What You Need to Know When Hiring an Outsourced Fund Admin

For any business and any function, deciding whether to outsource can be a complicated equation of weighing the pros and cons. The positives and negatives of the decision generally rely on resources, costs, and overall company bandwidth. Some functions can be performed by existing personnel, but it may not be the best decision for the company based on the role’s responsibilities and the high-level business goals.

However, some functions may require specific education or skills that existing team members do not have, or it simply just isn’t their strength. Lastly, the function may be better served by outsourcing based on required specialties or simply freeing up internal resources to focus on more specific work or higher-level initiatives that do require an in-house presence and substantial business and industry knowledge.

To decide whether outsourcing a particular business function is the best choice, leadership will generally be best served to consider the answers to the following questions:

• Do we have the required resources and/or talent in-house?
• Can this business function be performed by hiring someone who can work in-house?
• What would it take (how many people, total investment, etc.) to bring the resources/talent in-house?
• Would this position be better served by outsourcing?
• How can outsourcing this position impact our business positives and negatives)?

After evaluating the answers to this list, the business can then decide if outsourcing will be the best and most appropriate and lucrative course of action. When it comes to fund administration, outsourcing is often a great decision for both the internal team and for enabling business growth. However, there are some role-specific things to consider before making the final decision to outsource.

Fund Admin Outsourcing

When considering adding a fund administration role or hiring someone internally to support a fund managers admin needs, outsourcing is a common and often very cost efficient solution. This is because a fund manager can now apply his or her industry expertise more effectively and efficiently with the support of an external fund admin who functions as an extension of the funds internal team.

In addition, doing everything in-house for fund administration can be a misuse of resources since those administrative functions may not fall under the job responsibilities of a fund manager. These tasks may overwhelm the manager and limit his focus on adding value to the fund’s performance. Therefore, an outsourced fund admin will allow the manager to focus on their core role and responsibilities. He or she can focus on creating fund structures, managing relationships with investors, and creating income and value for those relationships instead of records, bookkeeping, and investor data collection. 

Also, outsourcing the admin function can provide the ability for individuals to grow and the business to scale. With a fund manager focusing on investment growth and serving investors’ interests, the fund can continue to grow while   ensuring current investors are satisfied. The manager can also allocate any budget flexibility toward improving and investing in analytical systems and data warehouses instead of administrative platforms that an outsourced fund admin should provide as part of their offering.

What to Look for in a Fund Admin

If this piques your interest and you are considering hiring an outsourced fund admin, here are a few things you need to consider.

1. Which services are offered? When sourcing a person or accounting firm, it is essential to understand which services will be offered and included within the collaboration. The responsibilities and communication processes should be clearly outlined and offered in a contractual agreement also known as an engagement letter that is understood and agreed upon by both parties.
2. What are the technical competencies? Understanding the platforms and capabilities of the outsourced team requires asking the right questions about technology and systems. Ensure that the technological competencies and systems align with your existing infrastructure.
3. Who are past clients? It is never a bad idea to ask for references and get a third-party perspective. We know that past performance in fund administration can be an indicator of future performance. So, in this case, asking for the names and contact information for 2-3 people or companies that were past clients will help give you the inside track into how the individual or team performed in a similar capacity. This will also provide a chance to ask questions without hesitation and get answers without bias and offer validation that supports their experience.

Outsourced Support Should Be a Seamless Extension

An outsourced arrangement should feel like a seamless extension of your internal team. The solution should support the fund manager and add value to the function and the fund overall. The fund admin should have a vested interest in the success of your business by valuing the relationship and identifying ways to improve business operations. 

Overall, an outsourced partner should make you feel good about your decision and continue to make everyone’s job easier and more efficient. If an outsourced fund administrator doesn’t offer the services in a way that helps the business thrive, then don’t be shy to seek an alternative solution and find the right admin that fits the criteria.

For any business and any function, deciding whether to outsource can be a complicated equation of weighing the pros and cons. The positives and negatives of the decision generally rely on resources, costs, and overall company bandwidth. Some functions can be performed by existing personnel, but it may not be the best decision for the company based on the role’s responsibilities and the high-level business goals.

However, some functions may require specific education or skills that existing team members do not have, or it simply just isn’t their strength. Lastly, the function may be better served by outsourcing based on required specialties or simply freeing up internal resources to focus on more specific work or higher-level initiatives that do require an in-house presence and substantial business and industry knowledge.

To decide whether outsourcing a particular business function is the best choice, leadership will generally be best served to consider the answers to the following questions:

• Do we have the required resources and/or talent in-house?
• Can this business function be performed by hiring someone who can work in-house?
• What would it take (how many people, total investment, etc.) to bring the resources/talent in-house?
• Would this position be better served by outsourcing?
• How can outsourcing this position impact our business positives and negatives)?

After evaluating the answers to this list, the business can then decide if outsourcing will be the best and most appropriate and lucrative course of action. When it comes to fund administration, outsourcing is often a great decision for both the internal team and for enabling business growth. However, there are some role-specific things to consider before making the final decision to outsource.

Fund Admin Outsourcing

When considering adding a fund administration role or hiring someone internally to support a fund managers admin needs, outsourcing is a common and often very cost efficient solution. This is because a fund manager can now apply his or her industry expertise more effectively and efficiently with the support of an external fund admin who functions as an extension of the funds internal team.

In addition, doing everything in-house for fund administration can be a misuse of resources since those administrative functions may not fall under the job responsibilities of a fund manager. These tasks may overwhelm the manager and limit his focus on adding value to the fund’s performance. Therefore, an outsourced fund admin will allow the manager to focus on their core role and responsibilities. He or she can focus on creating fund structures, managing relationships with investors, and creating income and value for those relationships instead of records, bookkeeping, and investor data collection. 

Also, outsourcing the admin function can provide the ability for individuals to grow and the business to scale. With a fund manager focusing on investment growth and serving investors’ interests, the fund can continue to grow while   ensuring current investors are satisfied. The manager can also allocate any budget flexibility toward improving and investing in analytical systems and data warehouses instead of administrative platforms that an outsourced fund admin should provide as part of their offering.

What to Look for in a Fund Admin

If this piques your interest and you are considering hiring an outsourced fund admin, here are a few things you need to consider.

1. Which services are offered? When sourcing a person or accounting firm, it is essential to understand which services will be offered and included within the collaboration. The responsibilities and communication processes should be clearly outlined and offered in a contractual agreement also known as an engagement letter that is understood and agreed upon by both parties.
2. What are the technical competencies? Understanding the platforms and capabilities of the outsourced team requires asking the right questions about technology and systems. Ensure that the technological competencies and systems align with your existing infrastructure.
3. Who are past clients? It is never a bad idea to ask for references and get a third-party perspective. We know that past performance in fund administration can be an indicator of future performance. So, in this case, asking for the names and contact information for 2-3 people or companies that were past clients will help give you the inside track into how the individual or team performed in a similar capacity. This will also provide a chance to ask questions without hesitation and get answers without bias and offer validation that supports their experience.

Outsourced Support Should Be a Seamless Extension

An outsourced arrangement should feel like a seamless extension of your internal team. The solution should support the fund manager and add value to the function and the fund overall. The fund admin should have a vested interest in the success of your business by valuing the relationship and identifying ways to improve business operations. 

Overall, an outsourced partner should make you feel good about your decision and continue to make everyone’s job easier and more efficient. If an outsourced fund administrator doesn’t offer the services in a way that helps the business thrive, then don’t be shy to seek an alternative solution and find the right admin that fits the criteria.