You wake up tomorrow and discover you’re the beneficiary of some financial assets. It’s like winning the lottery. Then you dig a little deeper. You realize that you could have come into ownership of the account several years ago. Perhaps you would have kept the account, actively managed and invested in it, and seen the assets grow even larger than what they are currently. Then you wonder why you were never notified.
This scenario is not that uncommon when it comes to Universal Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts. UGMA/ UTMA accounts are both custodial accounts, held in the name of the minor, but controlled by a parent or other relative until the child reaches the age of majority. When the minor reaches majority, the beneficiary can transfer the account to their name or use the unused money in the account.
However, if the beneficiary is never notified the account may languish, which can easily happen if the custodian doesn’t maintain accurate books and records. The investor misses out on building for their future. The asset manager misses the opportunity to acquire a new investor and create a lifelong customer relationship.
Many firms assume they don’t need a process for custodianship notifications of UGMA/UTMA (Uniform Gifts to Minors Act/Uniform Transfers to Minors Act) accounts. While all this is technically true, the practice is beginning to change. Some feel acting proactively is a sign of integrity. Others feel it’s only a matter of time until regulations mandate compliance. No matter the reason, confirming appropriate ownership, maintaining accurate books and records, and promoting asset retention are all positive outcomes.
It can be challenging, however, to efficiently track and notify beneficiaries. Tasks like identifying accounts, administering mail campaigns, sending out email notifications and updating records require a process, technology and staff—all of which can add additional expense.
Outsourcing can be an effective way to meet these challenges. Outsourcing allows firms to leverage the expertise of others, reduce fixed expenses, and “flex” resources as needed, which can add real value to both a firm’s bottom line and the customer experience, even for outsourcing arrangements that are on a short-term basis.
SS&C Flex harnesses advanced technology and staff expertise to help firms conduct periodic assessments to clean up books and records without further burdening in-house teams. With event management services like project management and consultation, print mail coordination, and reporting and attestations, SS&C Flex delivers an end-to-end solution for your UGMA/UTMA account management.
Moreover, with SS&C firms can also have access to digital mobile components that enable UGMA/UTMA accounts to be transferred and reregistered online, fitting the expectations of younger age demographics and helping your firm proactively retain assets. SS&C’s mobile app lets you meet your investors where they are, using self-service functionality and mobile tools that younger investors increasingly expect.
To learn more about how SS&C Flex can help you stay ahead of compliance requirements and retain assets when UGMA/UTMA accounts come of age, download our “Optimize the UGMA/UTMA Custodian Termination Process” brochure or contact us directly.
Written by Madeline FitzGerald
Head of Engagement, SS&C Flex