Changing fund services provider need not be complicated

Stephen McKenna profile image
Stephen McKenna
Chief Commercial Officer
Published: 6th Dec 2023

Stephen McKenna, chief commercial officer at Altum Group, discusses what makes a good fund services provider, what makes them stand out, and how a move might be easier than you think.

Changing fund services provider need not be complicated – and can bring many benefits.

Why are asset managers choosing to migrate service providers?

Asset managers who migrate are often frustrated about basic errors, missed deadlines or the amount of time they have to spend reviewing and amending deliverables from their fund administrators. This stems in part from a high turnover of staff. Clients have said that they often have a new relationship manager every 12-18 months. When your team is changing that regularly, it’s difficult to build a relationship, sometimes resulting in the client having to train replacement staff at the administrator, which is not an asset manager’s job.

These problems have been accentuated by consolidation in the market. Many fund administration businesses have been acquired in recent years and are now part of much larger organisations. This can mean culture changes or integration is delayed, which in turn can lead to people feeling undervalued and deciding to move on.

We’ve worked hard at Altum to foster  a culture where people feel they can develop. As a result, we have market leading levels of staff retention. This resonates well with asset managers because we can almost guarantee that the team they talk to on day one are likely to still be their team in, five, six or seven years’ time.

Once an asset manager decides they will migrate service provider a key consideration is the ownership model of the fund administrator. Where businesses are listed or highly scaled, there can be concerns about the business overstretching itself, growing at an unsustainable rate or simply prioritizing margin above client satisfaction. We have quite a unique ownership structure at Altum.  The majority of the business is owned by management and 20 per cent of that is held by an employee benefit trust for the staff.  We did this because we want our people to feel like they are more than just employees. We have a very talented and highly skilled team of professionals who drive our business and deliver its success. Shared ownership has resulted in higher retention rates where our people take more pride in the work that they do.  It also means we are in charge of our future and our focus is on sustainable growth.

When clients migrate from another service provider, how would the new provider ensure that the reporting process continues smoothly?

Getting the transfer of reporting right is absolutely key for a successful migration. We like to take the lead on this process and map out all of the reporting requirements, schedule regular all parties’ calls, agree the migration cut off periods and work closely with the ongoing administrator, to make sure nothing is forgotten.

What are the data migration concerns?

If clients are using the same Fund Accounting platform, then a transfer is very straightforward. If not, we can migrate the data using an out-of-the-box data migration tool. This takes a bit more work at set-up, but means we do not use manual transfers, therefore there is no risk of transposition errors.

Data security is paramount during this process, and it’s a real focus point for asset managers. At Altum, we invested significantly in this area, and have won awards for our Microsoft First technology strategy.

Is it really all down to cost? "Generally speaking, we aim to minimise or waive take-on fees for clients that are migrating from another service provider. We appreciate they might be subject to an exit fee from the incumbent and since we are always looking to build a long-term relationship, we are prepared to invest into the relationship too. In addition, we use technology to automate as many aspects of the transfer process as we can."
Stephen McKenna profile image
Stephen McKenna
Chief Commercial Officer

Is Altum aiming to be a complete provider of all outsourced services for asset managers?

We announced our acquisition of a third-party management company in Luxembourg which is set to close in early 2024. The ability to provide Third Party AIFM and Fund Administration in Luxembourg is very exciting for Altum Group and something we know our clients wanted from us.  We had spoken to a number of potential clients who were interested in migrating both services and previously this wasn’t something we could do, soon we will.

Recently, there has been a pendulum swing away from one-stop shops in the market. Often the different product lines within these businesses are siloed, which means you do not find the efficiencies or the co-ordination you might expect. With some services, I think it is best for managers to engage specialist third party providers. When they are specialist, they are likely to provide a higher standard of service with great levels of expertise. In addition, a third party that we bring to a transaction will treat us like a client, or somebody who refers work. This actually makes them much more responsive. When people use a one stop shop, they expect the areas to be joined up with improved communication where actually the reality is the opposite. People tend to respond slower when they are assured, they will always be appointed by their group colleagues who have no option on who to use.

We are also very specific about which asset classes we support. We only administer alternative investments, these are private equity & VC, private debt, and real assets (including infrastructure) because we know we can add real value to these clients. We do not want to be the biggest fund administrator in the market, but we do want to be the best.