Fund administration outsourcing services bring many benefits to hedge funds, family offices, and wealth and asset managers, but sometimes investment and operations managers will say
“I’m not interested”.
Sales and marketing is a fascinating thing. It’s about having the right product or service, promoting and delivering a message that resonates with the right person at the right time.
We have all been that person who answers the phone and says “I’m not interested”, and likely it’s because the timing, delivery, and means of communication of the caller were poor, and we are not familiar with or maybe a little creeped out by the person calling.
Salespeople and marketers can always do a better job, but occasionally people say ‘no’ to
things that could actually be good for them.
So long as industry risks exist, as highlighted in a CitiBank report, operations directors should consider ways to improve their middle- and back-offices, along with outsourcing services providers that can help them.
Opportunities You Lose Out On Saying ‘No’ to Fund Administration Outsourcing Services
This is the biggest opportunity you miss out on, and it’s not chump change. Generally, you can expect 25-50% lower operating costs by outsourcing reconciliation and other portfolio accounting software-related work.
A good operations is valuable because it puts other departments of the organization in a position to actively generate revenue for the firm, but operations itself does not create income. The best an
operating manager can do is take all measures to save money, and our previous blog mentioned why COOs need a CFO mindset.
Maybe you think your operations are running just fine, but for the chance at a substantial reduction in expenses, it’s worth hearing what middle- and back-office outsourcing companies have to say.
Freed Up Capacity
Back-office reporting work can take a few hours out of each day, and either you or other members of your team are doing the job, even though time could be better spent doing non-administrative tasks.
Outsourcing gives you the freedom and opportunity to pass on work to a team that can perform the job efficiently and at a lower cost. In the meantime, you and your team can focus on ways to better serve your clients and generate more revenue.
Portfolio Accounting Experts
By saying ‘no’ to reduced costs as a result of outsourcing, you’re passing up on experienced portfolio accounting specialists who know your software.
Do you or members of your team struggle with the portfolio accounting system? Don’t feel embarrassed if you say ‘yes’. Admittedly, most software is tricky to use, unless you are formally trained in using it. There are fund administration outsourcing services providers that are trained in the software you use, and they’ll do the work for you.
Besides, all you really need are the finished products: accurate, clean and crisp reports.
Now what happens when one of your superstar in-house operations associates leaves? Replacing that person is difficult, and in the meantime, your organization is paying the price (quite literally) finding a new hire and suffering from lower quality reports until you find and train someone of equal caliber.
Just as have you access to portfolio accounting talent via the back-office outsourcing provider, they can easily supply a reconciliation and reporting expert to do the work when one of your key
Achieving Operational Scale
One of the biggest challenges an operations manager faces (and not just in the financial services industry) is staffing the right number of people in relation to the workload.
Overworked and exhausted employees will drag down productivity and efficiency in the long run, and there cannot be anything more frustrating than seeing your staff idle or under-utilized when the workload is smaller.
Unfortunately, it’s not always possible to predict future workloads, and this is where outsourcing comes in handy. Perhaps you’ve decided to maintain a core group of operations personnel, but when the workload increases, you quickly need additional labor, and the outsourcing provider can easily supply portfolio accounting specialists to handle your tasks without skipping a beat.
When the work slows down, you can request less labor, and you can always add more when you need it again. You simply pay for what you need.
Fund Administration Outsourcing Opportunities
There are a variety of reasons we say “I’m not interested”. Some are justified; we have done the research, and we are not sold. Other times the benefits of the product or service are so marginal that it’s not worth the energy to make a transaction.
In other situations, we say we’re not interested because we have more important things to do than listen to someone’s spiel, or our ‘no’ is because we haven’t taken the time to realize the benefits.
As operations costs rise, operating managers at investment advisory firms should seriously consider taking the time to recognize outsourcing’s benefits. From reduced costs to operational scalability and efficiency, there are solutions out there for your firm.
Saying “I’m not interested” is truly a missed opportunity.
Empaxis is a leading provider of middle- and back-office outsourcing services for asset managers and hedge funds.