By Eamonn Greaves
Ours is hardly a static business. The services and capabilities fund administrators deliver are driven by client needs, which are constantly evolving. Flexibility and an adaptable technology infrastructure are critical to success. The primary goal of any fund administrator is to retain clients and ensure they’re receiving what they need, including timely and accurate regulatory filings.
Is there a relationship between an administrator’s adaptability and its size? Smaller fund administrators emphasize their boutique, “white glove” services as a way to compete with the larger firms. However, a key component of a high-touch service model is the flexibility to adapt quickly as clients seek to diversify their products or expand globally. This requires a robust technology platform underpinning the service. Fund managers with growth ambitions, whether near- or long-term, need to be sure the administrator they choose is not technology-constrained.
It’s vital to invest in technology to accommodate the changing demands of fund managers. Administrators that are diversifying their offerings and implementing new technologies while maintaining a consistent level of quality stand to succeed in this environment. As a global fund administrator, for example, SS&C strives to strike a balance between having strong technology and broad service capabilities while offering tailored services based on client needs. The scale of our business allows us to do that.
Adapting to Changing Regulations
New regulations, of course, are a key driver of changing client needs to which fund administrators need to respond. The US Foreign Account Tax Compliance Act is a prime example. It requires greater due diligence and documentation during the on-boarding process. Every new regulation presents some operational burdens, but FATCA on balance has been beneficial to the industry. It promotes transparency by requiring more client information upfront, and compels firms to better understand their client base. In-depth knowledge about a client’s needs should translate to a stronger relationships and higher likelihood of retention.
Beyond the fundamental tasks of accounting and producing NAV, fund managers now have more complex requirements such as risk reporting and performance attribution. That means fund administrators have to do more today than ever before while coming under enormous competitive fee pressure, making it crucial to invest in technology. Routine and repetitive tasks must be increasingly automated in order to focus staff on the analytical, problem solving and customer service components of the business.
In 2017, we expect to see fund managers continuing to launch new products (such as private equity structures) and strategies. They will be looking for fund administrators who can handle all aspects of their business today and support their growth in the future. Many managers would much rather have one fund administrator overseeing their entire business rather than multiple firms. This requires them to be very scrupulous in their selection of a partner. (We have a white paper on this very topic, Five Mistakes to Avoid When Selecting a Fund Administrator.)
Simply stated, keeping up with a dynamic market means investing in technology. Firms that do not are bound to fall behind – and may look at being acquired.