Keith Caplan and Samer Ojjeh
Ernst & Young
Engaging a third-party administrator to manage and maintain a fund’s books and records has its complexities and presents a variety of decision points and cost factors. Not only do virtually all fund managers pay for an administrator’s services, but they also elect to maintain some level of in-house operations and technology to oversee or “shadow” their outside administrators. The question then becomes how can a fund manager create a working relationship with an administrator that is cost effective and within an acceptable risk tolerance? In this paper, we will identify ways to create a more effective (and less costly) governance structure that will provide adequate oversight of fund administration functions. We will also examine evolving single-server administration technologies that could eventually streamline the shadowing processes and lower oversight costs.