For fund management firms venturing into the international arena, choosing the right fund administrator is a significant decision. This is because the role of a fund administrator encompasses the core operations of a fund, including accurately recording, calculating, and reporting the fund's assets, transactions, and holdings, measuring the fund's performance, calculating the Net Asset Value (NAV), managing investor subscriptions, conducting anti-money laundering checks, and computing the value of investor fund shares, as well as managing share registry and more.

So, should emerging fund management companies opt for a large-scale fund administrator from the get-go?

While there's no denying that large service providers have a wider range of services and resources at their disposal, these advantages may not always be conducive to the development of emerging fund management firms. Here are a few reasons:

Hidden Costs:

Large service providers often have complex processes, multiple layers of bureaucracy, and non-transparent fee structures, making it challenging for fund managers to understand the true cost of their services. Negotiating fees may also be limited.

Lack of Flexibility:

Large service providers tend to rely on standardized processes and systems that may not easily adapt to meet the unique needs of their clients. This lack of flexibility can restrict a fund manager's ability to customize services to meet their specific requirements.

Lack of Personalized Attention:

Large service providers typically have a vast client base, which can result in limited individualized attention for emerging fund managers. This can lead to a longer turn-around time, which can be particularly frustrating for emerging asset managers.

Reluctant to Embrace Emerging Technology:

Some large service providers tend to be conservative when it comes to adopting new technologies and processes, such as automation or integrating with external systems and data. This reluctance stems from the limitations imposed by their existing processes and requirements, which can prevent fund managers from enhancing their efficiency using the latest tools and technologies.

Specialization:

Boutique administrators typically focus exclusively on fund administration services without diversifying into ancillary services such as company registration, tax consultancy, or auditing. This specialization allows them to offer in-depth knowledge and expertise in their core area, providing clients with more personalized and tailor-made services.

Flexibility:

Boutique administrators are often more agile in adapting to changes in market demands. This flexibility enables them to be more responsive to clients' specific needs, which is crucial in fast-paced markets.

Cost-Efficiency:

Boutique administrators tend to offer pricing structures that align with clients' individual circumstances, whereas large service providers may lean toward standardized pricing. This pricing model can help emerging fund managers control costs effectively.

Emphasis on Partnership: 

At Precision, we place a strong emphasis on building a partnership with our clients. We believe in actively assisting clients in problem-solving, facilitating efficient communication, and delivering effective solutions promptly. We consider this a vital service element for emerging fund managers.

Innovation:

Boutique service providers are more inclined to improve their processes through technology and optimization to provide clients with more efficient and effective services. Their streamlined organizational structure enables them to implement changes more rapidly.

Independence:

As independent third-party service providers, boutique administrators are less likely to have "internal business conflicts or overlaps," as they solely concentrate on fund administration services. This allows them to provide impartial operational insights and share their observations and experiences in the market, which can be invaluable to fund managers as they navigate their offshore fund structures.

Ultimately, the choice of a service provider as your fund administrator will depend on your specific business needs and objectives, investor requirements, fund structure characteristics, and other factors. In any case, we are eager to offer impartial advice, co-assess the advantages and disadvantages of different providers, and help you make a well-informed decision that aligns with the best interests of your fund and investors.