Why should Fund Managers Review Business Operating Models?

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With markets disrupted by Covid-19 and high volatility creating new opportunities and some unexpected losses, it is the right time to consider changing your fund management business model, with Co-Sourcing offering scalability without loss of control.

Fund managers, in this day and age, face a range of hurdles from increased management due diligence, regulatory burdens and falling fees, to increased requirements for institutional processes and systems. Then there is the small matter of getting their fund performance back in line after a rough few months after Covid-19.

 

Fear of losing control impacts outsourcing decisions

 

All of these issues cost money and time to get under control. For a small to medium sized manager that does not have the management fee revenue to hire more experienced personnel, this can be a hard burden to bear. At the same time, managers are reluctant to outsource some of their core activities as they want the ability to draw on their team at any time, whether that is to run a new report for them or do some bespoke reporting for a client. There is a natural fear of outsourcing.

 

However, there are alternatives to the outsource model; chief amongst these is the Co-Sourcing model.

 

How Co-Sourcing works to your benefit

 

In this model the client remains in full control over the services and activities that they wish to no longer do in house, while freeing up key internal resources to concentrate on value added activities. This is a full partnership model between the client and the Co-Sourcing partner and, depending on the level of activity, the service provider will allocate as many dedicated resources to the client as if they are full time employees (FTEs) of the client and under their direct daily management.

 

These FTE resources work exclusively for the client and the benefits of the model are:

 

  • Cost saving
  • Fully trained, experienced, dedicated team
  • Scalability that matches the client’s requirements, whether that be growth or a step back
  • Usage of dedicated systems for middle office servicing
  • Flexibility, no standard product but rather a fully bespoke tailored service for the client
  • Continuity of staffing
  • Less time spent on non-core support activities, including HR and payroll, supporting these teams.

 

The activities that would typically be included in this model include, but are not limited to:

 

  • Portfolio management systems hosting and support
  • Trade support across the trade lifecycle
  • Collateral management, compliance reporting pre and post trade
  • Loan middle office ensuring cash settlement services and reconciliation across multiple structures
  • Performance measurement reporting and risk management reporting

Technology and Middle office

 

In addition to the scalable people power that a Co-Sourcing partner can bring, fund managers can also benefit from solutions across the value chain, leveraging the extensive global footprint and comprehensive technology infrastructure of the service provider. Fund managers need to be secure in the knowledge that all non-core risks are mitigated against and that your service provider can supply a breadth of solutions with coverage of trade support as well as supporting the middle office. In today’s challenging environment you can reduce risk, ensure scalability of systems and people and reduce total cost of ownership by working with a co-sourcing provider that has innovative and secure fully cloud-based solutions that service your needs without taking away your own oversight and control.

 

Finding your Co-Sourcing partner

 

The ideal co-sourcing model sees all of these activities performed by experienced staff working in an efficient and effective manner, making use of the service provider’s global footprint to deliver a business model most fund managers couldn’t sustain. The beauty of the Co-Sourcing model is that clients achieve scalability they would never normally have. If done correctly with the right partner the Co-Source model enables clients to develop a whole new operating model in very short order with little or no impact to the focus they need to have, now more than ever, on delivering returns for their clients in uncertain markets. Now is the time for strategic change.

 

Talk to Apex Group

 

As a global financial services provider, Apex Group delivers a comprehensive range of services to asset managers, capital markets, corporates, private clients and family offices. The Group has continually improved and evolved its capabilities to offer a single-source solution through establishing the broadest range of products in the industry; including fund administration servicesdigital bankingdepositary and custody and super ManCo services, business services including HR and Payroll and a pioneering ESG Ratings and Advisory service for private companies.

 

Our outsourcing and Co-Sourcing solutions are tailored to operate effectively and efficiently, in harmony with your daily operations. Our middle office, shadow NAV and risk reporting services have the ability to integrate with your existing portfolio management system or architecture, or can be delivered as a part of our full technology infrastructure.

 

With 45 offices around the world, we stand ready to support any business need. Contact us to learn more about what the Apex Group can offer you.

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