Just as fund performance and profitability are coming under pressure, so too are the fees funds charge investors. The old 2/20 model – 2% management fees or 20% on performance – has fallen out of favor. Investors want lower fees and more flexible arrangements. Fees in the range of 1.3% and tiered incentive payment structures, which tie the manager’s payout to certain performance hurdles, are increasingly the norm. On top of that, managers are dealing with side letter agreements and custom fee schedules tied to each investor’s amount of capital in the fund. Faced with this added layer of complexity, fee calculations can be a time-draining accounting headache for fund firms – and a flash point for investors when errors inevitably occur.
Clearly, fee calculations are ripe for an automated, systematic approach. Recently, Aani Nerlekar, Director, Solutions Consulting, held a 30-minute webinar on how to systematize fee calculations with Geneva World Investor (GWI). GWI supports hedge, private equity, hybrid, fund of funds, and SMAs among others – with virtually unlimited fund structures for each fund. With investor-level P&L data collected for purposes of allocation, it can easily automate the calculation of all types of fees.
To complement Geneva World Investor, the SS&C Advent team can also perform fee calculations as part of our managed services offering, a fully outsourced or co-sourcing option that covers a broad menu of operational and accounting services, including daily reconciliation and investor servicing.
Our recent webinar includes a step-by-step demo showing all the fee structures Geneva World Investor supports, and how it calculates both standard and customized fees. If complex fee arrangements are taking too much staff time or causing friction with investors, check out the webinar to see how Geneva World Investor can make your life easier while accurately accounting for your fee income.
