Investor Services Q&A with Declan Ryan

15 August, 2024

Global Funds Investor Services

Declan Ryan, Global Head of Investor Services at Ocorian, talks about the roles and responsibilities of the investor services team within Ocorian Fund Services.

What are investor services?

Investor services can be typically broken down into two main areas:

1. Investor on-boarding

Investor onboarding refers to the process of bringing new investors on board. An important aspect of this process is ensuring compliance with KYC (Know Your Customer) requirements.

KYC requirements vary slightly by jurisdiction but generally aim to achieve the same goal: understanding the investor. Investor onboarding questionnaires may look different depending on the jurisdiction, but they are essentially asking for the same information. Regulators want us to know who our investors are, the nature of their business, and a clear understanding of their source of funds and source of wealth.

Investor onboarding goes beyond just ticking a box saying KYC is done. It's about helping clients navigate KYC requirements and understand the risks associated with their investors. This includes ongoing due diligence, which involves monitoring for changes in an investor's status, such as appearing on a sanctions list.

By providing ongoing due diligence and reports, investor onboarding helps clients understand their investor base, including location and potential risks. This allows them to better manage their portfolio.

2. Investor communications and transfer agency

The first part is ensuring investor data stays up-to-date. This includes things like bank account details. It's important because outdated information can be a security risk. For example, if an investor's email gets hacked, someone could try to update their bank details to steal money. To prevent this, we put processes in place to verify any changes to investor information through call backs. Call backs can be burdensome but they are one of the most effective methods we have in preventing fraud.

The second part of communication is about keeping investors informed about the fund's operations. This includes things like capital calls, distributions, and any reports the fund manager wants to send out. Basically, we manage all correspondence and query handling by acting as the intermediary for communication between investors and clients.

What type of investor service reporting do you offer?

Investor statements vary depending on the specific fund and what the investment manager wants their investors to see. We also handle all major industry standards like the Institutional Limited Partners Association (ILPA). However, Ocorian investor services are flexible and can provide fully customisable reports and generate whatever report the client needs.

Who needs third party investor services?

Investor services are beneficial for any fund manager who wants to provide their investors with consistent, high-quality service. Our goal is to free up the fund manager's time to focus on core activities like investment decisions and raising capital.

By outsourcing investor services to a third party such as Ocorian, the fund manager can delegate tasks like onboarding new investors, ensuring KYC compliance, and generating reports. This allows the fund manager's investor relations team to focus on attracting new investors.

Ultimately, a third-party investor services provider acts as a guide for the fund manager, handling administrative tasks and ensuring a smooth experience for investors. Investors don't need to worry about the complexities of KYC requirements or jurisdictional differences; the investor services provider takes care of everything.

What are the benefits of using a third-party provider for investor services?

We typically find that our clients benefit from outsourcing to a third party such as Ocorian for the following three reasons:

Scale and consistency: A third-party provider can handle a larger volume of investors efficiently and ensure consistent service across all clients.
Technology: They likely have invested in specialised technology to streamline the investor services process, which can be expensive for a smaller fund manager to develop and maintain in-house.
Industry knowledge: By working with multiple clients, they gain broader industry knowledge and experience with various investor types and situations. This expertise can be valuable for fund managers who may not have the resources to develop the same level of knowledge internally.

What are the challenges of using a third-party provider?

When choosing a third-party investor services provider, one of the key challenges is finding a provider that strikes a balance between technology and human expertise.

I have seen some providers overemphasise technology and try to sell a one-size-fits-all software solution. Others might take a purely manual approach, relying on low-cost labour.

The ideal provider I believe uses technology efficiently while still having strong human oversight. Technology is great for automating tasks but can't handle everything. Having experienced professionals on hand is crucial for handling complex situations and providing good customer service. The key is to find a provider that uses both technology and people effectively.

What should you look for in a new provider?

It is important to have up-to-date technology, knowledgeable staff who understand the regulations, technology, and a common sense and pragmatic viewpoint.

Regulations are not always prescriptive so it’s important to have a strong understanding of KYC and AML regulations as well as being commercially minded.

Bear in mind that investor services are typically bundled with fund accounting and administration services so its important to consider whether you are looking for a standalone service or a suite of fund services. When choosing a provider, will the investor services be of the same quality as the other services they are providing?

About Ocorian Investor Services

Ocorian have an investor services team of over 50 people across locations including Jersey, Guernsey, Dublin, Belfast, Luxembourg and Mauritius.

We offer a fully digitised, investor onboarding and reporting experience throughout the end-to-end investor lifecycle to deliver a seamless experience to both investor and general partner.