Are you thinking of adopting or outsourcing family office or hedge fund back-office operations? fund Back office work is primarily the backbone of the offices and contributes to the smooth operation of the firm. They are involved in fulfilling the work of settlements, clearances, records maintenance, accounting, human resources, technology and checking with regulatory or organisational compliance. In this article, you will learn about factors to consider before you outsource your backend operations, the benefits of hedge fund back office outsourcing and what services you can outsource.
Factors to consider before you outsource your back-office operations
Here are the list of factors to consider before hiring a third-party service provider to handle back office operations:
1.Size of your firm
When it comes to outsourcing back office operations, many people believe that the size of the company is important, but this is not the case. Outsourcing can be a great way to increase return on investment, whether your investment firm is large or small with more than twelve employees.
2.Stage of growth
Outsourcing your back office work can help you smooth processes and take on extra administrative work if you want to expand your firm’s capacity and increase its AUM.
3.Repetitive work
If your staff is handling a lot of checking and repetitive work in the back office, then it can cause a delay in the work delivered to your high-net-worth clients.
4.Manual work
If you are still using the manual way of entering the data into your software, then your staff is facing a lot of problems in managing the entries and trading.
5.Increase in employee turnover
If you are facing a problem with your trained analysts leaving the organisation, then you might consider hiring the hedge fund outsourcing services that give permanent and assured results.
Benefits of hedge fund back-office outsourcing
Though there are several benefits, cost and time savings are the primary reasons to consider outsourcing back office work.
1.Cost benefits
If you are considering reorganizing your administrative or functional processes, then outsource your hedge fund back office services to third-party service providers who can manage your shadow administration processes at a lower cost. According to the 2020 survey, 71% of the hedge fund houses believe that they could benefit from cost efficiency if they outsourced some of their operations.
2.Time Saving
You can also save a lot of time and focus on core activities such as raising capital and investment analysis by outsourcing your administrative work. According to a study, 53% of investment managers saw a great benefit in outsourcing in terms of time savings and thereby generating more revenues.
3.Safety
The outsourced firm provides an extra layer of safety and reduces the risk associated with processes and regulatory compliance.
4.Updated Information
Apart from safety, they provide you with or keep you updated on transaction records, performance reports and portfolio information.
5.Technological Access
They offer cloud-based software services that aid in the tracking and management of funds around the clock.
Services you can outsource to handle your back office operations
You must be confused about which hedge fund back office operations activities you should outsource to a third-party firm. Then, you can think of outsourcing some of the important services such as administration, HR, tax and accounting, which are the top-ranked services by hedge funds, investment managers and family offices across the globe.
There are no sure-shot rules to decide which activities you should outsource because there are multiple factors that can affect your decision, such as the compliance requirements you need to fulfil, the existing internal infrastructure you have, the heavy functions and sophistication of the systems and IT platforms and the specialised skills of your employees.
IBN Tech is an excellent choice for your back-office operations because we have over 12 years of experience providing back-office services to hedge funds and funds of hedge funds, as well as fund administration. We also work with family offices, providing services such as fund accounting, quantitative risk analysis and reporting to clients with an AUM of $20 billion in the UK and the US, allowing you to save 30% to 40% on operational costs.
1. Performance tracking services
2. Transaction processing
3. Document management services
4. Shadow NAV Calculation
5. Management & Incentive fees calculations
6. Financial statement preparation
7. Data reconciliation
8. Data research activities
Conclusion
It is obvious that investment firms, hedge fund managers and family offices that deal with high-net-worth investors can significantly benefit from back office outsourcing and also need to analyse various factors before choosing hedge fund outsourcing services or family office outsourcing. The associated benefits are access to 100 professionals, such as FRMs, CPAs, CAs, etc., handling your financial reports, helping with NAV calculations, processing private investment statements, delivering centralized data on the cloud, and using automated technology under a single roof.
