The problem with account transfers
Businesses often look to move their client’s accounts from one provider to another for various reasons, including better service, lower fees, or access to a broader range of investment options. The process and ease of transferring client accounts often varies, depending on the providers involved, the types of assets, and the technology used.
The Problem with Account Transfers
Account transfers are done either as cash or in-specie transfers. Before we move on, here’s a lowdown on the two types of transfers.
Cash transfers can involve liquidating any / all the assets first and then transferring the cash to the new provider. They are typically faster and less complex but expose the investor to time out of the market and, depending on the account type, potential tax implications.
In-specie transfers include transferring non-cash assets, such as stocks, ETFs, and mutual funds, from one provider to another without liquidating them. These transfers are convenient for investors as their assets remain invested during the transfer process. However, they typically take longer than cash transfers.
While cash transfers are typically more straightforward, the FCA mandated platforms to ‘routinely offer consumers in-specie transfers and unit class conversions as part of the transfer process’ in 2019. This was done to prevent customers from unnecessary market exposure during the transfer process.
In-specie transfers take longer and are often delayed due to integrations or the lack of coordination between the old and new providers. Recently, a Citywire article shed light on a few platforms and SIPP providers that still rely on manual transfer processes for their in-specie transfers, resulting in a slowed-down transfer process and room for error. But in-specie transfers don’t have to be complex and slow!
Several providers, such as Origo, Calastone, and Equisoft (Altus), offer electronic and automated transfers that speed up the process considerably. Platforms that don’t use these modern integrations conduct transfers and communications through emails, phone calls, and posts, potentially leaving their customers waiting for weeks without updates. While the delay can also be caused by other reasons, such as fund availability, the main problem still lies in using manual processes to transfer assets.
How can we solve this?
Integrated approach - WealthKernel works with key automated transfer systems, which helps us improve the process with minimal delays, even for complex asset classes. The integration also allows for uninterrupted communication between the providers and platforms.
Focus on transparency - We offer regular updates and estimated timelines of the transfer processes, reducing the uncertainty that cash or in-specie transfers usually entail.
Focus on user experience - The WealthKernel infrastructure is designed to reduce our tenants' operational burden and allow them to focus on improving their users' experience. We handle the heavy lifting and the complexities of transfers so that our tenants and their customers can benefit from faster transfers and better user experience.
Want to know more about our transfer processes? Check out this page or contact sales@wealthkernel.com .
