E-Migration of Disclosure May Help Mutual Funds Defend Against ETF Growth

Another year has come and gone, and business news sources are flush with stories about the continued rise of ETF’s.  In a recent article, Joe Rosengarten of Wealth Professional ponders, “Is the growth of ETF’s unstoppable?”  Like a snowball rolling down a hill, ETF’s have continued to pick up steam, and while once brushed aside by the Mutual Fund juggernauts, nobody is ignoring them now.  In Rosengarten’s opinion, all signs point towards increased ETF adoption.  On top of all this, the recent implementation of CRM2 fee disclosure has only served to increase the focus on the fees we pay to invest our savings, and mutual funds aren’t about to win any head-to-head fee comparisons with ETF’s any time soon.  So what’s a fundco to do?

One answer may lie in a dedicated push towards e-Migration.  From Statements and Trade Confirmations to MRFP’s and Financial Statements, fund manufacturers are spending millions annually to print and mail disclosure documents to their clients.  Inevitably, these costs need to be recouped by some sort of fees paid by the end investor.  From a financial perspective, nothing pains me more than to think of a fund manufacturer spending $500k a year to send out MRFP and Financial Statement packages to their investors when they could move 50% of those to an e-Delivery channel that costs pennies per document, allowing them to save at least $200k in production and postage charges.  Better yet, they could exercise the option to mail a single page opt-in request letter to all investors, and only deliver the whole package to those investors who are interested in the contents. This also improves the investor experience by delivering information in a format preferred by many of today’s technophile investors.  The same economic and investor preference story holds true for statements, trade confirmations, and any other investor touchpoint.

At InvestorCOM, we have been helping our clients solve this problem for years.  Our multi-channel CCM and CDM solutions allow us to handle today’s print and mail requirements for these documents, while implementing investor preference management platforms to steer our clients towards increased penetration rates in e-Delivery of these documents.  This e-Migration strategy helps our clients reduce their costs and pass the savings on to investors via lower fees, ultimately helping to close the cost of ownership gap between mutual funds and ETF’s.

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