Mutual fund companies are facing ongoing challenges in overseeing their financial intermediary relationships as omnibus processing and the reliance on FIs continue to increase, according to a new survey by Boston Financial Data Services.
Specifically, the survey found that nearly all (96%) of the mutual fund firms anticipate that their obligation to manage FI relationships will increase over the next three years, primarily due toSecurities and Exchange Commission interest (92%) and interest at the fund Board level (69%).
The survey also reported that just slightly more than 10% of respondents were 'Highly Satisfied' with their current internal oversight programs.
"It's clear that achieving transparency is critical to an effective Financial Intermediary oversight and risk management program," stated Michael McNeill, a managing director at Boston Financial. "The survey tells us that the negative effects of not having a strong process in place are significant."
The 2013 Financial Intermediary Administration Survey measured mutual fund company opinions on their current Financial Intermediary (FI) practices, how they interact with their FIs, and what tools they use or need to manage their overall compliance and operational obligations.