Your Fund Admin Can Make or Break Your Investor Relationships. Here's Why

AML/KYC

In the US, collecting AML/KYC is an optional extra service that Fund Admins offer Fund Managers. In Europe, service providers are obligated to collect the AML/KYC and must own and maintain the files. This creates a tense situation, where a Fund Admin is required to collect documentation and information directly from a Fund Manager's investors — their clients! The Fund Manager, who has spent a significant amount of time building the relationship with the investors and sold them their product, now finds that relationship depends on a third party — it's a big deal.

How this situation is handled is important. The best Fund Admins strike a balance between being informative about the obligations and considerate of the time pressures and inconvenience of the ask. Clear and concise communication is key, as it can be catastrophic to leave an ask out of an email and have to come back to an investor again. An unclear ask can result in having to go back again for the same information! I have seen this go wrong so many times — Fund Admins getting the email tone wrong, not understanding a cultural barrier with a foreign investor, or simply not being on the same page as their own AML/KYC team.

Good practice is for the Fund Manager and Fund Admin to map out the AML requirements early. While some Fund Admins have long questionnaires designed to cover every scenario and jurisdiction, avoid drowning the investor in data and asks — keep it simple.

Picking the Right Investor Platform

This is the first impression, and it directly feeds into the workflows of investors. This is the data room through which documents and communications to investors are distributed. A robust and clean contact list needs to be maintained, which often requires an independent security administrator to ensure data protection and prevent erroneous changes being made to investor data.

Some platforms are better than others, but in essence there are a lot of highly functional Investor Relations platforms available. Some Fund Admins offer an IR platform as part of their investor services package, but most Fund Managers prefer to own their own platform. What is unavoidable is that your Fund Admin will inevitably be involved in communications to your investors — either by distributing the documents themselves, or by preparing the documents which ultimately get distributed.

As good practice, get the roles mapped out early. Who is responsible for maintaining the investor data? What checks and balances are in place to ensure it's accurate? Establish a quality assurance regime. Also, go for functionality and familiarity — there are so many platforms available, but remember this is a long-term investment, and you don't want to be bouncing around investor platforms, as that will impact the investor experience.

Document Accuracy and Timing

Making an obvious error on a call notice, or simply not sending the call or distribution notice at all, is another disastrous scenario I have unfortunately seen. Or perhaps it's the quarterly reports being held up because of late changes. These can be disastrous for investor relationships.

Good practice is to establish policies, procedures, and execution timetables ahead of time. Make sure everyone is on the same page before the process begins, and that there are multiple parties in the process who can check that documents have been sent correctly and on time.

Operational Due Diligence

Finally, your Fund Admin can have a direct impact on your appeal to future investors. Institutional investors will conduct operational due diligence, and a large-scale Fund Admin with robust control frameworks makes the fund more appealing. Picking an operationally mature Fund Admin with a widely recognized tech stack can help with investor appeal.

As a good practice tip, Fund Managers should front-load the operational due diligence process before institutional investors pick up on things. By doing this, you'll pick the right Fund Admin to improve your investor relationships.

In Conclusion

Your Fund Admin is critical to your Investor Relations and client relationship management. For Fund Admins, it is a key area of expertise and can be a key service differentiator if done right.

For more information on Investor Services and the Fund Admin's role in Investor Relations, reach out to me at Ben@boldbridge.net.