How Do You Choose The Right Funds Administration Service Provider?
The needs to contain costs, improve performance and comply with regulations are just some of the challenges facing today"s fund manager. While focusing on core competencies, the everyday reality is operational functions and technology issues eat up a portfolio manager"s time, they eat up his money and they eat up his resources. Outsourcing both middle and back-office processing is a logical solution to these distracting and complex pressures.
If you or your firm is considering outsourcing the fund administration of your fund, the first thing you need to ask yourself is, "Why am I dong this?" Not thinking the decision all the way through can restrict your ability to adjust your strategy and severely slow your response to changes in today"s competitive environment and it just might result in you or your firm missing out on not just this opportunity, but also future opportunities.
The second question you should ask yourself should be, "What is it that I need?" Your firm has particular needs that may change over time, and you need to decide what level of service you need and can afford. For example, while one administrator may be able to handle a "month-end only service", that same administrator may not be able to handle daily cash and reconcilements. You should determine a clear and complete list of your need prior to entering into discussions with an administrator and then refine this list as you compare the offerings of various providers.
Just to get you started, here are ten questions you should ask your potential administrator to help ensure a successful match:
1. How many clients do you have that are similar to my fund? Can you provide references?
2. Can you meet my service requirements including daily requirements, middle office requirements and tax reporting requirements?
3. Who are your key staff members and how long have they worked in the industry? What are your retention rates?
4. How are your client teams organized? What is your relationship management schedule?
5. How does your disaster recovery work?
6. Describe your technology platform. Do you own the software? Is it scaleable? Can it be integrated with our prime broker and our in-house system?
7. Describe your company"s financial stability and performance. Are you in business for the long term?
8. Do you have a SAS 70 type II certification? Where is the work going to be done?
9. Are there any potential conflicts of interest? For example: are you part of an organization that also has brokerage money management?
10. Will you meet my future needs globally?
If you or your firm is considering outsourcing the fund administration of your fund, the first thing you need to ask yourself is, "Why am I dong this?" Not thinking the decision all the way through can restrict your ability to adjust your strategy and severely slow your response to changes in today"s competitive environment and it just might result in you or your firm missing out on not just this opportunity, but also future opportunities.
The second question you should ask yourself should be, "What is it that I need?" Your firm has particular needs that may change over time, and you need to decide what level of service you need and can afford. For example, while one administrator may be able to handle a "month-end only service", that same administrator may not be able to handle daily cash and reconcilements. You should determine a clear and complete list of your need prior to entering into discussions with an administrator and then refine this list as you compare the offerings of various providers.
Just to get you started, here are ten questions you should ask your potential administrator to help ensure a successful match:
1. How many clients do you have that are similar to my fund? Can you provide references?
2. Can you meet my service requirements including daily requirements, middle office requirements and tax reporting requirements?
3. Who are your key staff members and how long have they worked in the industry? What are your retention rates?
4. How are your client teams organized? What is your relationship management schedule?
5. How does your disaster recovery work?
6. Describe your technology platform. Do you own the software? Is it scaleable? Can it be integrated with our prime broker and our in-house system?
7. Describe your company"s financial stability and performance. Are you in business for the long term?
8. Do you have a SAS 70 type II certification? Where is the work going to be done?
9. Are there any potential conflicts of interest? For example: are you part of an organization that also has brokerage money management?
10. Will you meet my future needs globally?
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