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segregated funds brought in $210 million in net flows in January, compared to the 10 times larger mutual fund asset base which brought in $215 million — only $5 million more.
Will this kind of robust segregated fund sales continue? That's yet to be seen. But regardless, FundSERV sees a tremendous growth opportunity to expand and automate an industry that still relies heavily on paper-based manual transactions.
"Many barriers and issues facing segregated funds are similar to those of mutual funds," says Ian Cook, FundSERV's CFO and VP of corporate services. "One of the differentiating factors is that the insurance industry's segregated fund back office operations are currently not as automated as the mutual fund industry's. Consequently, segregated funds rely more on manual paper-based processing that can lead to errors in processing, especially when dealing with large volumes. We're convinced because of the success we've had with mutual funds, that FundSERV can offer a better and more efficient alternative to manual processing through automation."
FundSERV has already started the dialogue with some of the top insurance companies in Canada — Manulife Financial, Sun Life Financial, Great-West Life, Industrial Alliance — about how its services will positively impact them and their customers. In fact, a working group has been established to examine how automation can reduce risk, time and cost for segregated fund processing.
Cook says there has been a great deal of enthusiasm around the discussions, and momentum should grow as the benefits of automation become more apparent.
"At the end of the day, the more business segregated funds put through FundSERV, the less paper and potential errors they will have to deal with," says Cook. "It's a win-win proposition for everyone. FundSERV can expand its business, and the industry can become more efficient processing its flourishing
segregated fund business."
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