NU Online News Service, Nov. 11, 2003, 3:18 p.m. EST – Changes under way at the Depository Trust and Clearing Corp., New York, mean that financial planners and producers ultimately will be able to provide better customer service to clients at a lower cost, says Angela Pearson, DTCC’s group director.

The corporation provides clearance and settlement services to expedite processing of investments in equities, bonds and other instruments.

Recently, DTCC has teamed with BISYS Group Inc., New York, to introduce a system for “seamless” application processing for life insurance and annuities submitted through broker-dealers, banks and wire houses.

To support the new system, BISYS will help financial product distributors obtain the necessary licenses and keep up with continuing education requirements, DTCC says.

In another new initiative, DTCC has been working with the standards committee at the Money Management Institute, Washington, which represents managers of separately managed accounts, to automate the servicing of separately managed accounts. These are relatively large, diversified accounts set up by wealthy investors and managed by professional advisors.

“We are taking MMI’s input and understanding what their criteria and requirements are for developing this hub so that [SMA managers] can better service their own company and extend that service to financial planners and ultimately the consumer,” says Pearson.

Broker-dealers and SMA managers that use DTCC’s SMA technology would be able to help financial planners automate the creation of a profile of each customer, including the individual’s financial situation and investment goals. Using the Web, advisors and financial planners would use their broker-dealers’ SMA system to keep tabs on any type of restrictions or investment sensitivities that an investor has, along with the investor’s desired rate of return.

Because those restrictions and goals would be programmed into the sponsoring broker-dealer’s investment program, the complexity of managing accounts would be significantly reduced. That, in turn, would reduce risk, cut costs and create sales opportunities for financial planners and advisors, Pearson argues.

The SMA program requires SEC approval, which is still pending.

It should be clearer in 18 months, after DTCC’s SMA system has been in place for a while, exactly what kind of savings and efficiencies advisors will experience, Pearson acknowledges. In the meantime, she points to significantly improved efficiencies for the mutual fund industry, which adopted a similar system through DTCC in the mid-1980s.