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Dramatic increase in electronic transfers between D2C platforms will make high exit fees ‘untenable’

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A dramatic increase in electronic transfers between D2C platforms will make charging high exit fees ‘untenable’, according to Altus Business Systems.

The firm has released its latest independent electronic transfer and re-registration market data, which shows strong market growth and improvements in the use of electronic transfers and re-registrations compared with the same time last year – especially among D2C platforms.

Consequently, Altus Business Systems has said that charging excessive exit fees is now becoming inexcusable, as a result of the fact that the majority of transfers are now becoming increasingly automated. 

Altus’ data for Q1 2015 at the end of March has shown the following;

• 14 of the top 20 advisor platforms are live with electronic transfers representing over 80 per cent of AUA (seven using the Altus Transfer Gateway or 68 per cent of AUA).

• The top eight D2C platforms are now executing live electronic transfers covering an estimated 67% of AUA on D2C platforms (7 using the Altus Transfer Gateway).

• Approximately 70 per cent of AUA on D2C platforms can now be transferred electronically
Altus data also suggests that an increase in the number of key participants automating their transfer solutions has caused the volumes of rejections of electronic transfers to dramatically reduce when compared with the previous two quarters. Consequently, the data has shown the vast majority of account/portfolio transfers (over 80 per cent) are now complete within the TeX requirement of six days.  
 
Howard Finnegan, Head of Sales and Marketing at Altus Business Systems says: “At the end of Q1-14 there were five D2C platforms live with electronic transfers, making up just over to 50% of the market based on AUA.  However, at the end of Q1-15 the number of D2C platforms that went live and the market coverage, based on AUA, increased to over 70 per cent.

“It is more than likely we’ll see the number of D2C platforms/brands supporting electronic transfers sharply rise by the end of the year, which means that end investors will be able  to move their investment portfolios as quickly and easily as  a bank account.

“This also means that the argument for charging excessive exit fees when the vast majority of transfers are  automated is  becoming increasingly difficult to defend.”

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