“Bank-Hosted” or “Independent” Stock Transfer Agent – What’s the Difference??

There are banks that remain in the stock transfer business, like Bank of New York, Wells Fargo and Mellon; and there are independent transfer agents that are equally significant players in the industry like Computershare, American Stock Transfer and Continental.   There are even corporations who do the work themselves, in-house, because they can afford to support an independent function of their own, and they feel they can offer the best service to their shareholders.   Walt Disney and Procter & Gamble are good examples of in-house agents.

Well over 90% of listed public companies use an outside (“commercial”) agent, of the bank-hosted or independent variety.   For the sake of brevity in this short article, we will simply summarize the pro’s and con’s of each here:

Bank-Hosted Agent Independent Agent
Pro’s
  • Deep pockets for potential investment in stock transfer
  • Numerous other products and “relationships” available to clients
  • Premium name as agent
  • Stock transfer the company’s sole focus
  • All invest-able resources go to stock transfer
  • No risk of divesting the stock transfer function
Con’s
  • Not a principal focus of the enterprise
  • Internal competition for needed stock transfer resources
  • Risk the stock transfer function could be sold
  • Smaller budget for investment, as a total organization
  • Few/no “cementing relationships” besides stock transfer
  • Some independent agent names are not “premium sounding”
  • Some independent agents are foreign companies

Notwithstanding these pro’s and con’s, Shareholder Service Solutions® believes there are no compelling reasons to choose one category of agent over another, or have concerns about one category versus another.   There is a common and probably true sentiment among cognoscenti in the industry that “any stock transfer agent who is still in the business after all the consolidation and automation of the 80’s and 90’s is probably quite resilient, and quite competent.”  Therefore, corporations should judge agents primarily on their underlying fundamentals:  customer service, technology, auditable controls, innovation and on-going investment in the business.

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