Fidelity Equips RIAs With e-Signature Software
Fidelity Investments is hoping to make it far easier for independent registered investment advisers to open new accounts, by equipping them with the ability to capture e-signatures on all necessary documents from new clients.
DocuSign is providing the supporting software, which is encrypted so that only the intended parties can view documents and "e-sign" them by clicking on signature lines.
Previously, the only way advisers could open new accounts was by sending documents in the mail or scheduling an in-person meeting in their office.
"Our investment in this new e-signature capability is indicative of our belief that service in our industry must be transformed to maximize a firm success and deliver a great experience for end clients," said Ed O'Brien, senior vice president at Fidelity Institutional Wealth Services.
By freeing up their time from administrative duties, RIAs can devote more time to client service, O'Brien said.
One firm that recently began piloting the software, Retirement Corp. of America, noted that the technology will enable it to instantly connect with clients' children and grandchildren, who are accustomed to operating via e-mail.
Fidelity plans to roll out the new service by the end of the year and in 2009, include it in the comprehensive electronic platform it is developing for RIAs, Fidelity WealthCentral, which includes portfolio management, customer relationship management and financial planning tools.
"Like all of our technology-driven solutions, our investment in building an e-signature capability reflects Fidelity's ongoing commitment to offering advisers an open, scalable platform that helps simplify workflow, increase operational efficiencies and grow more profitable practices," O'Brien said.
Closed-End Funds That Came to Investors' Rescue Face High Interest Rates
Having gone to great, and expensive, lengths to bail investors out of auction-rate securities, which have been severely hit by the credit crunch, some closed-end funds regret this decision in light of UBS', Citigroup's and Merrill Lynch's plan to buy back $40 billion in auction-rate preferreds, The Wall Street Journal reports.
When the $330 billion auction-rate securities market crashed in February, closed-end funds, with $65 billion in auction-rate securities, were badly hit.
Some firms, like BlackRock, jumped to redeem auction-rates when investors got restless following the crisis, while others, such as Allianz's PIMCO, decided to wait.
Throughout July, closed-end funds redeemed or planned to redeem up to $24 billion in auction-rate securities. BlackRock, Nuveen and Eaton Vance account for $12 billion of these redemptions.
Some funds financed the redemptions with syndicated bank loans and expensive lines of credit. Others deleveraged, or reduced their debt, thus compromising their returns.
PIMCO's reason for avoiding redemptions is that it would have been more expensive than paying penalty interest rates on auction-rate securities.
Wall Street banks' reason to buy back the securities is that they're under pressure from regulators to correct things with investors, whom they told auction rates had higher yields than cash equivalents.
Federated, Eaton Vance Turn to Tender-Option Bonds
In a continued effort to restore liquidity to investors who purchased auction-rate securities issued by municipal closed-end funds, two major mutual fund families are the latest to announce plans to redeem outstanding ARS by using tender-option bonds (TOBs) as a new source of leverage.
Pittsburgh-based Federated Investors and Eaton Vance Management in Boston have both scheduled redemptions to take place later this month at $25,000 per share, plus the amount of accumulated, but unpaid, dividends as of the redemption date.
Federated recently announced that it will redeem a combined 789 auction market preferred shares (AMPS) totaling a combined $19.7 million issued by its only two existing tax-exempt closed-end funds. This will mark the first time since failed auctions caused the ARS market to collapse in early February that the firm is attempting to redeem its AMPS and is the first time that the two closed-end funds are utilizing TOBs, according to spokeswoman Megan McAndrew.
The two funds hold a combined total of $114.7 million of AMPS, as of June 30, she noted. However, she could not comment on any future plans to redeem the outstanding balance.
The Federated Premier Municipal Income Fund is expected on Aug. 27 to redeem 384 shares totaling an aggregate amount of $9.6 million, which represents 18% of its outstanding AMPS. In addition, the Federated Premier Intermediate Municipal Income Fund is expected on Aug. 25 to redeem 405 shares totaling an aggregate amount of $10.1 million representing 17% of the fund's outstanding AMPS.
The TOB program being used to redeem the shares is expected to lower the relative cost of leverage over time and provide liquidity to a portion of AMPS shareholders. The redemption of the AMPS is contingent on the successful closure of the TOB transactions.
Historically, closed-end funds gained leverage in the ARS market until February when, for the first time in 20 years, auctions failed after bond insurance companies suffered credit downgrades.
At Eaton Vance, the firm is creating TOBs to provide replacement financing for nine municipal funds that are scheduled to redeem a combined 7,032 auction-rate preferred shares that total $176 million at the next dividend payment date on or after Aug. 22, according to its Aug. 5 press release.
Three of the firm's three closed-end funds-the Insured Municipal Bond Fund, the Insured California Municipal Bond Fund and the Insured New York Municipal Bond Fund-have secured new TOB financing that will be used to redeem a combined 5,639 shares, which represents all of their remaining outstanding auction-rate preferred shares and which totals approximately $140.97 million.
Meanwhile, the six other Eaton Vance funds will use new TOB financing to redeem a portion of outstanding APS representing a combined 1,393 shares totaling $34.81 million issued by: the Insured Municipal Bond Fund II, National Municipal Income Trust, California Municipal Income Trust, Insured California Municipal Bond Fund II, New York Municipal Income Trust and the Insured New York Municipal Bond Fund II.
Including the latest redemptions, the 29 Eaton Vance closed-end funds will have redeemed approximately $3.8 billion of APS, or approximately 76% of the $5.0 billion outstanding as of February, using replacement financing consisting of approximately $2.7 billion of bank, commercial paper facility, and other borrowings, and approximately $1.1 billion of TOBs.
Over time, the firm said it expects the cost of replacement leverage to be lower than the total cost of APS based on maximum applicable rates in the event of unsuccessful auctions.
Legal Team Helps Investors Sue Charles Schwab
A Florida-based law team is working to help investors of the failed Charles Schwab YieldPlus Fund recuperate some of their losses.
According to the legal team Shine and Vernon, Schwab marketed its YieldPlus Fund as a safe and conservative "cash alternative," comparing it to the safety of one- and two-year certificates of deposits.
Instead, former manager Kimon Daifotis invested increasing portions of fund assets into asset-backed and mortgage-backed securities.
The bond mutual fund's price has dropped by more than 30% in the last year, causing a virtual liquidation of assets-a drop of AUM in excess of $13 billion, or 96%. During this period, Schwab encouraged investors to hold on to their YieldPlus shares, the lawyers said.
Multi-Currency Platform Acquires SunGard
FolioDynamix, a provider of unified managed accounts technology and services, has acquired SunGard Advisory Technologies, which provides investment management and wealth management platform solutions to financial services organizations nationwide, including brokerage firms, RIAs, asset management firms and banks.
Terms of the transaction were not disclosed. As it is folded into FolioDynamix, will be renamed FDx Advisors.
More than 12,000 advisers use the FolioDynamix FDx platform to serve 3.5 million accounts each day.
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