Service reviews should be done at least every six months and conduct frank discussions with current and potential agents
As the registered shareholder base of 
publicly traded firms continues to shrink, many issuers are seeking ways to lower the costs of shareowner services, especially if their transfer agent contracts are coming up 
for renewal. Issuers need to understand what their service contract entitles them to and how much each service costs. Mike Nespoli, executive director of relationship management at American Stock Transfer & Trust, strongly encourages clients to do annual service reviews, ‘going over what their agent is currently doing for them, what additional services the agent could offer and whether they feel the 
services provided are at the level they expect.’
In fact, service reviews should happen every 
six months or even quarterly. They should involve face-to-face discussions with the transfer agent, with issuers coming to the meeting with a good idea of what they want improved or changed. Nespoli 
recommends discussing transfer agent performance internally, either with shareholder communications personnel or human resources staff who deal with employee stock plans and so on, to generate ideas for cost reductions and efficiency improvements.
A thorough contract review is critical to the 
process, ‘especially if current management wasn’t in charge when it was written,’ says Peter Breen, Broadridge’s general manager of corporate issuer 
solutions. Before a service review meeting, issuers should ensure their contract covers services consistent with current needs: ‘A lot of these old contracts have functions and features issuers may not even need.’
Mark Kopelman, vice president and head of strategy and product development for Broadridge corporate issuer solutions, believes ‘most clients don’t know what they’re paying today.’ He says 
conducting the service review will give issuers an opportunity to fully understand the agreements they have with their transfer agents and why they are being charged their current fees. ‘If you can understand the agreement, how it’s being billed and what those trends are over time, you have a good foundation to look at what’s important to you and which areas you can focus on to reduce expense,’ says Kopelman.
How to judge a transfer agent? Paul Capozzi, senior manager of client services at Computershare, says cost is only one of many factors:‘ Issuers should be wary of transfer agents trying to win business with bargain-basement bids; if agents are selling on price, they likely can’t compete on product or quality.’
Instead, he says, companies should perform the following actions with regard to transfer agents:

- Review products and services offered

- Review agent’s commitment to quality service

- Assess if agent is investing in the business

- Rate the agent’s performance.
Talk about reducing costs
To reduce transfer agent costs, issuers must have open and frank discussions with their current transfer agent and potential replacements. ‘Sit down with your relationship manager, talk through your bill and ask why the charges are what they are. There may be different programs you can use to cut costs,’ advises Todd May, senior vice president and head of Wells Fargo Shareowner Services. ‘Most importantly, however, you need to work with a transfer agent that won’t cut corners on quality and accuracy.’
Capozzi says issuers must take time to discuss how they are being charged for the services they 
are using, how they would be charged for any new services and what competing firms might charge for similar services. ‘There is significant variation in what services an issuer may use as well as a variety of billing approaches, so it can be difficult to 
compare pricing effectively,’ he notes.
‘Some issuers may pay per account, others will pay a flat fee, 
others an all-in fee including print/mail. Transfer agent fees are also only one component of an issuer’s overall investor relations, AGM and shareholder 
servicing costs.’ Billing options must be carefully considered when negotiating a service contract that can lower costs and still satisfy issuer needs.
Part of the conversation must focus on reducing costs for services the issuer feels are most important to its shareholders and the successful operation of its business. Kopelman suggests issuers tell agents which services are most important to them and ask for a transparent pricing plan to deliver those services. He also says issuers ‘must take a forward-looking view of how those services are delivered and priced.’ That means discussing how exceptional events, including regulatory changes that affect shareholder services, such as cost basis, would be billed. Ancillary charges for such things can add up quickly.
Issuers can always try to cut costs by bidding out their shareholder services contract. ‘It behooves you to do a little shopping around with a request for 
proposal (RFP),’ says Breen. ‘You always want to be respectful of the agent you’re with, however – don’t go behind its back.’
Breen says issuers should encourage their 
current agent to participate in the RFP bidding, and adds that receiving bids from other agents ‘may be the best way for an issuer to understand what is 
different and innovative, and the things happening in the industry that they maybe haven’t looked at in a long time. They will get a pretty good sense of what the price out of pocket is going to be – and then they can make a decision.’ Â
KEY QUESTIONS TO ASK YOUR TRANSFER AGENTService review
Negotiating a new contract
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COST-SAVING OPTIONS
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INSIDER TAKE
Obvious ways to cut costs    Â
Less obvious savings
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