Columbia Funds, T. Rowe Price and The Depository Trust & Clearing Corp. take top honors in SourceMedia's 2007 Fund Operations Awards. Now in its fifth year, the awards program is sponsored by Money Management Executive and judged by a panel of leading industry consultants. The awards honor industry leaders in three categories: Leadership, Innovation and Efficiencies/Streamlining.
Many thanks go out to this year's panel of judges for their time and consideration: T. Neil Bathon, managing director, PMR Associates, Peter Delano, senior analyst, investment management, TowerGroup, Bob Goldberg, president emeritus, The National Investment Company Service Association, Burton J. Greenwald, president, B.J. Greenwald Associates, Vincent Walsh, managing director, advisory services practice, KPMG and Kathleen Whalen, managing director, Dalbar.
Christopher L. Wilson, head of mutual funds and product management at Columbia Funds, is the winner of this year's first-place award for Leadership.
Faced with one of the biggest fund mergers in the history of the industry-Bank of America's $47 billion acquisition of FleetBoston Financial's fund division in 2004-Wilson and his team of 200 oversaw the integration of 209 products, 10,000 of them discrete, held in 2.5 million active accounts and serviced through three recordkeeping platforms and three custodians. Not only did Wilson have to integrate BoA's Nations brand with FleetBoston's Columbia division, but Columbia itself was a combination of seven families of mutual funds from earlier acquisitions.
The challenge was to streamline the infrastructure and to create a simplified product lineup. Columbia began by designating State Street as the sole custodian and fund accountant and Boston Financial as the sole transfer agent-and succeeded in integrating back-office servicing in 12 months.
Over the past three years, Columbia has accomplished a number of feats, not least of which is reducing the number of retail mutual funds from 125 to 75 and returning $200 million in savings to shareholders through reduced expense ratios.
Steve Krichmar, chief of operations, Putnam Investments, is this year's second-place winner, Leadership.
Previously a partner for 20 years at PricewaterhouseCoopers, Krichmar joined Putnam in 2004 to oversee a period of great transition at the firm: two major outsourcing projects, the sale of its distribution center and the conversion of Putnam's institutional defined contribution business to sister company Mercer HR Outsourcing.
Krichmar's overriding goal was to maintain service excellence for shareholders and ensure the firm's fiduciary responsibility to them. He began by working to minimize external turmoil by focusing on the people at Putnam, assuring those who were part of the transition that they would maintain their jobs.
Since then, Krichmar has continued to advocate an open environment where team members can speak openly and honestly about better solutions. As Putnam President and CEO Ed Haldeman said: "Steve understands that we have a special trust relationship with our shareholders. They trust us to take care of their money. This is Steve's driving principle in all he does."
Ann Bergin, managing director and general manager, DTCC Wealth Management Services, is this year's third-place winner, Leadership.
Probably the biggest challenge facing the separately managed account industry today is integrating money managers' systems with the proprietary platforms of sponsors. To create a centralized communications platform through which managers and sponsors can pass trades through a virtual straight-through-processing connection, Bergin began by working with the Money Management Institute.
Once DTCC and MMI had developed communication standards for managed accounts, then, in 2006, Bergin convinced Citigroup Smith Barney, the industry's largest managed account sponsor, to join DTCC as the charter participant in DTCC's Managed Account Service. Already, a number of other participants are testing the service, on target to launch this fall.
T. Rowe Price is the first-place winner of this year's Innovation category, for having created a collaborative information-sharing tool for its retail call center intranet.
In May 2006, the firm conducted an investigation on its intranet and found that information was not being published or maintained in real time and that links between complementary information either didn't exist or were broken. Thus, service representatives often had to rely on e-mails or phone calls to resolve investors' questions, repeating them several times down a chain of command.
T. Rowe Price decided to empower call center representatives to be able to update the intranet via a tool that incorporates wikis, forums, RSS feeds, bookmarking and tagging. Questions can now be answered once, and the answers are made available for all other associates.
Within two weeks of implementation, 33% of all of the call center associates were using the tool to answer tax and IRA inquiries. The intranet also allows them to communicate concerns and suggestions back up to management. Further, because it is user-intuitive, when call center volume is high and additional reps are needed, all hands can be brought on deck with minimal, if any, training.
John Hancock Signature Services, the transfer agent for John Hancock Funds, is this year's second-place winner for Innovation.
The unit, which continues to invest in custom technology to stay one step ahead of the competition, accomplished nine new automated projects in 2006 to manage the barrage of e-mails, checks, hard-copy reports and faxes that the firm receives-turning all into electronic documents and automatically routing them through the work flow.
John Hancock Signature Services not only is now able to create electronic images from paper reports, it can selectively choose and strip information and data from hard-copy reports to process transactions.
Fax-in, for example, is an automated process that systematically scans faxes being received and directs them into the processing work flow without any manual intervention. Similarly, SCLogic is an Internet-based tracking system that uses bar-coding and confirm-receipt technology to monitor and control the work flow of tangible objects, such as mail and checks, while Email-in also routes e-mails into the work flow.
Straight Through Correspondence is a software program that selects key customer information for outgoing correspondence, allowing for faster turnaround and standardization of correspondence. Finally, John Hancock has created an easier-to-use graphical user interface for new accounts.
Citigroup is the winner of this year's third-place award for Innovation for having created a straight-through-processing system for hedge fund trades.
Called OpenPrime, the system can support multiple strategies, asset classes and currencies. The asset classes it can handle include equities, derivatives, swaps, fixed income, OTC and structured products. Because it is an open-architecture system, it allows hedge fund managers to route trades across multiple executing and prime brokers.
OpenPrime also permits managers to analyze and manage their portfolio. They can configure and view flexible, customizable reports that enable them to view their positions from trading, portfolio management, operations and chief financial officer/chief operations officer perspectives. They can also view real-time profit and loss, along with risk exposure by strategy or position/legal vehicle. OpenPrime's portfolio accounting includes a general ledger and tax lot and trading engines.
Finally, by integrating their front, middle and back offices, hedge fund managers reduce risk and operations costs.
The Depository Trust & Clearing Corp. takes first place, Efficiencies/Streamlining in this year's Fund Operations Awards for its Managed Accounts Services.
In 2006, after working with the Money Management Institute on standards, DTCC formed a strategic alliance with Citigroup Smith Barney, the largest sponsor in the separately managed account industry, to create an automated communications service linking managed account firms to sponsors. Other firms have joined Citigroup in testing the new gateway, which is on target to launch this fall.
As Gary Jones, vice president of industry operations at MMI, has put it: "This collaboration is an important step forward in the industry's drive for adoption of the MMI message standards. It moves it from an idea that the industry supports to the reality of implementation."
SEI is the second-place winner in the Efficiencies/Streamlining category for having created an efficient model to convert separately managed accounts from one broker to another that can handle 10,000 accounts in less than 90 days.
Restructuring is normally a long, complex process, since it requires many rounds of communication between the outsourcing provider, portfolio management vendors and the two firms' internal constituents.
SEI streamlines the process by becoming the project manager for the conversion, spending three to five days at the client's site to uncover every aspect of their business. SEI walks the client through all possible configurations with a tool containing 1,000 fields; nevertheless, setting up the system is simple due to pull-down menus, check boxes and auto-fill fields.
The information is sent electronically to SEI, where it is uploaded into its systems and then mapped onto SEI's own codes. This allows the portfolio management vendor to spend time implementing the coding, as opposed to months of researching how the data sets will convert, saving the manager time and money.
Goldman Sachs Asset Management (GSAM) is the third-place winner in the Efficiencies/Streamlining category for this year's Fund Operations Awards.
In response to the growing popularity of hedge funds, private equity funds, hedge funds-of-funds and other alternative investments, several years ago, GSAM formed an alternative investment client experience team to build a straight-through-processing platform. Today, the platform shields clients from the complexities associated with outsourced third-party administrators.
Most recently, the unit formed a partnership service center where trades are captured in a single trade-entry environment, with most settled automatically. Regardless of how the client submits the information-via the Internet, e-mail, fax or regular/overnight mail, the platform can process it. It also can handle products even with only estimated NAVs, multiple settlement cycles and different accounting methods.
GSAM also created alternative standards, since few currently exist, to make it easier to transfer investor information, trades and settlement details to third-party vendors, as necessary.
The center handles more than 2,000 transactions a month representing more than 400 products and 1,000 share classes. All told, GSAM issues more than 100,000 investor documents to clients a year via their preferred method.
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