Is out-sourcing transfer agency services simply a fad of the 1990s or is it here to stay? This question has sparked extensive debate and has elicited many different responses. Whether to out-source transfer agency services introduces many issues. They include: cost, experience, ancillary services, technology, an ever-changing regulatory environment, capacity planning, disaster recovery, staffing, as well as management philosophy and strategy. This article outlines key considerations for each of these issues.
* Start-Up Costs: Start-up costs are a significant factor for both a new fund group developing its transfer agency function and for an existing group considering taking on this function internally. Hiring and training staff, procuring a facility that can accommodate growth as well as securing and maintaining a system that can adequately support the fund group's technical requirements are just a few of the issues that must be confronted. Another consideration is whether an internal operation can attain the economies of scale enjoyed by a larger third-party operation. If savings can not be realized, out-sourcing may be the best choice.