Many investment firms have realized the benefits of outsourcing fund administration. This strategy has reduced their spending, increased savings, improved profits, and has made their teams more productive and efficient. Outsourcing is a tried and tested strategy that several companies implement. However, before you delegate fund administration to an outsourced service provider, you should look into different factors. Not all service providers can meet your standards and requirements. You might regret outsourcing if your partner delivers substandard output.

 

If you want to leverage the benefits of outsourcing fund administration, these are some of the things you should consider.

 

Effective Onboarding and Implementation

Experienced outsourced service providers have a rigorous and effective onboarding process they implement. They put old and new clients through this process. This sets the expectations for everyone involved. Your chosen company establishes timelines and their approach to managing funds. They use a platform to store historical data to effectively manage your fund and measure the effectiveness of their approach.

 

Tested and Proven

To maximise the benefits of outsourcing fund administration, you’ll need to hire an experienced company. Review the credentials of potential partners. Determine if they have the necessary certifications and experience you’re looking for. Assess their track record so that you can be sure they can deliver what you need. If you can, reach out to their clients and get their feedback. This allows you to get enough information about a service provider. Ask them about their industry experience. Do they follow the requirements? Do they implement the best practices? What tools do they use? The answers to these questions enable you to make an informed decision.

 

Standards and Clarity

Effective fund administration relies on factors such as measurable performance, clear standards and expectations, and regular communication. These establish accountability on the part of the service provider. You and their team should always communicate through emails, online messaging, and in-person meetings. Your service provider should send regular updates and reports about the funds they manage. This creates trust among partners which makes it easier to collaborate and share ideas. Open communication enables you to identify possible improvements and mistakes. It also allows your service provider to address problems immediately. Provide your clients with a tool that allows them to access reports and data. Doing so improves collaboration and makes real-time updates possible.

 

Clear Delegation of Roles and Tasks

When hiring an outsourced service provider, identify a point person you can always contact. You should trust this person to delegate tasks and define everyone’s role in their team. They need to have experience in managing a team and the resources you entrust to them. That person should be easy to contact whenever you need them. Establish communication platforms you want to use and determine a schedule. Identify the level of involvement of all parties to make prioritizing easier. It also enables clients to concentrate on compliance, analysis, decision making, and risk management to name a few of their responsibilities.

 

Manage Costs Effectively

An outsourced fund administrator allows you to reduce costs. To maximise the benefits of outsourcing fund administration, you’ll need to hire a cost-effective service provider. Before hiring, create a list of potential business partners and the price of their services. You’d want to find one that balances the value you get and their price. Base your decision on a service provider’s experience in managing funds and the tools they use. Get referrals from colleagues. List down each provider’s pros and cons and their price for the services you want. This meticulous approach allows you to find the fund administrator that provides the best value.

 

Compliance and Risk Management

Outsourcing to a service provider still requires you to comply with rules and regulations. You’ll also deal with operational risks regardless of the company you outsource to. Before outsourcing, review the compliance process and internal controls of the companies on your shortlist. This protects your company from compliance issues you might encounter because of a lack of oversight. Define roles and expectations once you choose an outsourced fund administrator. Discuss monitoring and audit activities your provider needs to undergo before you sign any agreement. You’ll need to conduct both to ensure your outsourcing partner follows regulatory requirements and standards. These also allow you to manage risks.

 

Secure Data and Privacy

You need to keep your financial data secure when you outsource fund administration. Assess the security protocols of outsourced service providers on your list. Determine if these are sufficient to meet your security and privacy standards. Learn more about the technology, tools, data transmission, communication platforms, and encryption they use before deciding to hire a company. Determine if they meet and follow data protection regulations. The security protocols a service provider implements eliminates or reduces risks, prevents data breaches, and stops unauthorised access of financial information whenever you transact and communicate with them.

 

Flexible and Scalable

An investment firm might still grow or seize an opportunity to launch a new fund. To maximise the benefits of outsourcing fund administration, look for a service provider that can accommodate potential growth opportunities. They can adapt to an increase in workload and meet your new needs. Identify a company that can customise their services based on reporting format, reach, and structure of the fund. Consider testing the services of an outsourced company first. This allows you to determine if they can meet your standards or can customise a package for you.

 

The benefits of outsourcing fund administration outweigh its disadvantages. However, you need to identify and hire the right outsourcing partner to achieve your objectives. Doing so allows you to reduce your expenses and mitigate risks while complying with regulatory requirements. It also allows your management team to focus on more important tasks.

 

If you’re looking for a reliable and trustworthy outsourced service provider, we at Robookkeeper can assist you. We offer first-rate small business accounting services. Our experienced team of accountants can tackle a variety of tasks you might need. They can update your accounting books and make sure you get the right information whenever you need to make financial decisions.