GPs across the industry share common challenges with outsourced fund administration services.

Whether it’s the quality of data received, the timeliness of delivery, or the low confidence in its accuracy, these issues drive GPs to seek ways to access and validate this crucial information.

GPs often lack direct access to fund administrators’ systems, preventing them from retrieving data.

These limitations hinder firms from achieving two critical objectives: optimizing the fund’s operational efficiency and effectively servicing investors.

How are firms currently managing this challenge?

The two primary ways firms cope with this data access issue are:

  • First, the fund finance department resorts to full shadow fund accounting in-house. Distrust in the data provided by fund administrators forces them to manually validate it and send corrections—a process that is time-consuming and inefficient. This inefficiency severely limits firms’ ability to scale operations and add new funds without significantly increasing their headcount.  
  • Second, other teams maintain their own siloed versions of the data. For example, the IR team maintains commitment and track record data in spreadsheets. This is an inefficient duplication of effort and should not be the responsibility of the IR team.  

This raises the critical question: What level of value are firms getting from outsourcing fund administration if it leads to duplication of work, shadow accounting, and oversight that ultimately incurs additional costs? 

There are three ways that firms try to tackle this issue.

Escape Plan: Three attempts to take back control of your data

Attempt 1: Implementing full, in-house Fund Accounting systems to digitalize Shadow Fund Accounting 

Some GPs implement full fund accounting systems like eFront, Investran, or AllVue to digitalize shadow fund accounting in-house so that at least the shadow accounting is supported by technology and not done on Excel.  

Problem: These systems are costly and can take many months (even years) to implement. If the firm is paying for outsourced fund administration, it is highly inefficient to implement and maintain a full in-house accounting solution as well. 

Attempt 2: Leveraging Fund Administrators’ Data Sharing Capabilities

Across the industry, fund administrators are increasingly investing in tools to provide GPs with more flexible and real-time access to the data they manage. This enhanced data access can improve efficiency and transparency.  

Problems: The result is an operating model heavily dependent on a specific administrator, making it difficult to switch providers if service quality declines or market conditions change. Additionally, while these tools offer access to fund admin data, they would not enable you to integrate it with other data, e.g., in your portfolio monitoring or CRM systems.   

Attempt 3: Leverage a Data Platform for Fund Admin Oversight

A more advanced and efficient solution is to leverage an internal data platform to digitalize your data exchange with the fund administrator. By setting up an ongoing data feed, you can connect to their systems as seamlessly as their technology allows. This approach enables GPs to automate the reconciliation process and establish a digitalized exception management workflow.

This approach meets the firm’s need to access validated data from the fund administrator, in an efficient and scalable way, without duplication of effort or unnecessary additional costs.  

One of the key benefits of this strategy is that the GP always holds a copy of their latest full fund admin dataset. 

This enhances operational flexibility and ensures that if a change in service provider becomes necessary, the transition can be managed more smoothly and with far less disruption. 

ATLAS Fund Admin Oversight: The Gold Standard for Fund Admin Oversight

ATLAS Fund Admin Oversight is leveraged by many leading PE firms, giving them both access to and confidence in the data managed by their fund administrators, eliminating the need for shadow bookkeeping. Here are five benefits of our solution:

  • Real-time access to your data held by fund administrators. Leverage our library of connectors with fund administrators and set up an ongoing feed of data from your fund administrator(s) into ATLAS at the frequency that you need it.  
  • Full audit history functionalities. The platform provides a complete audit history and retains a copy of all source data across points in time.  
  • Automated data reconciliation, far beyond a pure data warehouse. ATLAS reconciles the data, automatically mapping and matching it and flagging exceptions. The platform also has exception management workflows, four-eyes principle, and posting functionality. 

ATLAS eliminates the need for manual data transformation and consolidation in Excel, saving time and reducing the potential for errors. 

  • Enrich the data with further attributes. Remove the need for manual data transformation, and add further attributes from the CRM system, portfolio monitoring system and/or Excel to enrich the dataset. 
  • Unlock your data and give self-service access to all who need it. Remove the need for people to ask others for data or maintain their own siloes spreadsheets. Surface the validated data in reports, dashboards, or other systems, accessible to everyone who needs it.

 

An example of automated dashboards based on fund admin data used by investor relations and finance teams. Source: ATLAS Fund Admin Oversight.  

 

Leveraging a data platform enhances accuracy and transparency and enables scaling operations, allowing the addition of new funds without the need to expand the accounting team. 

Contact our team of experts for an initial demo. 

By Katie Brown

August 22nd, 2024

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