Author: Chris Andraca
A recent study titled “Preqin Special Report:
Private Capital Service Providers” shows that if a Private Fund Manager feels that the quality of the service is poor, or if the cost is too high, they will fire their Fund Administrator and look for a new one.
Our team at BaseVenture is dedicated to helping Fund Administrators better service their Private Fund Manager clients, ultimately resulting in happier investors. We help Fund Administrators to simplify and streamline how they administer a fund. We save them time by eliminating much of the manual operational burden that they face today. This helps ensure that they avoid the churn highlighted in this study.
This report is full of some great insights, but here are a few that help show why Fund Administrators should be concerned:
1. 28% of Fund Managers have switched their Fund Administrator in the past 12 months:
2. Cost and quality of service are the two primary reasons for switching Fund Administrators. But regulation is a factor too, with 21% changing their Fund Administrators due to regulation needs
3. We were surprised to see the frequency with which Fund Managers are formally evaluating their Fund Administrators, with 9% reviewing every 6 months, 34% reviewing annually, and 24% reviewing each time they bring on a new fund:
4. Also surprising is that Fund Managers don’t think that their investors are concerned about price increases. Many costs are passed to investors either thru management fees or specific expense pass-through charges. As you’ll see below, a larger percentage of Fund Managers thought that investors would not be concerned by increased costs than the percentage that thought that investors would be concerned.
5. The good news for Fund Administrators is that Fund Managers are increasingly looking to outsource some key functions. Here are two graphics that show current as well as future outsourcing plans:
You can learn more about BaseVenture at www.baseventure.com
If you’re interested in reading the “Preqin Special Report: Private Capital Service Providers” (July 2016) report, you can find it here.