The Evolving (and Expanding) Role of the Fund Administrator: An Insider’s View

Personal insights into the changing role — and growing responsibilities — of fund administrators over a pivotal period.

By Nicholas D’Angelo

Senior Director of Markets for Private Equity & Real Estate, MUFG Investor Services, U.S.

For the general partners, investors, fund administrators, regulators, and technologies that make up our alternatives ecosystem, the last four years have been transformative. They’ve been transformative for me, too: the deep changes we’ve all witnessed have in many ways marked my professional evolution at MUFG Investor Services, U.S.

I came to the firm in 2019 as a problem-solver, a process-transformer — adept at creating bespoke solutions like automations, applications, and portals for some of the thorniest issues facing our clients. Those skills have been put to good use in recent years, as our clients have needed new sophisticated, global, tech-driven solutions in areas like compliance, onboarding, due diligence, customized branded investor services, and much more.

For Fund Managers, the Challenges Intensify

Those extra services have come to the fore as an absolute necessity. GPs are contending with all kinds of new pressures — many, for the first time. High interest rates, high inflation, tight capital markets, talent shortages, regulatory burdens, macroeconomic jitters, all kinds of new technologies — not to mention, a plethora of pandemic-related dislocations, like the well-documented accountant crunch .

The biggest challenge right now, of course, is getting the dry powder off the sidelines and deploying it strategically — and for that, all hands are needed on deck. It’s hard to think about plugging holes in the back office when fundraising is job #1.

The managers we work with are laser-focused on diversifying their sources of capital, expanding beyond traditional closed-end funds, attracting more institutional dollars, and serving an international cohort of investors drawn to the security of US markets. The growth they achieve often gives rise to new needs, like branded, specialized reports for institutions, or new portals for LPs. I’m always happy to supply those.

Fund Administration as Strategic Alliance

The days when fund administrators’ tasks revolved around bookkeeping, accounting, auditing, and wrangling Excel spreadsheets are clearly gone for good. Today’s managers don’t just need an accountant who sends their information to the auditor, they need a multiservice collaborator — an ally who can seamlessly integrate with their systems and culture. A consultant who is nimble and proactive enough to anticipate and quickly meet their evolving needs.

Here's how we do it: it’s a three-layer-cake service model. First, the table stakes: best-in-class accounting and capital administration. Next layer: the additional services the market is demanding — like staying on top of regulatory changes, compliance requirements, and technology. The icing on top is the bespoke layer: devising and deploying unique solutions to each company’s unique operating model and unique needs — with a single, accountable point of contact.

Managers want a multiservice collaborator — not an accountant to send their information to the auditor

Being Relationship- and Solutions-Focused Is More Essential Than Ever

Another area that makes MUFG Investor Services unique: we don’t put clients in a box, or try to make them fit some pre-designed template. That’s not our concept of service. We know that every fund, and every counterpart at that fund, is one-of-a-kind — with one-of-a-kind, specific needs and concerns. So we start there: deeply understanding those needs and concerns, and then tailoring our approach to them — rather than vice versa. We’ll build a scalable model from scratch, and make that the foundation of a white-glove service experience for our clients, no matter their size.

We’ll often start with a simple question: What process or action is wasting most of your time? What’s your biggest operational stress point? Then we’ll work to come up with a solution to that problem, so that you, the GP or manager, can focus on the central things you don’t need help with — like fundraising and deploying capital.

Then we’ll ask how we can actually enhance your workflow — creating branded investor dashboards or even ghostwriting quarterly reports, or other value-add activities that don’t involve counting beans. (I find a three-layer cake is much tastier.)

The Culture Edge: Adaptability Starts at Home

This flexible, high-touch service philosophy springs right from our culture here at MUFG-IS. Like the private markets we serve, we are all about adaptability and agility.

We were among the first financial firms to go remote-first, and we’re staying there — a gutsy decision that continues to pay off, enabling us to maintain continuity, both internally with our teams and externally with our clients. (Especially helpful when you have offices around the country, and a parent company in Japan.) It’s enabled us to recruit the best people wherever they are — not wherever we are. And our “culture of presence” means we can get together, physically or virtually, with clients or each other, at almost a moment’s notice. It’s actually enhanced our sense of teamwork, while adding to my personal and professional satisfaction.

To my mind, the powerful mix of circumstances we’ve seen in the last few years have brought fund managers and fund administrators like us much closer than ever before. Our goal is for that relationship to be far more a business alliance built around the client than the old client-vendor model. Because GPs need consistency, efficiency, and quality in their support systems to meet whatever challenges the market throws their way. We intend to be with them every step of the way.