Rethinking replication.
Discover how private markets firms are transforming their operating models—and why now is the time to reduce replication.
Rethinking replication.
The case for a leaner fund administration model. A research study by SEI in association with Cutter Associates.
Rethinking replication
Replication is complex, costly, and may be holding you back.
Private market firms didn’t set out to build complex webs of fund administration and internal replication processes. It happened over time without considering an end-state technology and operation model and was driven by new launches across jurisdictions, regulatory pressure, and M&A. To make sense of their fragmented systems, many firms built internal teams and infrastructure, often just to replicate what administrators were already doing.
Replication is now a major drain on resources; it demands investment, technology and time.
We commissioned this research because we see a better path forward. One that reduces replication, manages risk, and helps reallocate resources towards what really matters. Rethinking replication - we feel like it’s ripe time to do so in the industry right now there’s been so much growth and with growth comes some challenges and pain points.
There’s been an awful lot of consolidation within the industry. What that’s lead to an amalgamation of different technology stacks, different processes, and ultimately different practices. One of the phrases we deploy a lot in our industry is "less is more." In this research we found that 79% of managers ideally would like two or less chosen service providers as their partners.
The reality of today is quite different. Many managers unfortunately and primarily due to consolidation and M&A activity for the last number of years, have five+ vendor relationships to manage. That’s incredibly complex, its expensive and it’s a distraction to their core business.
Over half of managers believe that if they choose the right partner it will reduce their internal replication needs. You need to think about a partner that will scale with you. 63% of the managers that we interviewed said that better data would reduce their replication. The importance of data quality can not be underestimated.
So as you consume data potentially from multiple different sources, it’s really important that you can harmonize that data, that you can get a unified view of your world, and therefore you can put analytics on top of that.
What we found in this research is that actually, 47% of managers said that replication adds three plus days to the process, and 14% said that it adds a week plus. That's a long time to add on. The industry needs to move towards more compressed timelines, and if we're going to do that, we really need to examine these replication models.
We think it's ripe time to rethink what has been deemed the norm for how managers perform oversight on their service providers. The need to replicate shouldn’t be there if there is true trust in the data set and that you have chosen the right partner.
Top-level findings.
- Replication is widespread and costly: 43% of firms say over half of their non-investment staff are tied up in administrative replication or oversight
- Too many administrators, not enough efficiency: 57% of firms use multiple admins—14% juggle more than seven providers
- Outsourcing doesn’t eliminate in-house work: 55% of firms maintain an internal accounting book of record, even when using external administrators
- Delayed reporting, strained investor relations: 47% of respondents say replication adds more than three business days to their reporting cycles
- Firms want change, and are acting on it: 24% of firms are already reducing replication, and 55% say they would consider it in a future strategy
SEI’s global platform advantage.
Selecting SEI as your partner means that even where you need a second provider, we can ingest their data and make that usable, too.
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Redirect valuable resources
Replication consumes time, budget, and talent that could be redirected toward creating alpha and capital appreciation for your investors.
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Full data visibility
Modern fund administration allows for real-time data access and seamless integration, meaning data can be harmonised within your environment.
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Trusted outputs and reduced risk
Consolidating administrators and trusting a high-quality partner can reduce risk and improve insight.
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Scalable coverage
The right partner has the technology and infrastructure to support multiple asset classes and span jurisdictions to drive growth.
Partner with SEI.
Explore a leaner, more scalable fund admin model with Bryan Astheimer, Head of Investment Manager Services, EMEA
