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Rating:Merrill Escalates Fundster Data Arms Race Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, July 09, 2014

Merrill Escalates Fundster Data Arms Race

Reported by Tommy Fernandez

Another platform has joined the arms race for providing data to fund sponsors to help them maximize their sales efforts.

In this instance, Merrill Lynch is offering fund sponsors an "incremental operational reporting service" designed to help them fulfill their oversight obligations under Rule 38a-1 of the Investment Company Act of 1940.

(For those who don't speak compliance, this rule was adopted in February 2004 and, according to the SEC, "requires fund boards to adopt written policies and procedures reasonably designed to prevent the fund from violating the federal securities laws." Moreover, according to the SEC, the rule "provides fund complexes with flexibility so that each complex may apply the rule in a manner best suited to its organization.")

And it does that beautifully, to-be-sure. But the service also provides fund firms with data on how to calibrate their sales strategies, and align their resources, in order to be more successful on Merrill's platforms, which will ultimately be merged into one platform in the near future.

The unnamed service can serve as a scorecard for each fund firm in terms of the service they are delivering on the network, providing such data as success rates, defection rates, dividend declarations, pricing and accuracy of pricing, among other things.

The service also gives fund firms insights on how well they are doing in these areas in comparison to other firms, to what degree it is unknown.

Merrill originally developed the service for two major fund firms, but now offers it to 50 sponsors for a fee. Again, it is completely optional.

The goal of the service is to give fund firms some kind of window into how they are doing on the network, how efficiently they are running, and thereby refine their strategies, re-align their resources.

If this service sounds somewhat familiar, it is. One of the biggest themes this year for fund firms is Big Data, including data on platform success. Schwab offers fund sponsors a tiered data service that helps them drill down fund flows and other distribution details. Schwab's service is powered by Broadridge Financial Services, which is working to develop similar services for sponsors on other fund supermarkets. Albridge offers such services for sponsors on the Pershing network. 

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