Administrators Explain What They Do

Chidem Kurdas

Transparency is a term that’s been used a lot for fund managers. But increasingly you hear it applied to fund administrators as well.

Administrators lacked process transparency, says Mike Greenstein, a PricewaterhouseCoopers partner who leads the alternative investments practice. If people understand what administrators do, they will have more trust, so there is a move toward process transparency for administrators, he said, speaking at a conference.

What does process transparency involve? Vernon Barback, president and chief operating officer at GlobeOp Financial Services, an administrator listed on the London Stock Exchange, suggested basic questions from a fund’s investors to its administrator. 

Among the questions: How did you verify the existence of assets? What are the controls on the valuation process? “We and other administrators report what services we provide, what issues we see,” Mr. Barback said.

He pointed out that good governance can be a competitive advantage and fund boards are becoming more active in governance, with administrators and auditors reporting regularly to the board.

Does a fund really attract investors by having a strong administrator, auditor and board? It appears to be a necessary condition. A fund with an attractive strategy and track record is more likely to be rejected if it lacks these features. And investors want to hear more of how the administrator performs its tasks.

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Tags: GlobeOp, Mike Greenstein, PricewaterhouseCoopers, Vernon Barback