3 Things to Know Before Switching Fund Administrator

One of the biggest decisions an asset manager has to make is choosing the right fund administrator to partner with. Choosing well can save costs and provide a seamless connection with all outside parties and provide you with accurate, up to date information and reporting; choosing badly can ruin your reputation. So what are the key differentiators should you be looking for in selecting the right partner?

Traditional role vs. evolving role

Fund administrators have traditionally been focused on functions that protect investors by independently verifying assets and valuations of the fund, allowing fund managers to focus their attention on management of their portfolios. These include:

• Daily calculation of Net Asset Value (“NAV”)
• Calculation of income and expense accruals and the pricing of securities at current market value
• Financial reporting and financial statement preparation
• Audit liaison
• Opening and control of fund bank accounts
• Preparation of reports to shareholders
• Reconciliation of the broker, custodian, bank and investment manager statements
• Accounting services; maintenance and filing of the fund’s financial books and records
• Payment of fund expenses
• Settlement of daily purchases and sales of securities
• Collection of dividends and interest
• Calculation and payment of dividends and distributions to the transfer agent
• Preparation and filing of local regulatory body filings/reports
• Pricing the portfolio of the fund
• Calculation of the total returns and other performance measures of the fund
• Compliance and Investor KYC, anti-money laundering monitoring and reporting
• Supervision of the liquidation and dissolution of funds
• Governance

However, the role has been evolving in recent years, with leading fund administrators expanding both the scale and breadth of their capabilities. The leading administrators now operate globally, with expertise in the regulation, reporting, tax and compliance across multiple markets, enabling you to use the same administrator in all of the markets in which you operate, providing a consistent and reliable service to you and your investors.

As well as offering global scalability, fund administrators have been adding new products and services such as:

• Capital introduction services
• Specialist expertise in key markets (eg: real estate, private equity)
• Foreign exchange services and solutions
• Risk management reporting
• Collateral management
• Depositary and Custody
• ManCo Services
• Banking Services
• ESG rating & advisory
• Leading technology solutions providing 24/7 access for fund managers and investors

This evolution of the fund administrator role provides increasing support for middle-office and front-office functions previously only possible by committing to the fixed cost of internal resources, thus offering a single-source solution to fund managers.

Things to consider when selecting a fund administrator 

With the increased capabilities that a modern fund administrator can offer comes an increased dependence on their capabilities. Hence, it is critical that fund managers perform a comprehensive assessment of a new partner’s ability to provide the high levels of accuracy and reliability that you rightly demand. Some of the key requirements are:

• Single-source for all your needs
• Robust operational infrastructure and internal controls
• Quality of systems, automation, straight through servicing and cybersecurity
• Scalability and expertise in your key asset classes
• Provision of corporate secretarial and directorship services
• Foreign exchange and bank account management
• Ability to manage complex fund strategies
• Rigorous compliance and governance processes

If you are a global business, your fund administrator should be too, providing local expertise where and when you need it covering local regulation, tax and compliance solutions.

Key steps when switching fund administrator 

Once you have made the commitment to switch fund administrator and selected your new partner, you must agree a timetable of events to prepare and execute a project plan. It is important that from the outset that both parties allocate sufficient resources to accomplish the tasks set out in the plan to ensure a smooth transition by the planned date. The plan should encompass:

• Due diligence checks of investors and individual risk assessment
• Assessment of full physical and electronic data requirements
• Agree and sign full service level agreements, confidentiality and service contracts
• Review by new administrator of all legal agreements to ensure necessary changes can be verified by legal counsel at an early stage
• Preparation of necessary announcements and contractual changes for notification to investors
• Agreement of data transfer methods and protocols with old administrator
• Test transfer and reconciliation of calculated NAV from both administrators
• Live transfer of current and historical data covering at least the complete accounting period to facilitate smooth and complete audit processes

A well planned project with full transparency and a shared commitment will deliver a seamless transition and the immediate realization of the full set of benefits offered by the new administrator.

Talk to Apex Group

Apex Group is more than just a fund administrator, the global team delivers a comprehensive range of services to asset managers, capital markets, corporates, private clients and family offices. The Group has continually improved and evolved its capabilities to offer a single-source solution through establishing the broadest range of products in the industry, fund administration services, digital banking, custody and depositary, and super ManCo services, business services including HR and Payroll and a pioneering ESG Ratings and Advisory services for private companies. With 45 offices around the world, we stand ready to support any business need.

Contact us now to learn more about what Apex Group can offer you.