Investment managers looking to balance talent and cost

Without a doubt, investment managers need talented, highly-skilled staff who can display an appropriate track record to keep and attract investors. Having the right team on board both inspires investor confidence and, of course, is required to make the right investment decisions.

Simultaneously, profit margins are becoming leaner just as investment managers are experiencing the regulatory and compliance landscape becoming more convoluted, requiring more expertise to navigate.

For fund managers, keeping staff costs lean isn’t a simple question of retaining star talent while reducing back-office headcount: relevant expertise and guidance in back-office functions is an often-necessary component of staying operational and compliant. The result is that investment managers are looking to balance mounting staff costs without cutting corners or putting themselves in situations where they lack the necessary expertise needed to operate smoothly.

Outsourcing to fund administrators like ZEDRA is increasingly common, especially given all the different factors that require in-depth and expert attention. A fund must be well run, but hiring, training and managing expert staff to cover the back-office functions like compliance and accounting cuts into already slim profit margins for investment managers. Working with ZEDRA, our clients can access key and additional manpower or expertise whenever they need, incurring only a fraction of the cost of a full-time hire. We’ve dedicated ourselves to making our fund administration team a flawless extension of our clients’ workforce, so the interaction is seamless in the same way as if they’d made a direct hire.

Supporting our clients to upskill

Part of ZEDRA’s ethos to ‘Do More.’ also translates to supporting our client’s staff to understand and learn from ZEDRA’s fund administration employees who have several years of fund experience. Rather than being an ‘outsource only’ function, ZEDRA’s fund administration team have incorporated skill-sharing into our workflows, so clients can benefit from upskilling their employees if they want to.

Many experts play their cards close to their chest and deliver results without showing clients how those results are created. At ZEDRA, we recognise there’s a lot of value for our clients to know more about what we do from a process, administration, workflow and procedure perspective. We operate as a knowledge centre and learning resource, showing clients what we do, sharing best practices, how we approach governance, and comply with new legislation and so on. In this way, our client’s team can extend their skillsets if they wish. Especially for smaller players and family offices, access to this kind of knowledge can be especially useful as members of the team can take some of the practical skills that they’ve learnt from us and in many cases professionalise and streamline other functions in their business.

Controls and governance

Increasingly, investors are looking to investment managers to prove that they have appropriate controls to ensure that a fund is run correctly, and that money is being invested and managed appropriately. Stringent but relatively informal compliance procedures used to be enough to appease investors, but over time it’s become the norm for investors to insist on stricter processes – especially as technology has evolved.

Today, it’s not unusual for investors to insist that a professional and neutral party carry out these controls, perform reconciliations with banks and custodians, verify fund expenses and ensure that any payments are made in line with the fund’s constitutions or Information Memo.

Most investment managers understand the need for more stringent controls, and they also want to safeguard themselves from unnecessary risk. Equally, the administrational and time burden of carrying out these tasks is considerable. Outsourcing these functions can save time and money and allow investors to focus on other priorities.