A Deeper Look Into Your Fund Admin

Fund Admins are a vital, yet rarely discussed, part of your fund

Today 30% of all PE funds are outsourcing their fund administration, with an expected 50% of them to follow within the next 5 years.

You all are aware that within a fund there’s basically 3 main roles: an expert investor, a fund manager, and a money raiser.

But you’ve also heard of the term ‘fund administrators‘…Where do they come into all of this? What are their responsibilities?? And as a fund manager, why do you need one?

WHAT is a Fund Admin??

Think of a fund administrator as a 3rd party that plays a main role in assisting the fund manager in fulfilling responsibilities and staying legally safe.

Fund admins assist the fund manager through making sure the fund is staying compliant with current regulations through:

  • Managing Investor Relationships & Leads
  • Investor Portal/Investor Reporting
  • Fund Accounting 
    • NAV Calculations
    • Financial Preparation
  • LP Portfolio Management
  • Capital Calls & Capital Distributions
  • Tax Considerations

Fund administrators become a major part of your fund. They join your team and essentially become part of you and your fund’s BRAND.

Although an in-house fund administrator is an option, it is a tough route to take because completing the above listed responsibilities would require hiring a couple analysts and associates.

However, do your research! Depending on the fund, it might be a better deal for you to take the in-house option,

WHY is it essential??

Time. As the fund manager, you want to constantly be doing things that make you and your investors money.

The smaller, essential yet time-consuming, tasks are not the best use of your time and focus.

Cost. When you can hone-in on finding good deals and raising capital, you overall increase the profitability of your fund. Sometimes these things are just cheaper to outsource.

Credibility. This is a reputable thing, builds rapport. When investors see that you have a fund admin, and who it is, they automatically trust you more. They assume,

“Oh, okay. These guys know what they’re doing.”

Important note: Some investors require you to have a fund administrator before they will invest in your fund. This is something you should put a large amount of consideration in.

Take your time choosing your Fund Administrator!

HOW do I choose one?

Like I said, your fund admin plays a large role in your fund so it’s important to choose one that fits you.

Take into consideration how they will fit your needs now, and if they will work well with you for the next 5-10 YEARS.

How much capital are you planning on raising? Make sure you have a fund administrator that can handle the amount of capital you eventually will have in your fund.

Remember that it’s both timely and costly to switch fund admins, so make the decision carefully and intentionally.

Not only that, but also recall that this is somebody that will hold a considerable amount of information.

Fund admins have personal information of Limited Partners and direct insight into their accounts and your fund. The last thing you want is a privacy leak.

Before choosing an admin, be sure to:

  • Confirm that they have been audited by the SOC (Systems and Organizational Control) – This affirms that they have sufficient security systems in place to keep your LP’s info & accounts safe.

That being said, don’t spend too much on your fund admin! NEVER choose completely based on costs.

Costs will vary depending on the size of your fund and the way your chosen fund administrator collects fees (monthly, AUM-based, ect…)

If you need more information or want my personal recommendations on fund admin be sure to check out our Mastermind Program.

Thanks for the read!

Bridger Pennington

DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.

Leave a Reply