27 November 2024 Oak’s essential guide to choosing the right Fund Administration provider

Fundamentals 

Just like a stock assessment, a fund manager should look at the foundations of a fund administrator before making a choice. Specifics to consider here are; technology platforms, control environment, reputation, people, ESG maturity, and of course core services. 

A fund manager should look for an administrator that not only has a strong and stable track record of delivering high-quality services, but also one that is positioned for continued strong performance when looking forward.   

Forward looking factors might include; how modern the technology infrastructure is (a full cloud infrastructure, or a server kept in a basement?), how evolved are the ESG foundations in the business and how does this translate into ongoing people development and low staff turnover rates, is the administrator able to flex the service model to support the manager's needs (or is the model inflexible). 

Conduct thorough due diligence 

In the world of investing, due diligence is an essential task. Similarly, when choosing a fund administrator, a thorough background check is essential. Investigate the administrator’s history, reputation, and track record.  

The fund manager should look into how long the administrator has been in business and their experience with funds similar to yours. A proven track record of successful administration for similar clients can provide confidence in their capabilities. Previous client feedback will also be a good indicator of the administrators’ track record and ensure services were  high quality.  

In addition to verifying the fund administrator’s track record, the manager may also wish to consider if the administrator is actively engaged with the regulator and industry bodies (and therefore tracking the development of regulation and best practice). Therefore, being able to add value to a manager by helping shape governance processes, and stay at the forefront of demonstrating ongoing compliance and high standards of corporate governance. 

Evaluate stability 

Just as you wouldn’t invest in an unstable company, you shouldn’t partner with a fund administrator whose operational health is in question. Evaluating stability may be more nuanced than reading through earnings reports – however understanding the shareholder structure and also the stage of the business lifecycle is insightful.   

In an industry which has seen a large amount of businesses bought and sold, understanding the business plan of the administrator can avoid unexpected changes to the administrative service model and service quality received. An overarching evaluation should ensure alignment of the administrator’s objectives with the managers own objectives. 

Assess technology and infrastructure 

Technology is a crucial component of efficient fund administration. When evaluating potential administrators, consider technology platforms being used and how they manage data to ensure robust cyber security measures are in place to protect sensitive information from breaches and cyber threats.  

Integration capabilities should also be investigated, to guarantee seamless integration with your existing technology, ensuring smooth operations and data flow. 

Fund administrators, like Oak, use innovative and dependable software and systems for accounting, reporting, and compliance. Oak use modern, cloud-based, reliable, and capable software and systems to meet client needs and has the technological capabilities to integrate technology to facilitate faster operations and better access to data.  

Review service offerings and expertise 

The breadth and depth of services offered by the fund administrator is critical. Ensure the administrator provides a full suite of services you require, including accounting, reporting, governance, compliance, reporting services, and investor relations, as well as being flexible and able to customise based on individual requirements.  This is often a case of asking what is not directly supported by the administrator and can include legal and tax services which are specialist solutions. 

Oak Group provides a comprehensive approach to all fund managers in our service offering. We are able to provide the full range of fund administration services as well as leaning on our private client teams for additional support if structures are needed outside of the fund administration realm (such as private trusts and foundations). We have the experience and expertise managing a wide range of fund structures, so are able to cater to clients’ needs.  

Due to our unique ownership structure, Oak can be flexible and are able to customise and tailor services to suit your unique needs.  

Consider geographic presence and regulatory knowledge 

For funds operating in multiple jurisdictions, the administrator’s geographic presence and regulatory expertise are crucial.  

If your fund operates internationally, ensure the administrator has a presence in the regions where you do business. This can facilitate better local support and compliance. In addition, fund managers should ensure that the administrator has deep knowledge of local regulations and can provide relevant compliance support. This can help you navigate complex regulatory environments effectively. 

Oak Group are headquartered in Guernsey, with offices in Isle of Man, Jersey and Mauritius. We have experience across the globe with fund structures catering for various requirements. We are well-versed with regulatory needs, having a history dating back to 1999. 

Test customer service and support 

The quality of customer service and support can significantly impact your experience with a fund administrator. To assess this, it is important to gauge their responsiveness and professionalism during initial interactions, and prompt and courteous communication is a good indicator of their service quality. Additionally, it is important to understand the structure of their support team and ensure that you will have access to dedicated support staff who are knowledgeable and responsive. Reviewing their Service Level Agreements (SLAs) to ensure they meet your expectations for response times and issue resolution can also provide assurance of reliable service. 

Conclusion 

Choosing a fund administrator with the same thoroughness as selecting a stock involves comprehensive due diligence, financial evaluation, technological assessment, service review, cost analysis, and customer service testing.  

By applying these principles, you can find a fund administrator that not only meets your operational needs but also supports your fund’s long-term success. Remember, the right fund administrator can be a valuable partner in navigating the complexities of fund management and achieving your investment objectives. Like a well-chosen stock, a reliable fund administrator can enhance your fund’s performance and reputation, ultimately contributing to its success. 

How Oak Group can help 

Oak Group use a specialist-led approach to deliver high quality fund administration services to our clients, allowing them to focus on important investment decisions. We pride ourselves on developing close relationships to ensure our services are responsive and professional for the long-term, allowing us to grow our business in parallel with the growth of our clients. 

We support our clients’ fund management processes throughout the lifecycle of an investment product, adding value through early engagement in the assessment and formation stage, through to a full fund wind up process to ensure a thorough closure of all matters.   

We've strategically positioned our offices in key jurisdictions to provide our clients with the best mix of jurisdictional solutions for their financial needs and goals. And with more than £19bn of assets under administration, we have the experience to handle even the most complex structures.