The Importance of Training, Qualifications and Limiting the Potential Liability from Errors….

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Clive Shelton

I might be going out on a limb here, but few people set out to be a professional global transfer agent or registrar! It is the sort of career you migrate or even fall into. That’s a shame, because alongside technological advances, professional administration is the backbone to a successful global investment management and securities industry. A quality service goes a long way to provide investors with confidence and helps them to stick out the market downturns and reap the rewards from long term investment. A quality service will also serve to limit liability from errors. Often referred to as “the back-office” it was the Cinderella of the investment industry world, but a Cinderella can become a shining Princess (or Prince).

Perceptions have changed. The range of careers on offer in such businesses is remarkably large. People management, legal services, compliance, audit, IT development and infrastructure, project management, business analysis, administration, investor support services, call centres, accountancy, finance, sales and marketing, data management, cyber security, data protection, social media, risk management, product managers, human resource planning, recruitment, performance management, client relationship management, the list goes on. If the range makes it an attractive field then importantly, in today’s Covid world, the opportunity for staff, much of the time, to work remotely from home is a growing attraction.

For many years, administration roles were ones people simply learnt on-the-job “sitting next to Aunt Sally”. There were no professional qualifications, little professional recognition, and training was provided by the last person to do the role. Staff turnover was high, career development was limited and young people who sought a career in financial services or the City would move on rapidly to another firm and other roles with greater recognition. Towards the end of the 20th century this began to change.

The desire to improve investor service coupled with outsourcing the roles to experts meant a change in perception. The focus on having qualified, knowledgeable and experienced staff, and their impact on business retention and growth, increased. An investor can gain enormous assurance when speaking to a professional administrator who displays an in-depth knowledge of the product and processes, experience in handling even the most obscure circumstances; and understands the context in which they operate. Added to this, the ability to translate industry jargon and explain things in plain language the layman can understand is a winner.

The introduction of relevant globally recognised qualifications by the ICSA and the CISI did much to support the global professionalisation of the administration roles. It also encouraged many to consider this part of the industry as a career choice. Both organisations introduced Collective Investment Scheme Administration certificated courses which were recognised by Regulators. Many of today’s managers, senior managers and executives in the administration field added these qualifications to their tool-kit, helping to build their CVs and giving them the edge in recruitment selection for key roles. The CISI have recently introduced a new qualification with the support of The TA Forum. The Transfer Agency and Administration Oversight module is a certificated course and part of the Investment Operations qualifications suite. It is aimed at those staff who provide the services and those who carry out oversight.

From a business perspective and in order to gain competitive advantage, reducing turnover amongst administration roles became a challenge. From a business performance viewpoint the cost of recruitment and training came into focus. Reducing turnover also helps to improve the service quality - quite simply the training, qualifications and experience is vital in handling complex cases and again serves to provide confidence and help hit Service Level Agreement targets. Most importantly, as the size of transactions increases, errors can be costly. An error free regime is the goal.

Intermediation in the investment management industry has led to an increase in the size and value of individual transactions handled by transfer agents and registrars. A pricing or process error on a £1,000 deal is much less significant than one on a £100mn deal. While automated systems can go so far, understanding how to quickly identify and correct errors before the client is impacted is a crucial skill. An illustration of where having appropriately qualified, knowledgeable and experienced staff could have helped is the case involving Ardon Maroon Asia Master Fund (in Official Liquidation) heard by the Cayman Islands Court of Appeal in 2020. This case involved multi-million dollar redemptions and serves to illustrate the importance of ensuring that the redemption processes set out in a Master Fund’s Articles are strictly adhered to as a matter of administrative practice. If you need to build a business case for investing in qualified administration or oversight staff, this is a good case to use.

Finally, while I have covered business, customer service and personal career reasons for why training and qualifications are important, there is one other driver, although it should not be the primary driver in my view. It is of course a Regulatory requirement. There is no doubt some firms still only do these things because they are set as a requirement to do business whereas in reality it just makes plain good business sense to support and motivate staff in developing their CV, their knowledge and experience. It pays dividends in the end.