Article
What investment fund administrators do – and why the right relationship matters
May 23, 2025 · Authored by John Heyde
When asset managers evaluate fund administrators, the conversation often begins with a list of back-office services. Fund accounting, capital calls, investor reporting – these are table stakes. But in today’s fast-moving, increasingly complex market, the relationship between a fund and its administrator matters as much as – if not more than – the services provided. The best fund administrators go beyond transactional tasks. They become proactive, integrated partners who minimize friction, anticipate needs, and help organizations scale with confidence. If you’re asking, “What should a fund administrator do for my firm?” or “What should that relationship look like?” – here are the qualities and capabilities to consider for fund administration outsourcing.
What is fund administration?
At its core, fund administration involves managing the accounting and financial reporting functions for alternative investment funds, including private equity, venture capital, real estate funds, oil and gas funds, hedge funds, mutual funds and other investment vehicles such as SPV or co-investment entities. Fund administrators act as an outsourced back office, handling operational tasks so fund managers can focus on sourcing deals, raising capital and generating returns.
Typical responsibilities include:
- Fund-level accounting and financial reporting
- Preparing calculations and creating notices for capital calls and distributions
- Outsourced accounting and reporting for internal entities, such as the management company or GP investment vehicles
- Production of partner capital statements
- Document management through a secure investor portal
- Responding to recurring and ad-hoc investor requests for financial data and documentation
The right administrator should deliver these services efficiently, accurately and transparently – providing a frictionless experience for both the fund manager and its investors.
As operational complexity increases, fund managers often find themselves coordinating multiple service providers for tax, valuation, transaction due diligence, portfolio company accounting, and more. Needless to say, this fragmented approach can create inefficiencies, extra handoffs, and communication gaps.
Working with a fund administrator that can integrate or connect with other financial advisory services creates operational advantages. A one-stop shop relationship reduces redundancies, streamlines processes, and minimizes the time spent managing vendor relationships.
A fund administrator engaged year-round is also well-positioned to be a conduit between the private equity firm and other specialty service providers – flagging issues, anticipating needs and keeping back-office operations in sync with the fund’s growth and deal activity.
Technology has become a major differentiator in fund administration, and for good reason. Modern fund managers and their investors expect secure, user-friendly portals, fast access to reports and documents, and automated processes that reduce error risk and administrative burden.
But technology alone isn’t enough. The best fund administrators balance cutting-edge systems with experienced professionals and rigorous operational processes. Platforms like Investran are widely considered the gold standard for fund accounting, but without the right expertise behind them – professionals who understand fund documents, capital structures and waterfall calculations – technology can only go so far.
An effective operating model is a three-legged stool:
- Great technology to enhance accuracy and accessibility
- Great people to manage nuances and provide guidance
- Great processes and controls to ensure consistency and compliance
Funds that emphasize all three will consistently deliver a better client experience and are better equipped to adapt as the market evolves.
There’s a meaningful difference between a fund administrator that simply processes transactions and one that proactively advises on operational and financial matters. The most valuable fund administration relationships are collaborative, with administrators acting as extensions of the client’s internal team.
This means offering guidance on interpreting Limited Partnership Agreements (LPAs), proactively flagging issues, and helping to navigate complexities like management fee calculations, sophisticated waterfall calculations, or bespoke investor reporting requests.
A true advisor anticipates questions before they’re asked and offers solutions before problems surface. They’re responsive, transparent and focused on building long-term relationships based on trust and dependability – not nickel-and-diming clients for every incremental request.
Additionally, operational rigor is increasingly a focus for institutional investors and regulators alike. Fund administrators should maintain a SOC 1 Type 2 certification, which provides an independent attestation of their internal controls over financial reporting. This certification is a strong indicator of an administrator’s operational maturity and commitment to safeguarding client and investor data.
Investment funds that are unsatisfied with their current fund administration experience should know there are natural opportunities to make a change. The most seamless time to transition is immediately after year-end reporting or when launching a new fund. These points minimize operational disruption, simplify data migration, and allow new administrators to start with a clean slate.
It’s wise to begin transition conversations several months in advance, ensuring onboarding and reporting cycles remain uninterrupted and stakeholders – both internal and investor-facing – experience a seamless handoff.
The most common issues that investment managers face with their fund administrators include:
- Complications during year-end reporting, such as missed deadlines, audits not proceeding smoothly, agreed-upon timelines not being met and needing extensions
- Higher-than-normal back-office turnover
- Issues with lender or regulatory reporting
- The fund needing to scale, but the fund administrator being unable to support this growth
- Not receiving insights from data to help manage and grow the business
- Investors feeling that their requests are not responded to in a timely manner
What this looks like at Baker Tilly
At Baker Tilly, we’ve built our fund administration offering around these principles: proactive advisory, operational efficiency, and scalable, integrated support.
We deliver the foundational services – fund accounting, financial reporting, capital event management , waterfall administration, and investor relations – through a white-label investor portal that centralizes key documents like K-1s and capital call notices in one secure, accessible location. But what sets us apart is how we integrate those services with a broader suite of solutions, from tax and valuation to outsourced portfolio company accounting, transaction advisory and CFO services with our managed services offering for the asset management industry.
As a top 10 CPA and advisory firm, we offer investment managers a one-stop shop experience with a boutique service feel. Our model combines industry-leading platforms with experienced professionals who deeply understand fund operations.
And because we operate as an extension of your team, we’re positioned to offer proactive advice, manage complex fund provisions, and navigate issues before they escalate — all while maintaining the institutional controls and certifications that sophisticated investors require, demand and deserve.
