People, not technology, are leading the new fund administration revolution
It’s no secret that general partners (GPs) at funds are looking for fund administrators with the best technology to reduce costs while processing and harnessing the data they produce daily. While many in “new fund administration” have embraced automation, machine learning and other innovations. I feel duty bound to tell GPs that, though they might come to new fund administrators looking for tech solutions, they ultimately stay because of people.
GPs sometimes put too much emphasis on technology. Technology’s just the first step to understanding the broader new fund administration model.
The key is that tech used right, unlocks talents in people, freeing them up to focus on the creative, empathetic and nuanced aspects of the client engagement that offers GPs value-add solutions to complex and dynamic problems. That’s an important insight, because GPs, like everyone else, often assimilate new technologies into their workflows. But those same asset managers will continue to value people who understand and address their needs.
Fund managers value the transparency and services that the technology supporting new fund administration affords. But they still pick up the phone and call us when they want to really talk about solutions. Relationships matter like they always have.
The question is, how can new fund administrators improve their client services? Since we already know that our technology empowers, rather than replaces, people, and we know that clients expect to reach out to people, we might improve services by granting clients more and closer access to the people administering their funds.
Access is not as open as it should be in most fund administrators, where fund accountants, investor facing relationship managers and others traditionally operate in silos. One unit of the firm performs one job in isolation from the others. Technology has rendered that model obsolete today. Individuals within fund administrators must have specific expertise, to be sure. But there is no reason that fund administrators can’t work with clients with the same flexibility, speed and responsiveness more usually associated with, say, private equity firms.
In the same way that private equity chief financial officers (CFOs) turn to their internal teams for big-picture-thinking, there’s room for them to similarly consider new fund administrators. Technology helps to quickly identify the cause of a client’s concern or question and, because the tech does that behind-the-scenes work, fund administrators are empowered to deliver more boutique-like services to clients than would have been possible in the past. And those services are made most impactful by ensuring a CFO has access to, and relationships with, every member of the fund administrator’s team.
I know that’s easier said than done. GPs at funds often complain about turnover, that the individuals servicing their essential day-to-day needs come and go. In fact, turnover is a big reason why many fund administrators do not connect mid to lower-level client services members directly with their clients. Taking people out of their siloes helps reduce turnover, creates more cohesive teams and more opportunities for professional development, and empowers individuals to take on more, not less, responsibility where it suits them most. Make no mistake: asset managers want to benefit from collaboration. But turnover and the siloed service model that dominates legacy fund administrators makes them feel like a product on an assembly line. More facetime is better.
This new framework means seamless fund administration for asset managers who need and deserve services from someone who doesn’t feel like a third-party. GPs want administrators who can act as a true part of the internal team. The trust required to do that doesn’t come from fund administrators’ technology – it comes from relationships with the people. Private equity funds behave this way. The fund administrators who serve them can do the same.