Mutual fund companies face an array of competitive challenges in marketing and selling their products. Chief among them is providing service and support to intermediaries who want a convenient way to access client information that is scattered across fund companies. In the past five years, the Internet has become crucial for keeping fund companies' products in the forefront - especially to financial advisers and independent broker/dealers who increasingly rely on account aggregation sites.

At the same time, Fund/SPEEDsm, an industry-standard, open-architecture platform, has emerged to give fund companies the freedom to display fund and account information on multiple financial portals through a single program.

The underlying technology enables companies to quickly expand their presence and provide access to data. At its foundation, this platform serves as an industry conduit that can tap into legacy systems, eliminating the need to replicate information or store redundant data. As fund companies and their distribution partners embrace Fund/SPEED's open architecture, the opportunity to increase operational efficiencies and improve communications is unlimited.

The emergence of standards in the mutual fund industry dates back to the early 1980s. At that time, the Internet was barely known, and transaction processing was a paper- and phone-intensive process. In addition, the costs of servicing a highly decentralized sales force were growing disproportionately. Concerns began to surface over how the industry would handle the surging volume of transactions.

To tackle these issues, National Securities Clearing Corp. (NSCC), a subsidiary of the Depository Trust & Clearing Corp., developed the first centrally positioned electronic infrastructure to clear and settle mutual funds. Working with the Investment Company Institute and broker/dealers, NSCC introduced Fund/SERV in 1986, which automated and standardized the processing of mutual fund transactions and centralized their order entry, confirmation, registration and settlement. As a result, fund companies and their distributors using Fund/SERV are able to vastly increase processing efficiencies via a single communications link and a uniform process. Adopted as an industry standard, Fund/SERV has supported the growth of the fund industry, helping it expand penetration into new distribution networks.

Fund/SPEED is a natural evolution for the Internet age. Launched in 2002, the service is a Web-based platform that enables access to fund companies' account data on an aggregated basis, both for research and transaction purposes. For the first time, it provides a means and a standard for communicating account information in real time. Financial advisers, planners and other intermediaries gain access to Fund/SPEED through a front-end graphical user interface, provided by distribution agents, account aggregation sites or similar service providers, such as AdvisorCentral. The interface uses Extensible Markup Language (XML), a widely used, common language for exchanging financial data in electronic form.

Using Fund/SPEED as the pipeline to fund company data, intermediaries can generate account inquiries and gain real-time information within seconds - such as data on customers' financial histories, account positions, number of shares and their market value, and lists of pending transactions. Once a message is received from an intermediary, Fund/SPEED immediately routes it directly into the appropriate fund companies or their transfer agent systems. Fund/SPEED has recently enhanced its services to include transaction capabilities, thus enabling intermediaries to process purchase, redemption and exchange orders. These orders pass through a front-end interface, into Fund/SPEED and Fund/SERV, and finally to the fund companies.

In addition to strengthening communications between fund companies and their intermediaries, Fund/SPEED tears down technology-induced barriers to reaching the full spectrum of available intermediaries, giving fund companies a new level of decision-making freedom. The fund company has only to develop and support a single external communications interface to its underlying data. Rather than having to provide extensive account detail and historical data daily to a third-party service provider in a proprietary format, the details remain on the recordkeeping system and are accessed only when needed.

Moreover, once a company connects to Fund/SPEED, it can quickly distribute account information to any other front-end service that has also tied into this standard without having to recreate the wheel and develop and manage another separate interface. It shifts the decision of where and how client data is displayed away from one particular transfer agent or service provider interface.

Fund/SPEED is designed to position mutual fund companies and their intermediaries for continued growth, offering information to any and all parties without bias. By providing standard methods for communication, the platform is the gateway for future products and services. With technological obstacles eliminated, fund companies are free to base strategies on the issues that really matter--improved profits and stronger relationships with the intermediaries who will move them forward.

Harry Groom is president and CEO of AdvisorCentral. He can be reached at

Ann Bergin is managing director for distribution services at the Depository Trust & Clearing Corp. She can be reached at

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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