Fund administration plays a critical role in the operational aspects of an investment fund, providing essential services such as fund accounting, NAV calculation,  financial reporting, investor relations and regulatory compliance. Traditionally, switching fund administrators was viewed as a disruptive and challenging process, but in today’s evolving financial landscape, it has become a strategic move to enhance transparency, operational efficiency and value for money.

With private market managers continuously refining investment strategies, adapting to regulatory changes and expanding their investor base, the need to reassess and potentially switch fund administrators is becoming more common. But what drives fund managers to make this significant change? In this article, Thomas Erichsen, MD and EMEA Head of Alternatives Business Development, explores the key reasons why managers change their fund administrators.

Key reasons to switch administrators

Periodic reviews of fund administrators are essential to ensure that service quality, technology and costs align with a fund’s evolving needs. Below are the most common reasons why investment managers decide to switch providers:

1. Cost and fee structure: Is it worth the price?

Fees are a key consideration in any business relationship. Fund managers must strike a balance between cost and service quality. Overpaying does not necessarily guarantee premium service, while underpaying can lead to substandard support. The ideal provider should offer a pricing structure that reflects the workload, provides transparency and delivers true value for money.

2. Declining service levels and lack of accountability

Service quality is non-negotiable. If KPIs are not met, SLAs are neglected, or investors face delays in receiving reports and other deliverables, it can lead to significant disruptions. Additionally, some fund administrators, especially those that grow through mergers and acquisitions without proper integration, may struggle to maintain consistent service quality. Managers should look for providers with strong client retention, low staff turnover and a reputation for building long-term partnerships.

3. Outdated or inadequate technology

Technology is a major differentiator in fund administration. Many providers still operate on legacy systems that struggle to keep pace with evolving market demands. A modern technology stack should be scalable, capable of delivering bespoke reporting solutions, and provide automation that enhances efficiency while reducing errors. If a provider’s technology fails to support a fund manager’s operational requirements, it may be time to move on.

4. Limited service offerings

Fund managers often require more than just core fund administration services. Ancillary services – such as SPV administration, compliance support, tax reporting, and regulatory filings – add significant value. If a fund administrator’s service scope is too narrow, requiring managers to engage multiple third-party providers, this can lead to inefficiencies and additional costs.

5. Expertise and industry knowledge

As investment strategies evolve, managers may expand into new asset classes or geographies. If their fund administrator lacks the necessary expertise to support these changes, it can create operational and compliance risks. A provider with deep knowledge of private markets and experience handling complex structures across different jurisdictions is critical for ensuring smooth operations.

Positioning for long-term success

Changing fund administrators is no longer seen as an operational nightmare but rather as a strategic decision to ensure continued efficiency, investor satisfaction and regulatory compliance. Fund managers should proactively evaluate their service providers and not hesitate to switch if their needs are no longer being met. By focusing on cost, service quality, technology, expertise, and additional service offerings, investment managers can position themselves for long-term success.

At Centralis, we understand the critical role that fund administration plays in your success. Our tailored solutions, cutting-edge technology and commitment to service excellence ensure that your evolving needs are met with efficiency and expertise. If you’re considering a switch or want to explore how we can add value to your operations, get in touch with our team today.