May 13, 1993
TO: MEMBERS - ONE PER COMPLEX NO. 37-93
DIRECT MARKETING COMMITTEE NO. 30-93
MARKETING POLICY COMMITTEE NO. 21-93
OPERATIONS COMMITTEE NO. 20-93
RESEARCH COMMITTEE NO. 16-93
SALES FORCE MARKETING COMMITTEE NO. 30-93
SHAREHOLDER COMMUNICATIONS COMMITTEE NO. 25-93
SMALL FUNDS COMMITTEE NO. 12-93
RE: SECOND NOTICE - 1993 MUTUAL FUND QUALITY OF SERVICE SURVEYS
__________________________________________________________
As we recently informed you, the Investment Company
Institute is inviting your organization to participate in two
comprehensive studies of mutual fund service quality. At this
date, we are delighted to have received commitments from members
representing nearly half of industry assets. While we are
encouraged by this initial level of interest, we believe strongly
that additional members will want to participate in this
important baseline study. Moreover, it is important to the
Institute that this project have the widest possible membership
support to provide the highest possible level of confidence in
the measures and other information to be reported.
Therefore, we are extending the deadline for responding to
the participation request to May 28, 1993. If you have already
replied, thank you for your prompt response. If you have not yet
replied, or if you are still considering whether to participate,
please review this memorandum and return your participation form
to the ICI as soon as possible so that we may proceed with this
project in a timely fashion.
As you know, the services offered to mutual fund
shareholders play an increasingly important role in their
decisions to retain and add to existing fund investments.
Because most mutual funds have little face-to-face contact with
their shareholders, providing quality service presents special
challenges to the mutual fund industry. Therefore it is
essential that the industry monitor both the range and quality of
services provided to mutual fund shareholders, and shareholders'
evaluations of those services.
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Scope of Research
The Institute will conduct two comprehensive studies of
mutual fund service quality in 1993. The Institute's Operations
Department will work with Coopers & Lybrand to perform Study I
which will present data collected from mutual fund organizations
on products and services offered to shareholders and will measure
the quality of service in several areas including telephone
servicing, written correspondence, and transaction processing.
Study I will update and improve upon the ICI study issued in
1990, Mutual Fund Service
in the 1990's and will provide additional creative analyses that
will be useful to fund company executives in evaluating service
quality.
The Institute's Research Department and a task force of
industry members will perform Study II with a research firm
specializing in service quality measurement from the customer's
perspective. The key objective of Study II will be to obtain an
overall measurement of service quality, and examine in-depth
shareholders' perceptions of and satisfaction with mutual fund
service. Shareholders' use of and satisfaction with telephone
service will be examined in detail, including the types of
information requested. The survey will identify the "key
drivers" of service for mutual fund customers and will identify
shareholder-based service standards. Study II will seek to
update and improve upon the Institute's 1990 study of
shareholders' perceptions of service, Mutual Fund Service: The
Shareholder's Perspective.
Benefits to Participating Fund Groups
The two ICI studies which will be published in two separate
volumes will provide actionable information that is directly
applicable to the responsibilities of senior executives in both
the operations and marketing areas of the mutual fund complex.
Study I
In addition to quantitative measures of service quality,
Study I will include an analysis which will identify and discuss
activities, functions or operations associated with superior
service within the industry. Thus, participants will be able to
conduct a meaningful assessment of their own service quality
against representative industry-wide benchmarks. In addition,
the survey report will incorporate a special benchmarking
analysis of telephone service activities from an external or non-
mutual fund industry perspective.
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While the survey results will permit participants to
benchmark themselves generally within suitable or appropriate
industry peer groups, Coopers & Lybrand will be available on a
consulting basis to perform participant-specified peer group
analysis for interested participants. Consulting arrangements
should be made through the ICI following completion of the
survey.
To promote ease of participation and to help ensure
accuracy and timeliness of the data collection process, each
participant will receive in addition to a hard copy of the survey
questionnaire, a diskette containing a Microsoft Windows-based
automated version of the questionnaire. A workshop will be held
to instruct participants on questionnaire completion. Data will
be collected for the second quarter of 1993.
Style II
A key part of being a successful service provider is having
an understanding of shareholders' service expectations. The
survey results from Study II will provide an industry base to
which fund companies can refer in determining the role of service
from the shareholder's view. The data from respondents will be
identified for shareholders using the direct market and sales
force channels, thus enabling participating complexes to focus on
service evaluations within their primary distribution channel.
Results will be reported on an aggregate basis. Individual fund
groups will not be identified or ranked.
The Quality of Service Shareholder Survey offers
participating complexes the ability to conduct a parallel survey
with a sample of their own shareholders so that their group's
results can be compared to the ICI's aggregate data. ICI will
provide a kit to assist members who want to conduct a parallel
study. The kit will include the questionnaire as well as
guidance on sampling, data collection, analysis, and
interpretation.
Participant Responsibilities
The obligations of participants are 1) to furnish
shareholder service data confidentially, 2) to provide a sample
of shareholder names and addresses, if requested and 3) to pay a
proportionate share of the cost of the survey. Only fund groups
that agree to participate on this basis will receive the results
of the survey.
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Participant Fees
The cost of the two Mutual Fund Quality of Service Surveys,
exclusive of any specially requested analyses, will be shared by
the participants in accordance with an asset-based fee schedule.
The cost of participation in the two studies, which will be
billed during the data collection phase of the project, is as
follows:
Quality Survey Participant Fees
Total Assets of Open-end Funds Member Participation
in Complex (as of 3/31/93) Fee
Over $20 Billion $9,750
$10 to $20 Billion $8,500
$5 to $10 Billion $7,000
$2 to $5 Billion $5,500
$1 to $2 Billion $4,000
$.25 to $1 Billion $2,500
Under $.25 Billion $1,000
Action Requested
So that we may proceed with this project as quickly as
possible, it is important that we hear from you promptly as to
your
interest in participating in the two Mutual Fund Quality of
Service Surveys. Please return the attached form to the
Institute by May 28, 1993 via fax (202/293-1058) or mail to
indicate whether or not your organization will participate. You
may contact Diane Butler, Director of Operations & Fund Custody
at 202/955-3547 or Sandy West, Director of Marketing Research at
202/955-3509 if you have any questions regarding this important
industry project.
Donald J. Boteler
Assistant Vice President -
Operations
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