Navigating the 3 Operating Models of Modern Funds Management

For every unlisted fund manager, a fundamental question is always encountered. How should we handle our daily funds management operations? This usually involves a choice of scaling your internal team or outsourcing your registry to a third party.

While outsourcing has often been a standard fix for growing pains or to reduce headcount, the continued rise of purpose-built funds management software and technology has given fund managers more control than ever before.

The choice is not simply about "handling" funds admin, it's about the entire digital experience. The decision involves considerations around operational scalability, building investor trust, and data ownership and sovereignty.

Here is a breakdown of the three operating models defining the unlisted funds landscape today.

The Modern In-House Software Model

For a long time, the in-house days involved multiple team members managing various Excel spreadsheets across different funds. The modern version of this model is now powered by purpose-built software designed for funds administration and registry operations. This approach provides significant benefits, such as built-in user controls, audit trails, operational efficiencies and the introduction of professional branded investor portals and digital investor onboarding experiences.

• Who is it for: Fund managers who view investor experience as a competitive advantage.
• The Advantage: Total control. Ownership. Responsiveness. You own the "Single Source of Truth". When an investor calls, you can be highly reactive by addressing queries or problems in real time to provide the best experience possible for your investors.
• The Titanium Edge: With Titanium UNITISE, the heavy lifting of funds admin, registry, digital investor portals, investor onboarding, and compliance is streamlined into a single software package. You have professional software that administrators use at your fingertips.

The Outsourcing Model: Total Delegation

The outsourced approach involves fund managers handing the keys over to a third-party administrator. The third-party administrator handles the daily grind, including: investor applications, distributions, transactions, reporting and other registry functions. This helps save time and potentially reduce costs by reducing headcount. This allows you and your team to focus on other core aspects, such as growing the business.

• Who it’s for: Fund managers who want to operate very lean structures or those with highly complex, high-volume requirements who don't want heavy involvement in the day-to-day operations.
• The Trade-off: You lose the direct "line of sight" to your data and level of service to investors. Your brand experience is often mediated through a third party's portal, and you are beholden to their processing timelines.

The Hybrid Model: The Best of Both Worlds?

The hybrid approach is the newest approach. Consider it the new kid on the block, a blend of both in-house and outsourced approaches. A fund manager might keep their flagship funds in-house to maintain a high-touch experience with investors, while outsourcing legacy or highly complex funds to third-party administrators.

• Who it’s for: Growing firms with a larger mix of different fund types, including complex funds.
• The Strategy: It does allow for flexibility, but a drawback is the creation of data silos where information may be spread across multiple systems. This can make some overall business or group-level reporting more challenging.

At a Glance

	In-House (With UNITISE)	Outsourced	Hybrid
Investor Experience	Elite & Branded	Standard	Mixed
Data & Operational Control	100% Ownership & Control	Low - Administrator usually controls this.	Segmented - Data may be in different systems.
Speed to Action	Instant and Highly Reactive	Medium to Delayed	Variable

Which Model is Right for You?

The "right" model is a moving target as business requirements change and are influenced by various factors at different business stages. The traditional reason to outsource, was to reduce headcount or fix time-consuming operational processes. However, with a platform like Titanium UNITISE, a small number of team members can efficiently handle all aspects of funds management operations.

In today's world, investor expectations continue to shift toward real-time transparency. This likely gives fund managers who are willing to invest in their own in-house technology the edge. By choosing an in-house software model, you're investing in and building scalable infrastructure to maintain efficient fund operations, investor relationships, all whilst ensuring 100% data ownership and integrity.

Are you ready to discuss your operating model?

Contact us for a demo of Titanium UNITISE and see how our Funds Management, Investor Portal and Digital Investor Onboarding Software solutions could benefit your in-house operations.

Disclaimer: The information on Titanium Digital Insights is for general informational purposes only and does not constitute legal or regulatory advice. Titanium is a software company, and users should consult qualified professionals to ensure compliance with applicable regulations.