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“Smaller managers do often
require assistance as they
grow their businesses and a
boutique administrator can
be an excellent resource for
them to turn to.”
PETER NORTHCOTT, DIRECTOR, KB ASSOCIATES
“Those administrators which begin providing comprehensive
data analytics and expedited reporting will thrive.”
MATTHEW RUOSS, CEO, SCORPEO
would probably dispute this,” concedes
Northcott. Mirsky concurs. “A lot of bou-
tiques do offer a high touch client service.
Some of the smaller managers do often
require assistance as they grow their busi-
nesses and a boutique administrator can
be an excellent resource for them to turn
to,” he acknowledges.
There are other areas where smaller
providers could also have the upper hand
over the bigger players. Take illiquids,
for instance. Managers running illiquid
strategies are often very diverse and many
will have incredibly niche requirements,
which cannot always be adequately
supported by providers offering com-
moditised administration. As a result,
these managers might prefer to opt for
a smaller, more specialist administrator
over a generalist.
Flourishing in the future
If fund administrators are to thrive, they
need to adapt. Matthew Ruoss, CEO
at Scorpeo, says that administrators –
irrespective of their AUA – should build
in capabilities to support the growing
number of asset manager clients who
are incorporating environment, social,
governance (ESG) criteria into their
investments. Some providers are certainly
beginning to do this by developing ESG
reporting toolkits. However, a number
of firms do caveat that ESG reporting is
somewhat complicated by the continued
absence of fully agreed ESG standards.
Moreover, administrators will also need
to invest more in technology as clients
become increasingly digital. “There is a
greater demand from institutional clients
for data services and analytics, especially
where managers can show investors that
they are practicing good stewardship and
maximising shareholder value. Those ad-
ministrators which begin providing com-
prehensive data analytics and expedited
reporting will thrive,” says Ruoss. This is
happening. Many administrators say they
are allocating resources into improving
data analytics by providing clients with
digital, easier to access and real-time
portfolio reporting.
Northcott believes that administrators
– however big or small – will succeed if
they get the basics correct. “When I as-
sess fund administrators on behalf of fund
manager clients, I use several key criteria
to judge their credibility. Most critical is
their technical capabilities so I analyse if
they can actually do the job whether it is
NAV [net asset value] calculations, report-
ing or investor servicing. I also scrutinise
whether the provider is offering compet-
itive pricing and good value. I also review
their customer service quality and, finally,
their credibility with the manager’s
existing and targeted investor types. This
is particularly important for the smaller
fund managers or start-ups, which I work
with,” says Northcott.
What next for the boutique model?
Although boutique administrators are
facing a plethora of competitive challeng-
es, the model is not obsolete. It is true
big name service providers will benefit
from economies of scale but boutiques
highlight their bespoke customer service
is an attractive selling point. Whether this
is sufficient to preclude further consoli-
dation in the sector is another question.
Spring 2020
globalcustodian.com
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