as a preferred channel for delivering e-statements to advisors. More than 260 management companies currently provide account information through Vision, and more than 100,000 financial intermediaries regularly access Vision to manage their books-of-business.

Vision has featured e-statement retrieval capabilities at a shareholder statement level since 1999. Statement retrievals through Vision have increased 170% in the past six months due to the efforts of funds that have been suppressing paper statements with Vision as the recommended electronic alternative.

In our effort to develop a large-scale industry solution, DST has identified three key elements that must be addressed:

1) The solution must be universal. Advisors are most open to the idea of receiving electronic-only statements if e-statements are available across their entire books-of-business. In other words, they want to know that all of the major management companies they work with will make e-statements available to them in the same way through a centralized source.

2) The solution must be flexible. An industry e-statement solution has to integrate with the proprietary systems of broker/dealers of all types and sizes. Regardless of what technology advisors use to manage their accounts, they must be able to access statements easily. Similarly, the solution must be compatible with the fund company's chosen statement vendor or proprietary solution.

3) The solution must be efficient. To meet intermediaries' multi-year storage and retention objectives by means of electronic statements, a solution must make statements easy to download and file electronically. A print option should also be available for those firms that prefer to meet these objectives with paper records.

In light of these demands, DST has developed a new e-statement solution, Vision Statements. Vision Statements can replace the bulk delivery of all customer statements from each management company with a single electronic file.

The "batch" aspect of this solution means that the electronic file will include all customer statements in an advisor's book-of-business for a given management company. Statement files may be downloaded to the advisor's PC and saved to various storage media. The solution will also accommodate individual statement viewing and printing, preserving the advisor's ability to maintain paper copies through a single print command. DST is making Vision Statements available on demand or by subscription, with quarter-end statements automatically delivered.

To eliminate obstacles to broad-based adoption - and present a true industry solution - DST will make the solution available to all fund families, regardless of whether they participate in Vision.

Providing funds the leverage to "turn off" paper statements while enabling access to that information electronically represents another step toward the paperless office of the future.

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