December 19, 2007
NFS Pays More Attention to Institutional Clients
Clearing Quarterly & Directory
Story Utilities
National Financial Services, in a push to improve its institutional clearing services, recently convened the first ever meeting of its Institutional Advisor Council. NFS has had an advisor council for about a decade, but its attention generally has focused on retail clients needs. This new group will be interested solely in institutional clients, NFS
officials told CQ&D.
We started this council because we see the institutional client needs as different in many
respects, and because we know that a significant part of our growth will come from our existing clients, according to Anne Steer, executive vice president of relationship management for NFS. This council will very much direct us in how we are planning our future investments, she adds.
NFS is now primarily known as a retail-clearing broker-dealer. But it expects that institutional will be a major growth area. Around 40 percent of NFSs clearing clients have some institutional businessabout 140 of the NFSs some 340 correspondents now have some or a majority institutional orientation, according to NFS officials. Although NFS is not today an institutional powerhouse, the institutional council is part of a push to take on the Goldman Sachs, Broadcorts and Bear Stearns.
The councils first meeting was held in NFS headquarters in Boston and was attended by 10 correspondents. Council members discussed what specific products and services they want from NFS and its parent, Fidelity Investments, as well as how these services will be delivered.
What theyre looking for is a fast lanehow we can better support their day-to-day operations, Steer says. She adds that clients want the right NFS executives on their speed dial. Were trying to make sure that when our institutional clients have issues that matter to them, they can go directly to the people and groups within the firm who matter to them, she says.
That means putting clients quickly in touch with NFS officials who understand their unique problems, Steer says. The council will also serve as a sounding board for complaints, and weed out vendors that arent doing a good job, Steer says.
A securities industry analyst said the decision to form the institutional council was a good move. Matt Bienfang director of TowerGroups brokerage and wealth management service, said the council will probably become an internal lobbying group that will drive some changes that are geared toward the institutional community.
Although Bienfang said NFSs institutional offering have been recently improving, he doesnt believe that it will be able to overtake the Goldman Sachs and Bear Stearns clearing products in the near future.
Still, Bienfang said NFS will improve its offering if it gives institutional clients faster access to specialized services and provides officials who have an appreciation of their institutional business. This includes helping clients with business that could be dicey, according to Bienfang.
What their clients need is quick turnarounds on business exceptions, Bienfang said. Lets say a transaction falls out of the NFS parameters on net capital; a transaction that exceeds net capital requirements. Then NFS, he explains, must be able to act fast because, if the clearer cant change the requirements clearly, it risks losing a
transaction. On the other hand, Bienfang adds, the clearer must be able to expeditiously review and possibly veto a transaction that could be risky for both parties.
NFS officials wouldnt name any of the members of the council. However, an NFS client who didnt attend the meeting but knew of it told CQ&D what the clearer is doing makes a lot of sense. In fact, they should have been doing this years ago.
The brokerage executive said that NFS had likely heard some complaints over the years because retail-clearing systems are often very slow in switching. He said the success of the council depends on if NFS ensures that key information technology officials are available to the council.
Clients on the advisor council represent a cross section of the firms clearing business, according to NFS officials.
These include national, regional and boutique firms, Steer says. Besides a representative client sample, membership
was decided based on which firms would be willing to participate in the meetings.
Steer says the Institutional Advisor Council will have two yearly meetings. They will be presided over by two NFS senior vice presidents