A Canadian third-party fund services company now in its eighth year of operation, Felcom Data Services realised long ago that in order to be successful, it was imperative to partner with its customers, not just work for them.
The number of hedge funds in the market has grown rapidly, along with their degree of complexity, while competition from local and international service providers has intensified. Having undergone an extensive strategic review of how to service its customers better, Felcom has now moved to a partnership model that means that its success is directly proportional to that of its customers.
Felcom provides a wide array of product offerings related to a manager's dealings with its broker-dealers, distributors and investors. On one end of the spectrum, it offers fund valuation, accounting and financial reporting for onshore and offshore funds, as well as providing niche services such as anti-money laundering and terrorist watch-list reporting. At the other end of the scale, it can also take over the management administration role, freeing the manager to focus on raising assets and generating profits.
All told, Felcom has CAD3.6bn in assets under administration with 250 investment products, including principal-protected notes and hedge funds, and has just moved into a new office two-and-a-half times larger than its previous premises to accommodate its customer growth and expanding team.
The firm has 50 employees in Toronto and is looking selectively to increase its headcount, especially in the area of fund accounting. It is making a targeted effort to attract new business with the ambition of becoming one of the top players in the offshore funds area.
While it serves both traditional and alternative managers, hedge funds make up the majority of Felcom's business and are a key growth area. As a rising number of local managers diversify their investor base by targeting capital overseas, the company is increasingly focused on serving these managers' offshore fund needs alongside their domestic ones.
Felcom focuses on emerging managers. The firm is responsive to the needs of these start-up managers, which need to keep their cost base low during their initial operations and have the ability to beef up services as their assets and revenues increase. Unlike certain larger competitors, which only take on customers with a sizeable amount of capital, Felcom is committed to growing its business alongside those of its emerging manager customers.
Its highly competitive pricing model allows smaller customers to launch and stay with Felcom and grow their assets without having to look for another service provider. The company has the systems, experience and flexibility to service customers with less than CAD10m in assets as well as those with more than CAD1bn.
Felcom's pricing model also allows it to offer its customers flexibility. In early stages of growth, the firm will charge a flat fee until the manager reaches a certain level in assets, when the model changes. This adaptability not only makes Felcom highly competitive but enables the firm to grow along with the assets of its customers.
In order to provide top-quality service, Felcom strives to be forward-facing, holding one-on-one meetings with large customers on a monthly basis and quarterly meetings with smaller ones. During these sessions, the company remedies any communication holes that might exist. It does not want to hear from customers only at times of trouble - constant communication can prevent problems from cropping up.
Ronald Landry is president of Felcom Data Services