March 28, 1990
TO: OPERATIONS MEMBERS NO. 11-90
TRANSFER AGENT ADVISORY COMMITTEE NO. 8-90
ADHOC COMMITTEE ON UNCLAIMED PROPERTY
RE: RPO SURVEY RESULTS
__________________________________________________________
The Institute surveyed the Operations Committee last year
for information regarding abandoned shareholder accounts (memo to
Operations Committee No. 23-89, dated November 9, 1989). The
questionnaire was re-circulated on January 23, 1990 in an attempt
to improve the response rate. The results have been compiled and
are presented below.
Completed questionnaires were received from 28 of the 57
fund groups represented on the Operations Committee. The
respondents account for approximately 37% of industry assets and
about 26% of all open-end funds.
The data are illustrated in ranges and averages within
categories of respondents segregated by level of assets under
management. The following table profiles the 28 fund complexes
in the survey.
SURVEY PARTICIPANT'S ASSETS & FUNDS AT 10/31/89
_____________________________________________________________| Number of | Net Assets ($billions) | Number of Funds || Complexes | Class | Range | Average| Range | Average || | | | | | || 10 | > $10 | $10 - $ 45 | $27.9 | 23-85 | 44 || 8 |$5-$10 | $ 5 - $ 8 | $ 6.7 | 9-41 | 22 || 10 | < $ 5 | $.09 - $.32 | $ 1.8 | 4-28 | 12 || All | | | | | ||Respondents| | $.09 - $ 45 | $13.0 | 4-85 | 27 |
The aggregate number of open shareholder accounts for all
28 respondents at 10/31/89 was 19.6 million. Of that total, 202
thousand (1.0%) were designated as RPO (Returned by Post Office)
Accounts. The questionnaire defined "RPO Account" as an account
for which outgoing mail has been stopped. The following table
shows detailed information on open shareholder accounts, RPO
accounts and related data for the survey participants.
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TOTAL ACCOUNT AND RPO ACCOUNT PROFILE OF SURVEY
PARTICIPANTS AND RELATED DATA
_______________________________________________________________| | All | Complex Size || | Respondents | < $5B | $5-10B | > $10B || | | | | || Number Open | | | | || Accounts (000) | | | | || Range: | | | | || Low | 17 | 17 | 156 | 560 || High | 3,489 | 454 | 876 | 3,489 || Average | 698 | 132 | 525 | 1,403 || | | | | || Number RPO | | | | || Accounts (000) | | | | || Range: | | | | || Low | .08 | .08 | .7 | 1.4 || High | 29.50 | 3.40 | 29.5 | 29.0 || Average | 7.20 | 1.50 | 9.0 | 11.4 || | | | | || Percent of Average| | | | || RPO Accounts to | | | | || Average Open | | | | || Accounts | 1.03% | 1.13% | 1.71% | 0.81% || | | | | || Average Number* | | | | || Employees Engaged | | | | || in RPO Search and | | | | || Compliance | | | | || Activities | 2.03 | 0.74 | 2.56 | 2.90 || | | | | || Average Number | | | | || RPO Accounts Per | | | | || Employee | 3,547 | 2,027 | 3,516 | 3,931 |
*full time equivalent
Survey participants were asked whether a separate RPO bank
account is maintained for cash associated with RPO accounts.
Eleven of the twenty-eight participants responded that a separate
RPO bank account is maintained; there was no correlation between
maintenance of a separate account and number of RPO accounts,
assets under management or any other factor. For those with
separate RPO bank accounts, an average of .92 full time
equivalent employees were engaged in reconcilement of RPO bank
accounts.
An average of 1.18 full time equivalent employees were
engaged in recording RPO related data in the shareholder system
for the 21 participants who provided an estimate.
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Survey participants were asked to provide estimates of
annual costs incurred (both prior to and after an account is
designated RPO) in searching for lost shareholders for a number
of cost elements. Where several respondents were able to
estimate total costs only, the totals were allocated across the
cost categories in proportion to the average of the allocations
for those providing detailed cost estimates. The results are
presented in the following table.
ESTIMATED ANNUAL COSTS PER RPO ACCOUNT
_______________________________________________________________| Cost Category | All | Complex Size || |Respondents| < $5B | $5-10B | > $10B || | | | | || Labor | $5.14 | $10.12 | $5.05 | $4.52 || | | | | || Systems | $0.51 | $ 0.51 | $0.45 | $0.56 || | | | | || Phone | $0.37 | $ 0.33 | $0.65 | $0.20 || | | | | || Postage | $0.23 | $ 0.57 | $0.21 | $0.20 || | | | | || Outside Charges | $0.57 | $ 1.04 | $0.68 | $0.44 || | | | | || Other | $0.67 | $ 0.89 | $1.27 | $0.26 || | | | | || TOTAL | $7.49 | $13.46 | $8.30 | $6.18 |
As shown above, respondents are spending an estimated $7.49
per year per RPO account in efforts to locate lost shareholders,
with the smaller fund groups spending considerably more than the
average for all respondents. Labor costs account for over two-
thirds of total costs.
Estimated total annual costs spread across the entire
shareholder account base are as follows:
Complex Size Total Costs Per Account
> $10 B $0.050
$5 - 10 B $0.142
< $5 B $0.158
All Respondents $0.077
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Twenty-six participants furnished responses as to how they
obtain reimbursement for RPO costs. The results are summarized
below.
_____________________________________________________________
| | Method of Reimbursement || Number of |Bill as| In Overall | Charge | Take Expense || Respondents|out of|Account Fees|Shareholders| From RPO || |pocket | | When Found | Dollars || | | | | || 2 | X | | X | || | | | | || 8 | X | X | | || | | | | || 4 | X | | | || | | | | || 12 | | X | | |
Insufficient data were furnished on the costs of using
external services and associated success rates to report a
meaningful summary.
If you wish to discuss any of the above, please call me at
(202) 955-3552.
Donald J. Boteler
Director of Operations/
Fund Accounting