April 17, 1997
TO: PRIMARY CONTACTS - MEMBER COMPLEX No. 24-97
RESEARCH COMMITTEE No. 5-97
INDUSTRY STATISTICS COMMITTEE No. 4-97
DIRECT MARKETING COMMITTEE No. 9-97
SALES FORCE MARKETING COMMITTEE No. 9-97
SMALL FUNDS COMMITTEE No. 6-97
OPERATIONS COMMITTEE No. 11-97
TRANSFER AGENT ADVISORY COMMITTEE No. 17-97
BROKER/DEALER ADVISORY COMMITTEE No. 7-97
RE: 1997 Research on Shareholder Service Quality
______________________________________________________________________________
For more than a decade, the Investment Company Institute has conducted many market
research projects on behalf of its members. From time-to-time, projects are undertaken that
benefit a specific segment of Institute members. In such instances, those companies interested
in the research are asked to share in the research cost. This year the Institute is planning a
participant-financed study of shareholder service quality, previously conducted in 1994, and is
pleased to invite your organization to participate.
Background
In order to determine shareholder perceptions of the quality of service delivered by the mutual
fund industry, the Investment Company Institute executed a study in 1994 of mutual fund
shareholders on behalf of participating companies. The 1994 Shareholder Service Quality Study
demonstrated, among other findings, that mutual funds deliver the best overall service
compared with other financial intermediaries. The findings also concluded that service quality
impacts shareholders perceptions of their satisfaction with their investment, and more
importantly, their subsequent investment behavior. This research is being repeated in 1997 for
Institute members who decide to participate.
Benefits to Participating Companies
Providing quality shareholder service is an important element in the operation of a successful
mutual fund. There are many reasons for promoting top-quality service for shareholders: to
build shareholder loyalty, which can result in the purchase of additional funds and/or increase
balances in current funds; to produce recommendations from shareholders to friends and
family for purchase of funds; and to develop a positive service image to differentiate products
in an increasingly competitive market.
The 1997 Service Quality Studys findings will establish an industry-wide benchmark from
which individual fund companies can conduct a parallel study of their own shareholders for
comparison. This ability to do a parallel study will provide unique opportunities for
comparison because the same questionnaire and analytical programs will be available to
participant companies as to the Institute.
Scope of the Research
The main purpose of the 1997 Shareholder Service Quality study is to measure the overall
quality of service provided to shareholders by mutual fund companies, and to evaluate
shareholder perceptions and expectations of mutual fund company telephone, mail, and
personal computer-assisted service. Based on shareholders most recent service experience, the
evaluation will include their assessment of the fund companies range of services, the quality of
service provided, and a close examination of service problems with mutual fund companies.
Focusing on their most recent service experience, specific objectives of the study include the
following:
To identify shareholders assessment of the quality of service provided by
mutual fund companies relative to other financial intermediaries;
To identify shareholders awareness of the range of services provided by their
mutual fund companies;
To identify shareholders expectations of the types and frequency of services
provided;
To identify the types and frequency of services shareholders use;
To identify whether the types and frequency of services shareholders
experience satisfy, fails to meet, or exceeds their expectations;
To determine the relative importance of service quality in the decision to
invest,
whether it affects decisions to increase or withdraw their investment,
or to recommend the fund to others;
To identify which of several components of service (e.g. making it easier to
conduct transactions, having friendly employees, etc.) are most important
to shareholders and to assess which determinants offer mutual fund
companies the greatest opportunities to improve service quality;
To identify shareholders assessment of mutual fund company telephone,
mail, and personal computer assisted service.
The study will utilize random digit dialing to obtain a sample of 2,800 respondents who have
had a service experience for long-term mutual funds in the last twelve months. The study will
actually comprise two distinct surveys, one measuring shareholders views on mutual fund
service quality versus other financial intermediaries, and the second measuring shareholder
service and problem episodes. No mutual fund company will be identified in the findings
since the data will be reported for the industry as a whole. A full proposal is available, should
you wish; call 202-326-5919.
Participant Fees
Only companies that agree to participate in this study will receive its results. The cost of the
research on the Shareholder Service Quality Study will be shared by the participants in
proportion to their mutual fund assets under management as of December 1996. The costs
below do not include the parallel research which has been costed by our vendor to give a
participating fund company a reasonable base cost, with the opportunity to add custom
modules.
The overall cost of the industry study meets the direct and indirect costs incurred by the
Institute. This cost will be assigned to each participant using assets under management as of
December 1996 as estimated in the following schedule.
Total Fund Assets as of December 1996 Participation Fee
Greater than $50 billion $12,500
Between $20 - $50 billion $10,000
Between $10 - $20 billion $8,500
Between $2 - $10 billion $6,000
Between $250 million - $2 billion $4,000
Less than $250 million $2,500
ICI members wishing to participate in the study must indicate their support before May 2, 1997
by completing the attached form and forwarding it to James Erceg. Fees must be paid before
delivery of the final report, which is expected to be in late 1997.
Responsibilities
Companies that agree to participate in the research on the Service Quality Study will
need to :
Assign a manager to serve as a point of contact with ICI on this project;
Agree that ICI members who do not participate in supporting this research will not
receive the final report; and
Agree to pay the proportionate share of the cost of the study.
Action Requested
Please note that this letter has been sent to participants of each Institute committee listed on this
memorandum and thus may have been sent to others in your firm. 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 research on the Service Quality Study. Please return the
attached form to the Institute before May 2, 1997 via fax at 202/326-5924 or by mail to indicate
whether or not your organization will participate. Please contact James Erceg, who will
manage this project, at 202/326-5919 if you have any questions regarding this important
industry project.
Sandra J. West
Director,
Market and Policy Research
Attachment
INVESTMENT COMPANY INSTITUTE
1997 SHAREHOLDER SERVICE QUALITY STUDY
Participation Form
CHECK ONE:
[ ] The organization listed below agrees to participate in the 1997 Investment Company
Institute Shareholder Service Quality Study. The obligations are to 1) assign a manager
to serve as a point of contact with ICI on this project; 2) agree that the final report will be
available only to those ICI members who participate in this research; and 3) agree to pay
the appropriate participant fee.
[ ] The organization listed below will not participate.
COMPLETE:
ORGANIZATION: _______________________________________________
ADDRESS: ________________________________________________
________________________________________________
RESEARCH CONTACT: ________________________________________________
TELEPHONE NUMBER: ________________________________________________
________________________________________________
Authorized Signature
________________________________________________
Name
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PLEASE RETURN THIS FORM TO:
James Erceg
Research Analyst, Market and Policy Research
Investment Company Institute
1401 H Street, N.W., 12th Floor
Washington, D.C. 20005
Fax: (202) 326-5924
Phone: (202) 326-5919