Private Funds Transfer Agent Outsource
Case Study
Issue
An investment manager had an active range of private funds that serviced their institutional client base. All investor orders and transactions were processed through the client service team who received each order directly from the client then batched the transactions and forwarded them to the fund administrator. The volume of activity was significant and since all funds only offered a month-end open window, this process became a bottleneck and raised the risk that investor transactions would not be completed on a timely basis. A secondary risk arose from the process of the client service team manual transcription of the orders.
Challenges
The client service team viewed their handling of investor orders as an important client service offering and it also gave the client service team insight as to the cashflows generated by each investor. This view was somewhat misguided, since clients considered the processing of their orders as a perfunctory event. However, there was value to the manager in understanding the impact of significant cashflows to the fund, which the legacy process provided.
Process and Approach
The fund administrator offered transfer agent services, and a new operational process flow was designed where investors sent orders directly to the administrator using a standard template throughout the month. Orders were faxed to the administrator which were then taken into their standard processing workstream. In order to gain insight on the cashflow volumes, the administrator provided cashflow summaries to the manager at certain intervals of 7, 5, and 3 days prior to the open window.
Result
This process redesign allowed a more efficient use of the client service team’s resource and mitigated the risk of processing bottlenecks and order transposition.