In response to increased regulatory focus on U.S. mutual funds fee arrangements, Northern Trust has enhanced its reconciliation and payment processing for intermediary payments to improve automation and provide more comprehensive reporting to its clients.
U.S. mutual fund distribution and servicing arrangements have increased in complexity. Broker-dealers and other financial intermediaries have sought omnibus recordkeeping arrangements, with a single “house” account held on the transfer agent’s books, and the underlying subaccounting being performed by the intermediary. This has led to increased focus on intermediary oversight, including tighter controls around the reconciliation and payment of distribution and servicing fees.
With the implementation of Broadridge Financial Solution’s Revport tool, Northern Trust has streamlined its process for invoice validation, controls around invoicing and payment processes and reporting options on how funds communicate with their boards.
“As the SEC has increased its focus on mutual fund fee arrangements, Northern Trust has developed capabilities that help our fund clients tighten controls around their oversight process,” said Dan Houlihan, head of Global Fund Services in North America at Northern Trust. “We view this as a natural extension of our dealer servicing support for U.S. mutual funds.”
Key aspects of the enhanced capabilities include:
• Greater automation of payments, including the calculation of expected invoice amounts;
• Improved reconciliation, with the ability to compare expected amounts to actual invoices, set tolerances and identify discrepancies and;
• Enhanced board-ready reporting, including summarized payments and fee arrangements.
“Broadridge is excited to work with Northern Trust to enhance its intermediary payment oversight process,” said Chris John, President, Revenue and Expense Management, Broadridge. “Our Revport tool provides data aggregation, extensive workflow capabilities and audit controls and a flexible calculation engine to make the calculation, reconciliation and approval process more efficient.”