Need to Transfer Between Transfer Agencies?

The back office recently took a front spotlight at the Principal Financial Group, when its member company, Principal Management Corporation, extended its relationship with PFPC for transfer-agency services. The Iowa-based buy-side firm will continue to use PFPC to remotely service Principal Mutual Funds, a fund family with $10 billion in assets across 750,000 shareholder accounts.

Paul Germain, vice president of Mutual Funds Operations with The Principal Financial Group, explains that a successful mutual-fund family operates as a three-legged stool. "You need to have funds that are attractive in the marketplace, you need a sales force to take those funds to the marketplace, and you need to be able to service what you sell," he says. "That's where PFPC comes in. It allows us to provide our customers with a level of service that will make them want to stay our customers."

PFPC's commitment to Principal includes shareholder record-keeping, as well as integrated desktop technology, cost-basis accounting and data warehousing. In addition, Germain notes that new capabilities have arisen since he last evaluated the marketplace, such as enhanced technology to connect mutual funds to the National Securities Clearing Corporation, as well as Web-based technology portals.

These new and constantly changing aspects of the industry add to the appeal of subscribing to a third-party partner for shareholder accounting, Germain adds. "PFPC makes available any new enhancements that are specific to the industry. We have the ability to take advantage of those immediately and we don't have to develop them ourselves."

While PFPC handles record-keeping, statement printing, tax forms, check cashing and other administrative tasks, Principal Mutual Funds still maintains its own level of customer intervention through call-centers, mail receipt and transaction processing. However, Germain says, Principal has leased a line with PFPC's data center which allows the firm to easily retrieve customer data through Web-based interfaces.

Principal first came across the Delaware-based vendor in the mid-1990s, and contracted it as a transfer-agency provider to replace its proprietary shareholder-accounting technology.

Germain says that the initial factors that drew the firm to PFPC still applied during the recent deal. "Our evaluation was based on their current technology, future technology, economics and relationship," he explains.

Yet, Germain notes, most of the vendors on the market are very similar in their technology nuances. He says that it was PFPC's ability to convince the firm that it would provide a trustworthy relationship that won his bid. "We positioned them as a business partner more so than a service provider, and we have not been disappointed."