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Maintaining quality while increasing speed

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An increasing sense of urgency for data and reporting among investors is sharpening the focus on quality to ensure excellence is preserved as client demand for speed rises. The way this data is delivered is also changing in view of investor needs. 

“The push for delivery of financial statements and other deliverables as quickly as possible has increased significantly,” notes Jill Calton EVP, Executive Director Alternative Investments, UMB Fund Services, underscoring the growing calls for more for transparency alongside these shorter reporting deadlines. 

This increasing sense of urgency can impact quality if not managed appropriately by administrators. Calton details how UMB is moving to a daily cadence for data processing as a result: “Our accounting teams are standardising workflow to provide investment data more near time for our quarterly reporting clients. Investor transactions are updated as they occur.” 

“We aim to update investment reporting as frequently as weekly sometimes daily to allow the general partners more up to date investment reporting. These changes do require more resources, so increased costs passed through to funds should be expected.” 

In keeping pace with shifting investor and adviser demands, UMB is adapting by continually investing time and talent into its proprietary system, AltPro®, which provides detailed reporting directly from the source. The firm is also developing processes to get as close to real-time as possible with less preparation at reporting time. 

The platform also supports UMB in accommodating client requests related to their need for data to be uploaded directly to their internal platforms for tracking investor, investment and general ledger parameters. 

Clients’ reporting demands have also been changing as offering online access to investors to retrieve fund information safely and securely has been widely adopted throughout the industry. Calton observes: “Previously, clients were happy to just receive financial statements and investor statements in PDF format. More and more clients are requesting more detailed exports of their investment and investor data. Reporting has shifted from standard to tailored, including custom exports of clients’ data. UMB’s AltPro platform can readily extract clients’ data, which has proven very beneficial to our clients.” 

Private capital needs 

In addition, UMB has seen a significant amount of growth in the private debt space, says Calton: “Our clients, current and potential, are looking to us as a solution to track their loan portfolios. We are currently working to scale this business, moving beyond manual processes to specialised loan servicing providers and software.” 

Investor onboarding is another area to consider within the context of private capital funds as the space has witnessed a significant rise in technology solutions. Calton says: “The age-old problem of standardisation has prevented the private fund space from creating a one-size-fits-all solution for onboarding new investors and processing subscription documents. New software offerings with a side of fund administration claim to be automatic, using robotic process automation (RPA). However, these offerings still require integration using human touch for both reconciliation and review.” 

Further, the SEC announced several proposed new rules for private funds that cover a wide range of topics including statements of performance and fees, mandatory fund audits, adviser-led secondaries, compliance program reviews and testing, and revisions to Form PF requirements, to name a few. 

She identifies how finding the right solution here can still be challenging and costly. 

As the industry faces numerous pressures, Calton stresses: “We recommend clients look hard at how fund administrator industry consolidation will impact their services. Watch out for smoke and mirrors and find the value add of a proven accounting system and team. Remember, data is king. Clients need a reliable partner to update, review, and maintain the data for decision making.” 

Such partners can help managers and their investors navigate other changes in the industry. This includes new IRS reporting requirements. “The partnership tax form K-3, which is meant to standardise international tax reporting, has brought with it a 15+ page tax form that is meant to be included in nearly every K-1 sent to investors. This has been quite the task for the industry to implement and streamline, and many are still working on it,” Calton outlines. 

Cyber vigilance 

Investors and managers also need to remain mindful of cybersecurity issues and potential fraud as these risks remain significant. Delivering data through a secure portal can help mitigate these concerns. According to Calton: “As digital transformation accelerated during Covid and is now continuing, so does the risk of cyberattack. Risks of data breaches, bad actors, wire fraud, late funding, missing deals, and missing compliance and reporting deadlines require persistent attention.” 

“We help mitigate that risk by using our secure portal to deliver and receive confidential information. The UMB portal includes a two-step authentication method to prevent cyberattacks. We’ve also focused on reviewing policies and procedures to address increased threats to ensure that we are protecting our clients and their data.” 

Jill Calton, CPA, EVP, Executive Director Alternative Investments, UMB Fund Services 

Jill leads the alternative investment servicing business of UMB Fund Services, which offers a full range of back-office services for alternative investment funds. Her responsibilities include organisational leadership, strategic development and fiscal management. This includes overseeing the teams that provide fund accounting, administration, investor reporting, tax and audit services for the company’s alternative investment clients. She is a certified public accountant and a member of the Utah Association of CPAs. She also serves on the Hedge Fund Association’s board of directors.

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