The Internet has truly changed our lives forever. Thanks to it, people around the world have quick, easy and accurate access to a wealth of information. In the future, the Internet will greatly influence the investment management industry by enabling transfer agency functions to be performed with greater ease and at a lesser cost than ever before.

In my opinion, of all the mutual fund support tasks, transfer agency seems to be best suited to cyberspace. Fund accounting and portfolio management can also be done over the Internet, but those two tasks are tailored to a limited audience. For example, fund accounting reports are used by fund company personnel and never read by the public. Likewise, fund portfolio management software creates reports used only by portfolio managers and back-office personnel.

But by definition, transfer agency is the process whereby shareholder transactions are made, and thus a great many people are affected - as many people as there are invested in the fund. These transactions include buying shares, redeeming shares and querying accounts.

Actually, transfer agency is a pretty straightforward process, and some fund companies keep track of shareholder transactions on their own, using Excel spreadsheets. But if a firm is experiencing a growing number of shareholders, and adds new share classes (involving different types of commission schedules), there is a good case for it to purchase a dedicated transfer agency system to handle the more complex workload.

One of the hottest markets for transfer agency software products is in Europe, where more investment management companies are getting ready to introduce retail funds, similar to those offered in the U.S., and thus these companies will need to be doing retail transfer agency work. There are quite a few firms, like us, poised to capitalize on this growth area.

There are a number of companies out there that can customize software to dovetail with the very specific needs of the fund sponsor. The sophistication of the software product all depends on the fund, the transfer agent and what level and depth of transactions they want to make available for their clients.

Transfer agency on the Internet can save companies money by reducing their dependence on personnel to execute fund transactions for clients. Such transactions can be made directly over the Internet, as opposed to the previous methods of doing so by mail, or wire, or through a call center. Naturally, using the Internet eliminates the wait for a call center to answer the phone. It also gets rid of the delay over the regular mail.

All it takes for an investor to purchase shares is to set up an automatic debit system with their bank and they're in business. If he or she needs to look at an account balance, or receive a performance update, he can get it immediately. This way, transactions can be executed and monitored 24 hours a day.

Full and partial redemptions can be executed over the Internet and redemptions can be made payable to a third party as well. The software can even keep track of the tax consequences of fund purchases and redemptions for shareholders, potentially saving money that would otherwise go to Uncle Sam.

Naturally, the software provides password protection and online signature verification to the shareholder. If the fund carries a load, that will be assessed and records kept for the producer. If it's a no-load fund you can have the relatively new option of allowing investors to make initial share purchases over the Internet.

Fund companies can also use the software to conduct proxy votes and keep records of them, keep track of shareholder correspondence with the fund and communicate issues related to IRAs and qualified plans to those shareholders who need it. The software can thus generate a host of different reports for both the fund sponsor and the client.

It's a must for any fund company that is building assets and increasing its fund offerings to have a software system devoted just to transfer agency. And that product should be fully connected to the Internet, so that it can reach the growing number of individuals who want to monitor their investments over the Internet.

Barry McConville is director of sales and marketing with Global Investment Systems. GIS is a supplier of specialized investment accounting software for financial service firms.

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