With fund managers increasingly turning to third-party fund administrators, Head of BD UK - Private Equity, Richard Hansford outlines the key benefits outsourcing offers fund managers.
Unsurprisingly, given the increasing operational complexity and LP pressures facing fund managers, demand for strategic outsourcing looks set to continue to increase. Just last year our global survey of alternative investment managers revealed that 70% expect to increase the amount of functions they outsource in the next three years and nearly three-quarters of respondents (72%) expect outsourcing to play a more central role for fund managers. So, what can outsourcing fund administration really offer fund managers?
- Increased oversight: the extra layer of people, processes and regulatory compliance that outsourcing provides improves risk management processes.
- Cost efficiency: at a time when fees and margins are under pressure, outsourcing can offer a more efficient option than the hours, infrastructure, personnel, training and recruitment required for an in-house administration team.
- Access to top tier technology: top fund administrators can provide their clients with a custom-built technology platform that includes a robust portfolio accounting system, an investor portal and a client self-service reporting portal. This can reduce complexity and importantly, meet the demands for information from regulators and investors.
- Technical expertise: technical specialists with relevant fund operations and asset class expertise will oversee day-to-day running of the fund and will provide experienced directors and trustees to the boards.
- Time saving: outsourcing fund administration gives managers space and time to focus on their core competencies, raising and investing capital and generating value for investors.
- Remain compliant: the regulatory landscape governing the funds industry continues to evolve at pace and reporting obligations change as a result. The issue is compounded by global, industry and local legislation. Partnering with an administrator with the requisite skills, experience and resources to monitor and interpret changing regulations is invaluable in ensuring operations remain compliant.
- Scalability: Launch new funds without having to scale and hire for your operational, accounting and investor services.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.