1 in 10 Hedge Funds Plans to Change Fund Administrators This Year

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A recent survey by TKS Solutions revealed that 10% of alternative investment funds have considered switching administrators during the past 12 months due to issues stemming from timeliness and accuracy of partner and shareholder accounting reports.

Customized reporting tailored to each fund

Penny - It Works is the most flexible partnership accounting tool in the industry - Gerry Ranzal of Anchin, Block, Anchin LLP

A recent survey by TKS Solutions revealed that 10% of alternative investment funds have considered switching administrators during the past 12 months due to issues stemming from timeliness and accuracy of partner and shareholder accounting reports.

Accuracy of third-party accounting and partner reporting are considered mission critical in attracting and retaining investors – yet many administrators continue to struggle with managing the nuances of each fund’s fee structures and reporting requirements. Lacking a sophisticated, yet flexible back-office accounting system, administrators often rely on manual procedures and spreadsheet-based record-keeping, resulting in both staff inefficiency and error prone processes.

TKS Solutions recognized the dearth of scalable packaged solutions for administrators, and in 2009 focused on enhancing its flagship software, Penny®, to answer their needs.

Says TKS’ President, Ronald Kashden, “based on feedback from our hedge fund customers, we discovered that many administrators were still struggling under the weight of convoluted spreadsheets. By expanding Penny’s partnership and shareholder accounting features to factor in administrator needs we could give them the efficiencies and improvements in accuracy that their customers are demanding in this economic climate.”

Three new features in particular: 1) workflow review 2) user-defined reporting fields, and 3) automated report distribution, have laid the groundwork for administrators who deploy the system to ensure accuracy and improve timeliness of the information they provide to fund managers and investors.

Automated Workflow Promotes Quality Assurance

Administrators have always struggled with a way to automate the review of their staff’s work. Through the use of the new administrator workflow review functions, Penny offers an integrated method for reviewing and approving data entry. Supervisors can monitor the progress of each fund and client and be alerted when overrides and exceptions occur. They can review activity at the fund or investor level, and flag items that require further attention. Closing the loop, Penny provides a method to document and track issue resolution.

Customized Reporting Tailored to Each Fund’s Needs

One particular vexing aspect of automating fund processing is the reality that every client is different and has unique reporting needs. The enhanced Penny® software addresses this through the use of user-defined reporting fields. Now the user can create custom reporting fields for their clients that extend the database and the application’s reporting capabilities, which can be associated with investors, funds, or even transactions. Once created, the application is instantly aware of any of new fields and the relevant screens and reports are automatically adjusted to reflect these fields. By combining these fields with the built-in report writer, administrators can easily tailor reports to the needs of each client.

Automated Investor Statements

Another aspect that administrators have struggled with is the issue of delivering statements and reports to their client’s investors and affiliated parties. Even if the administrator has successfully cobbled together several applications to send reports, they are still left with the problem of maintaining the distribution lists. Penny’s new investor distribution functionality provides a systematized way of creating/maintaining distributions lists as well as using those lists to circulate report packages. The system has the ability to assign preferences (including personal passwords and preferred means of receiving reports) to investors, classes of investors, and even their interested parties. Penny uses those settings to create distribution lists that can then be used to send monthly reports/statements to email, fax, or individual PDF file outputs.

Gerry Ranzal of Anchin, Block, Anchin LLP, describes the system as “the most flexible partnership accounting tool in the industry”. The recent administrator-focused enhancements to the system, coupled with its already robust client reporting facilities, paved the way for the program’s adoption in 2009 by two top 10 Boston-based fund administrators. Both are now able to leverage Penny’s ability to initialize funds mid-year - without the typically arduous backload – to simultaneously streamline operations and grow their client bases.

About TKS Solutions

TKS Solutions offers unified partnership and shareholder accounting solutions for the financial industry. Its flagship software Penny®- It Works, helps firm better manage their investment partnerships and funds by providing automated and instant access to detailed investor data. Penny’s open architecture and proven features easily integrate with portfolio accounting and customer relationship management systems, data warehouses and in-house proprietary solutions, creating a comprehensive and unified view of all investor data, as well as greater transparency for investors. TKS Solutions works with
partners worldwide to serve its customer base of leading hedge funds, fund of funds, private equity firms, administrators and management companies, ranging from $50 million up to $60 billion under management. For more information, please visit PennyItWorks.com

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Kelly Franklin
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