Operational efficiency in your back office and full oversight and control over your investor and asset data are fundamental to your fund’s success. In today’s private equity and venture capital environment, your provider of transfer agent services needs to be flexible. Your transfer agent services must be specialized to support your fund raising strategy, your investment approach and your presentation to the market. Whether your capital is coming from institutions, retail investors, crowdfunding or general solicitation, a transfer agent platform that can grow, scale, and adapt according to your business needs is essential.

A transfer agent’s capability needs to span the ecosystem of alternative investments and give you the option to pursue opportunities, change course and achieve growth without back-office complications.

There are four qualities in a transfer agent services provider that will assure that a company is the right partner for you.

1. Reliability

Reliability comes from experience. You want your transfer agent to have a long track record with every fund structure, asset class and fundraising strategy in the industry. Reliability is more than just conscientiousness but comes from a confident knowledge of the intricacies of the many scenarios in back-office processes.

The Golden Gate bridge is very reliable.

You don’t know what ideas you may have going forward, what changes of direction you may want to take. Your transfer agent should be able to support your fund wherever you decide to take it. Down the road, you may want electronic subscription capability, you may need accreditation services, you may want multiple share classes, you may need specialized reporting for institutional investors, you may want to launch a different structure of fund. When that time comes, it is not the time to find out that your transfer agent cannot handle the demands of your new vision.

With experience comes the technological ability to support and enhance new strategies. A prepared transfer agent will have systems, services and knowledge to empower you.

  • Flexible systems
  • Integrated services
  • Reporting tools
  • Data services
  • High-touch investor service support
  • Investor/Advisor web portal capability
  • Printing and fulfillment services

This capability allows you to focus on what matters most, new investment sales and asset acquisition. Reliability is key. You need to know that your back-office partner is able not only to keep up with your strategic vision but to give you tools to help you achieve it.

2. Responsiveness

Working with a transfer agent partner should be as much like working with your own employees as it can be. Your transfer agent team should reflect your hiring philosophy and be a familiar and available team. Investors and financial advisors have demands and expectations that need to be met promptly and professionally. Your transfer agent team represents your brand and their responsiveness is important to your reputation.

An investor is on the phone with her transfer agent and is happy at their responsive service.

Your transfer agent should not only be prompt and responsive in servicing investors, advisors custodians and other third parties but most importantly in serving you. New investment processing, financial and sales reporting, audit support and tax document production are all ways your transfer agent should be facilitating the operation of your fund. Slowness, lateness or inaccuracy only makes your job harder and more frustrating.

The more tasks your transfer agent is able to take off your plate the better integrated and cost-effective their service will be and the more efficient the division of labor. A transfer agent may be able to provide:

  • Fund Accounting
  • Investor services
  • Tax services
  • Compliance support
  • Telephone support
  • Web portal
  • Printing and fulfillment

Integrated back-office services with a single outsourced provider simplifies compliance, enhances data security and controls costs.

3. Scalability

All the ways that you can succeed as a fund sponsor can create operational issues for some transfer agents.

  • High investor count
  • Expanding asset volume
  • Asset complexity
  • Multiple share classes
  • Additional funds
  • New fund structures
  • Institutional investors
An office is filled with multiple workers at their desk.

All these mean demands on transfer agent systems and/or personnel that can build up over time. If a firm is not prepared for the level of success to which you aspire, it will not be a good operational partner. A firm’s ability to scale is a function of:

  • The sophistication of the transfer agent system
  • The versatility of the fund accounting system
  • The capacity of the tax reporting system module
  • The integration of the print facility
  • Staffing levels
  • Operational experience

A transfer agent’s inability to scale along with its clients’ funds results in a variety of service issues:

  • Operational errors
  • Slow new investment processing
  • Late distributions
  • Late tax documents
  • High hourly coats due to capacity limitations

You should not have to pay hourly for the limitations of your transfer agent’s capabilities. Know before you begin a relationship with a transfer agent services provider that they will not be overwhelmed by the success of your fund.

4. Versatility

As your operational partner, your transfer agent should be a part of your team and work according to your requirements. You should not have to accommodate the way your transfer agent prefers to do business. Their own economic interest incentivizes standardization, with every client fund using the same statements, web portal, checks and reporting package – and operating according to schedules convenient to them. But if your transfer agent is truly your operational partner, all deliverables and investor/advisor facing interactions will be customized to represent you. Workflow, scheduling, reporting, email communications and telephone support should all be customized for your brand and specific preferences, reflecting the image you want to present to the market.

Two partners discuss their ideas while sitting on some chairs.

Your transfer agent should also be able to give you the benefit of their experience with other client funds, providing insights on operational best practices, regulatory compliance and the downstream operational impacts of your decision making to ensure optimum back-office performance. A constructive consultative approach to the back-office implications of your obligations and preferences and a willingness to adjust systems and services to your needs represents the kind of versatility that is important in a transfer agent partner.

An outsourced provider of back-office services is an intimate part of your operation as a fund sponsor. All the qualities you look for in employees should characterize your transfer agent. The alternative investment fund space is complex and arcane. The right transfer agent partner is in a position to make every aspect of running your fund considerably easier for you.