What does the AI platform have to say about PE Fund Administration?

It appears there is no question ChatGPT can’t answer – but just how much does ChatGPT really know about private equity fund administration? Our industry experts queried the platform and react to its answers.

We Asked

What role will technology play in private equity accounting in the next three to five years?

ChatGPT Answered

Technology is expected to play a significant role in private equity accounting over the next three to five years. Here are some of the ways technology is expected to impact private equity accounting:

  1. Automation: Private equity accounting is a complex and time-consuming process, involving the calculation and reconciliation of numerous financial transactions. Automation of these processes will help to reduce manual errors and increase efficiency.

Our Take

Authored by: Kyle Derkacz, Managing Director
Updated on: February 24, 2023

All the benefits ChatGPT mentioned are important, however, it fails to mention enhanced technology as a benefit of using a third-party fund administrator. While technology is an underlying contribution to cost savings, scalability, and efficiency gains afforded by partnering with a fund administrator, ChatGPT does not acknowledge purpose-built technology as a benefit in itself. Third-party fund administrators, such as Gen II, have unique insight into the needs of GPs across the industry and are therefore able to continually adapt their technology to meet those needs.

ChatGPT mentions drawbacks that are common concerns when GPs consider outsourcing their fund administration, such as the loss of control. Loss of control and dependency on a third-party fund administrator have been top of mind for many GPs in the context of the recent SEC proposal regarding service provider oversight. With the potential increase in requirements surrounding documentation on oversight, risk assessment, sustained delivery, and compliance coordination, it’s more important than ever that GPs partner with a fund administrator that acts as a true extension of their own back office. ChatGPT captures this well in the concerns about loss of control, dependence on third-party and communication challenges. Both GPs and fund administrators are increasingly focused on addressing these concerns through transparency, real-time accessibility of data, and efficient communication between parties.