We hear from fund managers on an almost daily basis that they are considering a switch in their current fund administrator. There are many reasons why a manager would consider a switch including poor responsiveness and support, frequent turnover on service teams, outdated technology and reporting, difficulty scaling as their fund(s) grows and frequent operational errors. While many of those might be enough for some managers to make a change, you might be surprised at some of the reasons they balk at making what many would consider a necessary change.
Frequently a manager will assume that the transition will be disruptive to day-to-day operations and, what can be even more intimidating, disruptive to their investors. In reality, the bigger risk is staying with a provider that isn't properly supporting the work at hand. In our experience it is easier to demonstrate the value in a service provider switch to an investor beforehand rather than having to explain away errors on statements or in a valuation, causing investors to be the one pushing for the switch. Sometimes defense is the best offense.
There are some important questions a manager should ask themselves before making, or even considering a change. If the answers to these questions are at all concerning, now is the time to make the move:
- What prompted you to explore a change?
- What is working well and not working well with your current administrator?
- What would you improve if you could?
- How stable has your service team(s) been?
- Do inconsistencies in service occur?
- Are you evaluating based on service, technology, cost, or all three?
Another frequent impediment we are often faced with is managers that have more than one fund. While moving one fund may seem daunting, the thought of moving a portfolio of funds can be very intimidating. We have a simple answer for this; simply start with one fund. Pick the one with lowest level of risk (least amount of investors, lowest level of activity, lowest asset value, etc.) and make the switch as a proof of concept.
Most clients switch because they want better service, responsiveness, and partnership, not just another administrator. We suggest you work with an administrator that provides a dedicated account manager and service team, experienced implementation project managers, a structured conversion methodology and offers a parallel run and reconciliation process with the current administrator to validate data before the true go-live date.
Most importantly, work with a firm that handles most of the heavy lifting during the transition. Can a manager remove themselves entirely from the process? Obviously not, but our job is to make it as easy and seamless for you as possible.
