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If you don't ask you don't get
11 March 2008
Beneficial owners can get more transparency than ever before about the price of different services. But they need to ask, and many smaller funds don't. Maria McGrady explains the murky world of pricing and how to ask the right questions.
The biggest advantage of competition is that it's hard to hide dodgy practices. Eventually everything from performance to technology, service to transparency becomes something to compete on. This is what has happened with custody and securities lending. Competition for lending business has grown so fierce (due to its higher revenues compared to the relatively commoditised custody service) that transparency has increased along with performance, customer service and so on.
Many beneficial owners use a bundled service from their custodian, combining custody, cash management, lending and other services. According to a recent survey by the Vodia Group, this is the case for about 70% of public plans in the US that were surveyed. Where custodians in the past merely offered lending as a way to offset other fees, with no suggestion as to exactly what that lending did or could generate, now they all offer transparency at every level. If a...
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