The jointly owned Internet portal three of the largest mutual fund companies plan to start with a banking companys transfer agent would enhance the services financial advisers can offer their clients and perhaps maintain the fund firms market share.
Putnam Investments, Franklin Investments, Fidelity Investments, and the transfer agent PFPC Corp. of Wilmington, Del., a division of PNC Financial Services Group Inc., announced plans on Wednesday to start the Web site by the third quarter.
The site, as yet unnamed, would let advisers offer several services to their clients, such as the ability to buy and sell participating funds and account aggregation.
John Rekenthaler, research director at Morningstar Inc. in Chicago, said the rare collaboration between the companies is largely a response to competitive pressures that the entire mutual fund industry is facing from alternative investment products, such as separate accounts.
To maintain their market share, fund companies have done nearly everything they can in recent years to appeal to advisers, and the site would be another example of this, he said. Its a new twist on the old game of doing whatever it takes to make advisers happy.
The companies planning the site call it an important development for advisers.
Paul Flood, senior vice president of e-commerce at PFPC, said the site will be the premier financial services portal in the industry.
Karnig Durgarian, senior managing director at Putnam, said the site will serve independent financial planners who lack the resources available to large brokers or banks. It may be expanded to serve banks and wire houses as it grows, he said.
Other services such as tax reporting may be added as user volume grows, Mr. Durgarian said.
Jennifer Bolt, chief Web officer at Franklin, said the site will provide historical activity, such as daily fund prices and performance history; redemptions; exchanges; transaction confirmations; and access to prospectuses and company annual reports.
However, the site will not go into detail about the securities holdings of any individual fund, she said.
Though still a relatively small part of the industry, independent financial advisers are recognized as a growing sales force. Most fund companies have reported growth in intermediary-sold products in recent years, and some traditional no-load companies such as Scudder Investments and Invesco Funds Group Inc are creating load funds to be sold through intermediaries.
Geoff Bobroff, a mutual fund consultant, said the site may be useful to fund companies since wholesalers have a hard time reaching independent advisers, who are spread throughout the country.
The site would be most attractive to the roughly 25,000 independent advisers who are compensated by commissions, since most fee-based advisers are already committed to the fund supermarkets of companies like Fidelity and Charles Schwab & Co., he said.
Mr. Durgarian said the site does not intend to compete with or replace fund supermarkets. Its value will be as an information provider, as well as a transaction medium, he said.
Ken Rathgeber, chief operating officer at Fidelity Institutional Investment Services, said the companies decided to set up the site because investment professionals were asking for the ability to transact business across fund families.
Advisers want a standard portal, through which they can get access to all of the roughly 100 fund companies expected to be on the site when it is launched, he said. We felt this was the fastest way to meet this need.
The site will use PFPCs Internet platform, but the three fund companies sponsoring it will also supply some technology, Mr. Rathgeber said. An independent management team yet to be appointed will run it, he said.
Advisers will be able to use the site for free, and participating fund families will pay an undetermined fee to be listed.
Mr. Durgarian said that Putnam has no plan to expand ownership of the site, but were looking for all fund families to view this as an industry solution, he said.
Mr. Rathgeber said that advisory clients will be able to use the site only with their advisers permission. However, the sponsoring companies may eventually decide to give these clients direct access to it, he said.