The Advantages for an Investment Manager of Outsourcing Fund Accounting and Administration to a Third Party
- Posted by Admin
- On 6 September 2021
Outsourcing fund accounting and administration is a substantial and imperative decision for fund managers. Many factors contribute to the increase in third party outsourcing, most fund managers understand that doing everything in house may lead to misuse of the information. Fund managers are now moving towards third party administration of funds to lower the operating expenses.
A growing number of investment fund managers are outsourcing to third parties to support their funds. The role of the fund administrator varies and depends on the demand and industry. Investors are now looking for an independent net asset value, and as the complex set of regulatory rules increases, the requirements to run the back office operations of a fund technically is challenging, and in turn is resource intensive. The job outsourced to an experienced and qualified fund administrator helps the investment manager to meet the investor demands and focus on future investment strategies and building value to their business.
Investors do not prefer to keep all the fund administration under one roof, though few think it would lower the cost. Investors preferences include independent fund accounting and administrators, as outsourcing frees up the time a fund manager can focus on investments and returns of the fund.
Your software should also be in pace with your funds growth, if you are still managing the accounting in spreadsheets, then you need to think about outsourcing to providers who constantly monitor investment developments using the latest tools. Your funds will be administered with the latest technology and artificial intelligence solutions, built specifically for private fund accounting.
One of the biggest benefits of outsourcing is reduced risk. This applies to both people and processes. Investment managers must first deploy an outsourcing model which will help to reduce risk.
Resources and Cost
Due to increasing demands during the peak periods for some of the routine jobs, it is good to outsource the tasks, as staff demand rises and the need to continuously train people also increases. Third party fund administrators help to fulfil the resource needs in such times and are also cost effective.
Outsourcing has significant benefits, and you can concentrate on your investments. It is important to select the right third party who is skilled enough to handle your funds. Before you outsource your work, a proper workflow should be sorted out with regular status updates. Once outsourced to a fund administrator, investment managers can concentrate on their core capabilities of investments and investor relations, without being distracted by back office operations.
HNW specialises in fund accounting and administration services. Whether you are taking a smaller step, or looking for a complete outsourcing solution, HNW can help you with the bespoke solutions.