Regulators, wealth firms and tech providers are joining forces to modernize fund transfers and deliver smoother client transitions
A new push to modernize the account transfer process could represent an inflection point for the wealth management industry by addressing a decades-old weakness that undermines operational performance, elevates costs for managers, and causes frustration for clients.
Account transfers are a moment of truth for wealth managers and clients. Because the transfer process is generally the first experience a client has working with a new wealth firm, transfers play a key role in defining first impressions.
Historically, that first impression has often not been a good one. Rather than kicking off a smooth and satisfying relationship, account transfers can expose serious shortcomings in the wealth industry’s legacy infrastructure, especially when compared with other consumer onboarding experiences. Clients switching to new wealth management firms often wait weeks for their transfers and frequently find themselves hit with delays in accessing their funds, inability to trade, vague status reports and even surprise fees.
While that type of sub-par service has never been acceptable, clients today are finding this process more frustrating than ever, especially when so many other consumer experiences have become real-time and highly transparent. The massive upgrades in service quality achieved by other financial and consumer businesses in the past decade make slow and unreliable transfers seem all the more outdated. The antiquated process starts to erode client trust in new wealth managers from day one.
Everyone knows this situation must change—and quickly. That’s why a consortium of regulators, wealth firms and technology providers are working to propel the industry into a new era of digital-first, technology-driven transitions. If they are successful, wealth management clients across North America will experience faster transfer speeds, real-time transparency into the transfer process, and expanded reach into a broader spectrum of assets, including alternatives. Those achievements would improve client satisfaction, build trust, and help place the entire industry on a more competitive footing.
An infrastructure not up to the task
The backbone of the brokerage transfer process in the United States is the Automated Customer Account Transfer Service (ACATS). Although it was considered efficient in its day, the system turned 40 years old this year and is now constrained by dated technology. In Canada, The ATON solution, which was implemented in 1990, remains heavily paper-based, with relatively low levels of automation. It handles only about 40% all Canadian transfers. Although ATON has been adopted widely by broker-dealers, most mutual fund trading in Canada is done through a separate organization called Fundserv. That split requires wealth managers to operate on both networks, a cumbersome process that contributes to errors and delays. In both countries, the use of automation solutions remains limited in alternative investments and among certain market participants.
The main thing the U.S. and Canadian systems have in common is that neither seems up for the task in 2025 and beyond. Wealth transfer volumes have exploded, and growth appears to be accelerating. In the U.S., ACATS processes about 1 million transfers and roughly $90 billion in assets each month, but in Canada, regulators acknowledge that fragmented systems and inconsistent reporting prevent a clear picture of national transfer volumes.
As transfer volumes grow, the inadequacies of the current infrastructure will become more apparent, creating friction for clients and elevating costs for firms. The primary problem with these systems is that they are slow, lack all asset class participation, lack mandatory participation due to different regulatory bodies and lack transparency, with transfers often taking from five days to many weeks. Much of that delay can be attributed to the need for manual handling of exemptions, a process that both adds time and limits transparency for clients, who are often in the dark about where things stand. Also contributing to delays are inconsistencies in data, firm participation, lack of uniform requirements and mandates, and documentation—issues that the industry should be able to address through modern data management solutions. Finally, the lack of standardization across the industry causes sometimes significant delays when transfers involve “non ACAT” and “non ATON” firms, vehicles or asset classes.
These delays have real consequences for clients. Extended account freezes associated with drawn out transfers prevent clients from accessing cash or taking market actions, causing them to miss opportunities. Slow transfers can also cost clients money by delaying liquidation, exposing clients to market shifts that can impact the value of assets that need to be liquidated, and the amount of capital gains taxes incurred.
For wealth firms, inefficiencies in the fund transfer process inflate operational costs, reduce revenue opportunities by delaying receipt of assets, undermine the client onboarding process, and generally taint the industry’s reputation at a time when wealth managers are fighting fiercely to maintain relevance with younger, tech-savvy investors.
Working toward a tipping point
After wrestling with these issues for decades, the industry is finally rolling up its sleeves. The Depository Trust & Clearing Corporation (DTCC) in the United States and the Canadian Investment Regulatory Organization (CIRO) are leading a multi-year modernization effort that, if successful, would represent a tipping point for the industry.
In the United States, the modernization push is taking the form of the DTCC Roadmap for 2025-2028. The goals of this initiative include removing legacy “settle prep” bottlenecks, migrating data from mainframes to the cloud, eliminating outdated COBOL programming, and expanding asset classes to include annuities, alternative investments, and fractional shares.
It also aims to shorten settlement cycles, expand services to more participants through open APIs, automate exception processing, incorporate the use of artificial intelligence and advanced analytics, enhance real-time status reporting, increase transparency, strengthen CBRS alignment, and explore opportunities to accelerate the transfer of cost basis information.
In Canada, the planned interconnection of ATON and Fundserv promises to deliver a major bump in transfer efficiency, while upcoming regulations from the CIRO should result in
more automation and better alignment. CIRO is working on rules that would require the use of automated solutions, establish a standard service level agreement (SLA), and mandate disclosure rules for investors regarding fees and other transfer impediments.
These initiatives are possible due to advances in technology. Tools like automation solutions and APIs are enabling process speeds and efficiencies that were unachievable even a few short years ago. Looking ahead, artificial intelligence applications will accelerate the process further by filling out and reviewing documents and enabling wealth managers to start the transfer process earlier.
If all players can align around shared standards, enabling all participants to connect through common APIs and interoperable capabilities, the result will be a next-generation transfer structure that is:
- Technology-Enabled: Manual/legacy processing will be eliminated and replaced by automated solutions equipped with AI for exception handling, system-to-system integration and, eventually, distributed ledgers for alternatives.
- Faster: Transfers will be completed in two to three business days (or even better, in real-time), and aligned with trade settlement.
- Transparent: Clients will see clear, plain-language updates. (Not just “pending.”)
- More Inclusive: The system will be able to handle alternatives, annuities, and fractional shares.
- Harmonized: Data standards and compliance treatment will be unified and consistent across North America.
A modern ecosystem, a more competitive industry
Account transfers are not back-office mechanics; they are high-stakes client touchpoints. For far too long, the existing outdated legacy infrastructure for fund transfers has imposed costs on wealth firms and their clients, undermining confidence in the industry.
Modernizing this architecture will require close collaboration among regulators, industry associations, and wealth firms. The DTCC, CIRO, and groups like SIFMA and the CIRO Transfers Working Group deserve credit for taking on the challenge. With commitment and collaboration among these groups and the rest of the industry, we can create a next-gen fund transfer infrastructure that serves as the foundation for a modern, client-focused and competitive wealth management industry.
