Who is your Gatekeeper?
The importance of choosing the right administrator has never been greater. The Securities and Exchange Commission (SEC) now regularly reaches into the industry regardless of whether a fund manager is required to be registered. The concept of a gatekeeper is poorly defined, but shows that even the SEC values the service provider choices made by a fund manager. Investors are increasingly demanding not only performance, but security. It’s not only about choosing the right fund manager, who produces the right results, but the right service providers, too. Carefully selected independent service providers are seen to provide investors safety in numbers.
Since Madoff, it is has now become industry best practice for a fund to engage an independent fund administrator. But with over 200 administrators in the US alone, how do you ensure that you choose the right firm? A common misconception is that all fund administrators are the same, and that they provide the same generic service. How can service provider A be any different to service provider B? Making the right choice can appear to be a minefield. Fortunately, the industry is still primarily a relationship and referral business. Everybody knows who is good and bad. You just need to ask, and know what the right questions to ask are.
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