FIS Blog

Three Reasons Why Some Fund Admin Partnerships Fail


Tony Chung | Thursday, June 30, 2016

Let’s face it, data, reporting, and accounting aren’t considered the sexiest of focus areas. If you’re a general partner in the private equity sector, these words may even make you cringe. It’s easy to think of the reporting and accounting side of the asset management world as another box to check, a pressure on your resources that takes focus from your core business.

So you’ve decided a fund administration partner is the answer.

But not all GP/fund admin relationships are created equal. Whether you’re starting to explore the idea of outsourcing your reporting and accounting work or you’re well down the path with a fund administrator already, there are some key points to remember to ensure you build a strong, successful relationship.

1. Clear expectations

From working with hundreds of private equity firms and fund administrators of varying sizes and specialties, we’ve found that the foundation for a true partnership starts with setting and managing expectations. When private equity/fund admin relationships are on the rocks, it’s often coupled with a lack of clarity around expectations on either side of the partnership.

General partners need to remember that they shouldn’t simply take their accounting and reporting tasks and “throw them over the fence” to fund administrators – they need to be specific about their needs and expectations from the start.

Fund administrators know that every firm’s business is unique, and when you equip them with the background they need to truly understand your needs, you’ll form a true partnership where everyone is on the same page, which helps you avoid needless frustration and inefficiency.

2. Continual communication

Once the expectations and deliverables are clear, the real work can begin (or resume). As with any great relationship, continual communication is a key to success.

When priorities shift or needs change, your fund administrator needs to know. If something isn’t clear about the nuances in your business, your fund administrator needs to ask.

Setting expectations isn’t enough; for a true partnership to work, and to enable you to meet your expectations, you’ll need to foster an environment of two-way communication between you and your fund administrator.

3. Flexible technology

You’ve set your expectations and agreed on deliverables and servicing timing. You’ve set the tone for ongoing, two-way communication between your firm and your fund administrator. Now, do you have the right technology in place to ensure the results of your relationship are what you desire?

Technology can often be the difference between a partnership where information is accessible and data is transparent or one where GPs – or even your limited partners – are frustrated at a lack of visibility into their outsourced back office.

When you’re building your relationship with a fund administrator, ensure there is a flexible technology solution powering your back office – one that can adapt to the nuances of your business and one that can serve as a central hub where both sides can come together with a shared understanding of the data and reports.

If you already have a relationship with a fund administrator, are you getting what you need? If you’re considering outsourcing part or all of your back office to a fund administrator, are you confident that you’re positioned to build a true partnership?

For more on this topic, view our infographic: Is Your Back Office Looking Forward?

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