How to Choose the Fund Administrator That’s Right for You
Updated on: November 5, 2024
Whether an emerging manager or an established firm, the idea of switching to a new fund administrator can be daunting. Fears that changing your service provider will consume valuable time and resources or result in costly or disruptive mistakes often distract from the long-term benefits.
However, the need for a new fund administrator often indicates that your business is growing and evolving so making the switch will ultimately benefit your firm.
Choosing the right third-party administrator is vital for your business's performance as well as reputation. Your fund administrator manages financial reporting, investor statements, and serves as a strategic partner for long-term growth. Further, they coordinate services from other providers such as lawyers, banks, and auditors to ensure compliance with deadlines and optimize operational efficiency.
What To Consider When Choosing Your Fund Administrator
| Expertise & Experience |
Assess your fund administrator's expertise and experience in serving clients with similar fund structures and investment strategies, such as private equity. An experienced administrator understands the complexities of your fund, ensuring accurate accounting, investor reporting, and compliance.
According to our Fund Administration Technology survey report…
96% of LPs say that funds have gotten more complex in the last five years
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| Scalable Solutions |
Look for a fund administrator that can tailor services to meet your fund's unique needs. To avoid disruptions during periods of growth, ensure that your administrator can adapt to increased complexity and accommodate growing AUM.
According to our Fund Administration Technology survey report…
22% of LPs say they are somewhat/very dissatisfied with their fund administration
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| Service Quality |
Consider your administrator's approach to investor relations and servicing. Timely and transparent reporting is essential for maintaining investor confidence. A reliable administrator helps navigate the evolving regulatory landscape and prepares accurate filings to avoid costly penalties and maintain investor trust while reducing the burden on your team.
According to our Fund Administration Technology survey report…
43% of institutional investors strongly agree that near real-time reporting will be needed in the next five years
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| Technology & Infrastructure |
Evaluate the fund administrator's technology platform and infrastructure. Advanced technology enables efficient data management, reporting automation, and secure data access, improving operational efficiency and minimizing errors.
According to our Fund Administration Technology survey report…
48% of large institutional LPs are a lot more likely to invest with a fund sponsor who uses automation in fund administration
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| Fee Structure |
A transparent fee structure is vital for managing costs effectively. With a fund administrator that provides tailored solutions, you should have a clear understanding of the fees and expenses of the services to satisfy your needs. |
Advanced technology makes for a smooth transition
While considering changing fund administrators, a range of concerns may arise, such as data security, integrity, and continuity. However, with the help of advanced technology and streamlined processes, switching fund administrators can be a seamless and hassle-free experience.
Partnering with a service provider that utilizes automation and straight-through processes ensures historical fund data, financial records, investor information, and performance data are accurately transferred without disruptions or discrepancies. This reduces manual intervention and human errors while enabling your team to track and verify data accuracy during the transition.
Hesitation results in inefficiency and diminished investor confidence
If you're considering a new fund administrator, don't let the idea of a difficult transition stop you. Delaying the switch to a new service provider may result in prolonged inefficiency and loss of investor confidence. As long as you choose a provider with modern, scalable technology and an experienced team, switching service providers can be a smooth and straightforward process.
Published on: September 6, 2023
