Cost cutting drives down custody scores
01 April 2014 London
Image: Shutterstock
In a 2014 survey of global custodians, it was found that Pictet, RBC and BNP Paribas were highest ranked, but that overall, scores declined across the board.
The R & M Global Custody Survey received 748 responses: thirty-one percent of which were from asset owners, 62 percent from asset managers, and 7 percent from banks.
A scoring system of 1 (low) to 7 (high) was used for all questions, with the questionnaire covering 49 different aspects of global custody ranging from core skills such as settlements and income collection through to services such as securities lending and alternatives processing.
Richard Hogsflesh, managing director of R&M Consultants and the author of the report, said: “it is rare to see scores decline so comprehensively as they have this year. When it has happened in the past it has usually been linked to falling market values. Clearly that is not the case at the moment. So what else can it be?”
“Everyone appears to be rushed off their feet and much of the talk is of regulation ... Add to that the debate regarding the potential EU Directive on the single market in Europe for personal pensions and you can see that no one escapes. So maybe that’s why scores have fallen, reflecting the stress people are under.”
“But the biggest decline by far was in the US. Perhaps there is another cause? Cost cutting, client service and relationship management are the cornerstones of good service levels. When RMs no longer have the budget to travel regularly to see clients and are being forced to confine communication to electronic media, be it emails, conference calls or video links, it strips out the human element. It’s not winning favours with clients.”
There was a return to pole position for Pictet—a place they have not occupied since 2003—but other custodians were on the receiving end of harsh criticism.
One US based fund manager said: “I have no time to describe my issues with other custodians as I am really busy here but would like to express an opinion. Pictet is one of my top custodians and I would rate State Street as the worst due to getting someone to answer back on their help desk.”
The R & M Global Custody Survey received 748 responses: thirty-one percent of which were from asset owners, 62 percent from asset managers, and 7 percent from banks.
A scoring system of 1 (low) to 7 (high) was used for all questions, with the questionnaire covering 49 different aspects of global custody ranging from core skills such as settlements and income collection through to services such as securities lending and alternatives processing.
Richard Hogsflesh, managing director of R&M Consultants and the author of the report, said: “it is rare to see scores decline so comprehensively as they have this year. When it has happened in the past it has usually been linked to falling market values. Clearly that is not the case at the moment. So what else can it be?”
“Everyone appears to be rushed off their feet and much of the talk is of regulation ... Add to that the debate regarding the potential EU Directive on the single market in Europe for personal pensions and you can see that no one escapes. So maybe that’s why scores have fallen, reflecting the stress people are under.”
“But the biggest decline by far was in the US. Perhaps there is another cause? Cost cutting, client service and relationship management are the cornerstones of good service levels. When RMs no longer have the budget to travel regularly to see clients and are being forced to confine communication to electronic media, be it emails, conference calls or video links, it strips out the human element. It’s not winning favours with clients.”
There was a return to pole position for Pictet—a place they have not occupied since 2003—but other custodians were on the receiving end of harsh criticism.
One US based fund manager said: “I have no time to describe my issues with other custodians as I am really busy here but would like to express an opinion. Pictet is one of my top custodians and I would rate State Street as the worst due to getting someone to answer back on their help desk.”
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