Fund Administration in 2024: An Overview of Everything Impacting Your Fund Admin This Year
Outsourcing your back-office activities to a third party continues to trend upward as the demand for operational excellence from investors is on the rise and new regulations continue to impact back-office operations. The fund administration sector is rapidly evolving, with outsourcing becoming increasingly normalized compared to the landscape of just 6-8 years ago.
With record levels of dry powder, outsourcing fund admin activities to a third party will continue to be at the forefront of many industry participants’ minds. This rise in popularity of outsourcing fund administration is expected to grow, especially as regulatory requirements become more complex and extensive. No need to look further than the new rules the SEC adopts every year that impact fund managers and advisors alike.
New SEC Changes
According to a report from ThomsonReuters earlier this year, The SEC plans to adopt 25 rules in 2024 according to the SEC-published Reg Flex Agenda.
The rulemaking agenda is updated twice a year and is the best estimate of when the SEC will propose or adopt rules. Regardless, over two dozen new rules are a lot for industry participants to stay on top of, especially when they are as far-reaching as those identified for adoption this year, including:
- Climate Change Disclosure
- Strong Regulation for SPACs
- New Asset Classes to be Safeguarded
- Cybersecurity Risk Management
- New Reporting for Private Fund Advisors
- New Additions to the Order Competition Rule
- And more . . .
Investor Reporting and Transparency
In addition to compliance initiatives, investor demand for greater reporting transparency continues to grow. Real-time reporting, interactive dashboards, and customized reporting templates are all now a “must have” rather than a “want.”
As the financial industry continues to embrace technology in 2023 and beyond, including the use of AI and cloud-based platforms, fund administrators are positioned better than ever before to help automate processes and alleviate costs.
Many managers are adopting cloud-based fund administration solutions, such as STP BluePrint, to enhance operational efficiency and bring more flexibility to managing their funds. When technology is used thoughtfully and strategically, it can greatly reduce the chance of human error and streamline repeatable processes to save firms time and money.
Ultimately, as firms seek to increase operational efficiency by adapting to evolving regulations and investor reporting demands, working with a third-party team of dedicated specialists can help accomplish this goal in a cost-effective way.
Leveraging the Expertise and Resources of STP
With our tech solutions and knowledgeable specialists, we can help streamline the complexities of your back office functions and allow you to focus on what you do best, generating alpha for your clients. Whether you’re a long-established or an emerging fund manager, it’s important to keep a keen eye on the factors that can impact your fund. STP offers managers and advisors an all-in-one solution for outsourcing their fund administration obligations. Contact us to learn more about how we can help.
