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Alternatives: 10 questions managers should ask their administrator

In response to growing demand for alternative assets, many fund managers are looking to either add these strategies to their product suite or branch into new sectors. But fund managers must balance boosting investor reach and product range with specialist regulatory and administrative demands.

If you are contemplating a move into alternatives, finding an effective service provider is crucial. The right partner can offer the solutions, scale and market expertise you need to achieve success. Here are 10 questions every manager should ask when evaluating service providers:

1. DO YOU OFFER SERVICES TO ALTERNATIVE ASSET MANAGERS AND ASSET OWNERS? 

Appointing a service provider that services both asset managers and their investors can give you a 360° view of industry challenges and opportunities. Consider not only the service provider’s experience, but also the way it is organised: Is it structured so that the team that supports fund managers can benefit from the expertise and insight of the team that works directly with investors?

2. WHICH ALTERNATIVE ASSET CLASSES DO YOU SUPPORT? 

While there are growing opportunities for fund managers to launch products across different asset classes, not all service providers are proficient in every asset class. If you are primarily focused on a single asset class such as private equity, it can be tempting to hire a boutique administrator. But choosing a service provider that supports the full spectrum of alternative asset classes may help you tap into developing trends and avoid the burden of changing service providers or hiring multiple firms.

3. HOW DO YOU SUPPORT FUND LAUNCHES/TRANSITIONS? 

When launching a fund, understanding how the launch will be supported is critical to getting to market quickly and meeting regulatory approvals along the way. If you’re transitioning a fund, it is essential to ensure the transition will not interfere with your daily trading activity. In both cases, ask potential service providers how their approach promotes appropriate governance, clear ownership, accountability and oversight.

4. CAN YOU HELP ME MANAGE MY DATA AND REPORTING OBLIGATIONS?

Today, managers are asked to capture and validate exponentially more data and deliver it to a broadening array of stakeholders: trading desks, governing boards, regulators, investors, counterparties and others. Carefully evaluate potential service providers’ ability to capture, aggregate, validate and report crucial data. Whilst technology plays an important role in bringing greater automation and transparency, consider also the team that will support you.

5. ARE YOU A “ONE STOP SHOP” OR A SPECIALIST SERVICE PROVIDER?

Thoughtfully lay out the full scope of services you may require. In addition to traditional administrative functions, contemplate potential middle office opportunities. Avoid pressure to sign up for services you don’t need. Focus on the “how” as well as the “what” of each service provider’s offerings. A larger tier-one service provider should be in a position to offer you the resources you need both today and as your business grows in the future.

6. WHAT IS YOUR GEOGRAPHIC REACH? 

Regional or domicile-specific specialists may be challenged if you decide to expand into new markets or establish cross-jurisdictional structures. Global providers, on the other hand, offer the flexibility to service funds in more than one jurisdiction. Understanding the geographic implications of current and future plans are an important part of identifying a service provider for the long term.

7. HOW CAN YOU HELP ME MEET INCREASED TAX TRANSPARENCY REQUIREMENTS? 

Ensure a service provider will support you to meet your obligations to tax authorities and is anticipating future changes such as the OECD’s Base Erosion and Profit Shifting tax (BEPS). Regulations such as the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) require a disciplined and well-informed approach. 

8. WHAT IS YOUR APPROACH TO RELATIONSHIP MANAGEMENT? 

The complexities of alternative asset funds make it imperative that you know and trust the people you’re working with. Evaluate a provider’s service model: Will you have access to the expertise you need? Is there a service level description with performance measures? What are response times? What are the escalation procedures? Is the team experienced in your strategy? An effective relationship means speaking to people who not only understand your day-to-day requirements but actively engage with you to support your long-term strategy.

9. WHAT IS YOUR APPROACH TO COMMUNICATING AND SUPPORTING REGULATORY CHANGES? 

Regulation is evolving faster than ever – across regions and sectors. It’s easier to keep ahead if a provider has a dedicated approach that gives both a global and local perspective. Their commitment should be backed by expertise and solutions to give you the services you need, when you need them.

10. HOW CAN YOU HELP ME KEEP UP WITH INDUSTRY TRENDS?

Finally, keeping an eye on industry trends will help you manage your programme more effectively. Consider industry memberships. Does the service provider sit on any industry task forces? How will information be shared with you? Regular seminars can provide you with new information and contacts.

To learn more about Northern Trust’s services for alternative fund managers, contact Douglas Gee at [email protected].  

 

DISCLAIMER TEXT:
© 2017 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit www.northerntrust.com/disclosures. The following information is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch; Northern Trust Global Services Limited; Northern Trust Global Investments Limited; Northern Trust Securities LLP. The following information is provided to comply with Article 9(a) of The Central Bank of the UAE’s Board of Directors Resolution No 57/3/1996 Regarding the Regulation for Representative Offices: Northern Trust Global Services Limited, Abu Dhabi Representative Office. The Northern Trust Company of Saudi Arabia – a Saudi closed joint stock company – Capital SAR 52 million. Licensed by the Capital Market Authority –License No. 12163-26 – C.R: 1010366439. Northern Trust Global Services Limited Luxembourg Branch, 6 rue Lou Hemmer, L-1748 Senningerberg, Grand-Duché de Luxembourg, Succursale d’une société de droit étranger RCS B129936. Northern Trust Luxembourg Management Company S.A., 6 rue Lou Hemmer, L-1748 Senningerberg, Grand-Duché de Luxembourg, Société anonyme RCS B99167. Northern Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust International Fund Administration Services (Guernsey) Limited (15532) Registered Office: Trafalgar Court Les Banques, St Peter Port, Guernsey GY1 3DA.

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