SEI has unveiled research that found private market asset managers identify data replication and fragmentation from multiple fund administrators as a challenge, causing operational inefficiencies, resource drain, and increased costs.
Conducted in partnership with Cutter Associates, the survey examined the private market fund administration landscape and the current and target state replication model through feedback from US- and UK-based managers.
Phil McCabe, Head of SEI’s Investment Managers business, says: “Global private markets assets under management have grown nearly 20 per cent annually since 2018. As firms scale to meet demand, they can find themselves working with multiple fund administrators—whether that’s driven by regulatory pressures, cross-border operations, or M&A activity over time. Managing data replication in house through technology and staffing can be a drain on resources, but a modern fund administrator can serve as a primary strategic partner in managing multiple asset classes and domiciles, while consolidating data.”
Key highlights of the research
Outsourcing is widespread, but so is replication. Many firms duplicate their administrators’ work in-house, with 55 per cent keeping an internal accounting book of record, and 43 per cent saying more than half of their non-investment staff are involved in oversight or replication.
Replication costs are high, and those costs aren’t only financial. One-third of firms are concerned about technology costs, and replication delays reporting (47 per cent say by three or more days) and threatens data visibility. But many firms feel compelled to maintain the status quo due to risk concerns or investments already made in internal systems.
The fewer fund administrators, the better. While the majority of firms (57 per cent) work with multiple administrators—more than seven in some cases, 58 per cent indicated one provider as their ideal number, and 21 per cent would like just two providers.
The replication model is shifting. One-quarter (24 per cent) of firms are actively reducing replication, and another 55 per cent say they would consider it as part of future strategic plans. Nearly two-thirds (62 per cent) say the ability to reduce replication influences their choice of fund administrator.
Commenting on the research, Bryan Astheimer, Head of SEI’s Investment Managers business for EMEA, says: “The increasingly complex environment is putting pressure on firms to meet investor demand while maintaining operational efficiency and improving the bottom line. A single strategic partner that offers data quality, multi-domicile capabilities, and seamless system integrations makes a strong case for consolidating fund administrators. But firms don’t need to tackle everything overnight in an ever-evolving landscape. A first step in the right direction can begin with one product launch, taking a phased approach to a journey of transformation.”
