One of the trends shaping fund distribution is heeding advisor demands to make the process more efficient through technology, says one asset management senior executive.
With more than 25 years of industry experience, Meg Zwick, senior vice president and director of alternative custody services at Millennium Trust, is focused on relationship building and creating business solutions for Millennium's alternative asset clients.
As the asset class gains mainstream momentum and further adoption among advisors, Zwick is now seeking ways of becoming efficient through technology, noting there are still back end delays to contend with.
"I can only see automation playing a bigger and bigger role in the industry," Zwick said in an interview with Money Management Executive. "To me it seems so obvious that it almost seems silly to say."
What have been some of the noticeable distribution trends?
Millennium serves a niche market, providing custody for clients investing in alternative assets. Up until, I would say recently, it's all been a paper-based workflow. Over the last year, the trend in automating that process is accelerating.
Initially, while waiting for the crowd-funding rules to come out, we were working with platforms that service to credit investors and have been working with them and still are to create more automation in that process using e-Signature and electronic documents for investing, including the piece on our side, which is account opening and investment direction and funding of the account.
But it has really been about merging that concept with these funds so that the client has a complete online experience.
What's been the firm's biggest distribution success this year?
We introduced an online account opening process, and I think that is a wheel in the machine that's going to get this moving forward.
We have 10 to 11 platforms that I can't specifically name right now, but we are working with, to fit the front end into the back end with Millennium Trust to layout that whole experience. That's really our focus at Millennium - to create a self-serving, automated, electronic process for our client.
We'll still be there if they need us to help them, and obviously the fund manager is a big part of that process, but really to allow them to complete documents at midnight and make it a 24-hour process versus a business hour process.
What is the biggest distribution challenge for Millennium?
Based on the things that I've heard, and in my own opinion, it's just efficiency. Advisors work hard to engage this client and when they are ready to move forward there is this slow process on the back end.
We're definitely focused on the technology side of the business.
Someone recently equated it to me in how we used to trade mutual funds, and there was really no center marketplace for it and hoping to build a more central marketplace for alternatives.
I really think that's where we are going to see the industry going.
How does Millennium approach shareholder outreach for distribution?
We produce quarterly publications that are available online, we email our clients, we send hard copy in the mail, we have dedicated client service teams depending on the client that you are - so our advisors have a dedicated team - and we try to keep our website fresh so there are reasons for them to visit and see what's new.
We also have an email blast that we send out to our advisors called the Millennium Minute, which is news you can use in 60 seconds. We found people in general tend to read less and be more image-focused, so that's why we try to keep our communications to the point.
What funds have gained the most traction with your firm's platforms?
I would say hedge funds, private equity, private debt - all of those are really going to be the main focus of these platforms. We work now with a lot of the marketplace lending platforms, which is obviously focused on private debt, and we have seen that industry boom. I think there is just so much more to realize in there.
How would you ideally envision distribution developing?
There are two starting points here. One could be, a client comes to Millennium and says, 'Hey I want to invest in this fund, and help me do that.' Through our website, or a link that we provide to them, we can send them over to a fund manager and let them do all of their due diligence.
Then, there is a pathway or a tag on that person that brings them back to Millennium to open their account, or vice versa where we are a referral from the fund manager and the client says, "It's ok. This looks good to me. I'm ready to invest but I want to use my IRA to invest."
They facilitate in the electronic jump over to Millennium to get that whole account online process opening. It's just a smooth process and takes away all of those hurdles of signing and sending in paperwork, and making sure they got it, and them hoping the money gets there.
Have you had to scale up your workforce to keep up with growth?
We have done some hiring, but quite honestly, given our asset growth over the last year - which we have about $16 billion in assets under custody - we've only hired about 25 people to work in Millennium as a whole.
We're around 250 employees, so while we have had to add personnel to handle the new business, the technology that we have focused on has allowed us to be more efficient.