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The Advantages of Outsourcing Back Office Processes

Sponsors form direct participation programs to identify investment opportunities, establish broker relationships, sell securities and create wealth for all concerned.

No one goes into the alternative investment business to manage the constant changes in the investor database, execute title transfers and stuff distribution checks into envelopes every month. But as a fund grows these back office processes are where an increasing amount of time is spent and where an increasing number of problems arise.

The fund manager’s goal is to raise as much money from as many investors as possible and to make it grow. But any growing fund, as it grows, is forced to commit significant in-house resources to shareholder record keeping, new investment entry, distributions, title transfers, fiduciary reporting, commission payments, tax reporting and managing all the mail, email and online communication with investors and financial advisors. All this while satisfying an array of compliance requirements.

These distractions from the core mission of the fund only multiply as the fund succeeds in attracting new investors.

The back office, done right, requires sophisticated systems, experience in the operations aspect of the industry, and a commitment to precision and compliance. A full service transfer agent/fund administrator with an advanced transfer agent system and a full range of integrated back office services is a wise choice for a fund at any stage in its life.

Outsourcing the back office saves real money over the costs of employing an operations staff and aggregates all the back office functions to a single account manager who is experienced, organized and intimately familiar with the fund.

It is not a decision to be made lightly.

A provider with all these responsibilities is essentially a partner in your business. A sponsor needs to know that the fund’s data will be secure, that government regulations as well as prospectus commitments will be met, and that the provider’s interactions with investors and advisors will represent the sponsor in the best possible way.

Your provider should be an SEC registered transfer agent with advanced systems, long experience and a commitment to customer service. Your account manager should be as dedicated to his or her relationship with you as you are to your relationship with your investors and advisors.

Yes, shareholder record keeping can be done with Excel spread sheets. But it shouldn’t be. Even when a fund is new, it should be prepared to succeed.

An efficient outsourced back office process from the beginning prevents a time consuming conversion from an overwhelmed in-house system down the road after inevitable problems have arisen. A provider experienced with the full life cycle of a fund will scale pricing and customize services to be affordable and responsive to the needs of a fund whatever its stage of development.

The professionalism and efficiency of your back office is an important compliment to your offering. It helps to represent your fund as a sound opportunity to investors and advisors.

Outsourcing the back office maximizes efficiency and frees you to concentrate on sales and investments – which is why you formed your fund in the first place.