The complex concept of investment is understood easily only by an expert independent fund administrator. The external pressures and the complexity of significant intel operations have made it important to outsource fund administration services especially in the private equity, real estate and infrastructure sectors. This article will help you understand whether fund administration needs an Independent Fund Administrator, Alternative Investment Fund Administrator or is best when done on your own.
So, let’s take all the important points into consideration before reaching the final conclusion and see why managers are re-working on their operating models.
The surge of Regulations and Subsequent Reporting
The funds investment industry is surrounded by various complicated rules and regulations which keep on changing with time. These regulations are enacted by various firms together in agreement to certain Common Reporting Standards (“CRS”) to promote transparency. However, it is hard to keep up with regulations and reporting with all the formalities as it involves detailed reporting and documentation of matters in an understandable format applicable to everyone involved. Therefore, the whole investments of funds process are to be handled by professional delegates having expert knowledge in the matter.
For proper adherence to these rules and regulations, fund managers either need high-end resources and time to do it all by themselves or rely on external fund administrators responsible for keeping up with the ever-changing regulations.
Earning Trust of Investors & Getting maximum returns from investments
Expectations of a fund manager investor’s base are extremely crucial. To avoid the practice of any fraudulent activities in the investment industry, the demand rises for independent fund administrators to be appointed along with the Alternative Investment Fund Administrator for consistent, well-documented, independent valuations of funds.
This will primarily ensure faultless paperwork and remarkable growth in the fundraising activities as the managers will partner only with the experienced players and reliable fund administrators in the market.
Hiring external delegates only for fund administration ensures their undivided attention in the investments made which is quintessential for good returns of investments. They don’t get distracted by other not so important back-office work and focus only on maximizing the returns. On the other hand, the efforts and focus are compromised when managers manage to handle the funds investments and the operations in their office on their own. Simultaneous working in various fields distracts them from doing the things with perfection causing them losses in funds.
Streamlining Operational Costs & Increasing ROI
When companies choose administration of funds on their own, they employ fund managers and overload them with back-office operations comprising regular maintenance of technological platforms, marketing strategies and a considerable investment of time and money in human capital. Though these responsibilities are important they are also non-revenue generating.
On the other hand, hiring specialized independent fund administrators will cost much less as the administrator is able to leverage the operations on his own, servicing all the fund investments and growing his profile.
Now is the time to make the call
While this article helps you in making the final decision about outsourcing independent fund administrators in addition to Alternate Investment Fund Administrator. It also highlights how critical it is to continuously manage fund investments preventing and fraudulent activity or errors in the detailed reports. Therefore, managers must make the decision to put every aspect on the focal point as the statement “ one size fits all” fails in this situation.