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Stronger by association
In January 2018, former JP Morgan, State Street and Citi fund services veteran Chris Meader set up a new association for administrators, in a bid to promote collaboration and the sharing of ideas. He talks about the motives behind the association and what he is hoping to achieve.
After 24-years in fund services with the likes of State Street, Citi and JP Morgan, Chris Meader established the North American Fund Administrators Association( NAFAA) in January. Just over six months in he has already enlisted Apex Fund Services, Stone Coast Fund Services, Basiz Fund Services and North Street Global, while Meader is confident of adding another top 10 administrator by the end of the year. Back in February, Apex’ s CEO, Peter Hughes, said“ the US fund administration space and institutional allocators need more structure”, when joining NAFAA, adding more credibility to Meader’ s cause. Soon he expects the biggest players to turn their attention, and one day add nonfund administrators such as auditors and lawyers, however at present he is committing all his focus and attention to the service providers he has worked for and alongside with for the past few decades.
Global Custodian: You have worked at some of the biggest companies in the fund administration space, what did you experience in those roles that led you to start this association? Chris Meader: There really is a lack of collaboration in the industry. Some shops are hesitant to collaborate with their competitors, but there are some forward-thinking people who realise it’ s the way things are done today. It’ s important to make sure that people should have the opportunity to work together and present challenges that everybody is experiencing and come up with solutions as a group. I’ ve heard from some within these shops that wish they had the opportunity to talk to their peers at other administrators about what they’ re experiencing, and in the legal, risk and compliance side that is really important. To have one company do it one way, a second doing it a different way, and all the others doing it another can cause dysfunction. You don’ t have to be training each other but if people can say here’ s our focus and here’ s what we can do – let’ s say – about the SEC gatekeeper, we can decide as an industry how to move forward? I many times felt as though people are
“ I’ m not building this to be a lobbying ground, but we need to define standards.”
doing things differently to another and not necessarily being a differentiator. For our inaugural meeting, we had 35 people show up from 30 different shops and even before the meeting the amount of people talking was incredible, then people stayed for an hour after just talking about the experience they are having around valuation issues, how they are managing fraud, and other risks and issues in the industry. Everybody embraced it, they may see each other at other conferences but this is a chance to talk about the industry, the other events are generally to meet with potential clients and get their sales pitches out. People realise that this kind of association makes sense.
GC: Are these providers happy to collaborate given it’ s a bit of a tough time for them at the moment and there’ s a constant consolidation trend going on? CM: There have been people who have asked‘ is this just an association for people to pick off who they acquire?’ That may happen – and some shops may want that- but that isn’ t the purpose of the association. So there is a bit of scepticism about that.
There is the whole‘ secret sauce’ thing that people are nervous about. But I’ ve already put out that we are looking to define minimum standards for the industry. We want to establish the minimum standard, but how you do it is up to you and the secret sauce isn’ t something we want to cross-train other administrators on. Minimum standards such as ensuring administrators control the bank accounts used for processing capital activity, ensuring administrators are utilising independent valuation agents, that they are vetting the AML / KYC on investors and managers etc, these are things that aren’ t defined and written down outside of best practice guides that other associations and third parties are putting out
GC: Why does this industry need a forum, what are these best practices? CM: It’ s defining best practices around service offerings: investor services,
“ We want to define standards to level the playing field for the industry, around services, technology and client onboarding.”
accounting, regulatory services, reporting, tax, defining best practices around technology, cyber security, data standards, employees working from home – those sorts of things – for example, most shops have secure connectivity when employees are working from home but some smaller shops may not have that kind of technology, so what does that mean for the clients. We want to define standards to level the playing field for the industry, around services, technology, and client onboarding.
40 Global Custodian The Hedge Fund Annual 2018