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"The only way a CFO can keep up with the changes and ensure ongoing fund compliance is to utilise specialist third party providers."

The Evolving Role of the CFO

25 Jun 2018

Amid a restless regulatory environment, Ocorian's Richard Hansford attended the CFO Forum in Lisbon this month to gauge how the role of the CFO is evolving and how outsourcing can ease their increasing burden.

Despite talk in the US of increased deregulation under the Trump administration, across Europe the industry has seen an ever-increasing and challenging regulatory landscape. This stands to significantly increase the pressure and therefore the importance of the CFO's role in the asset management industry. The event in Lisbon was designed to share knowledge and to shed light on this by identifying the key pressure points that are forcing CFOs to shoulder more responsibility:

  1. Regulation - Following the introduction of legislation such as AIFMD, MIFID II, FATCA and BEPS over the last decade, the regulatory and tax environment has become increasingly stringent. The CFO must keep abreast of these developments and how they impact fund operations and investor appetite. A lack of thorough oversight on their part could result in a failure to give investors enough detail and ultimately, in extreme cases, cause funds to fall foul of regulation. Many attendees outlined that, given the vast change they have witnessed across the industry, the only way a CFO can keep up with the changes and ensure ongoing fund compliance is to utilise specialist third party providers such as lawyers, tax advisors and fund administrators.
  2. Investor preference - Investors are demanding more from the CFO. Reports are being requested in both more detail and over shorter time-frames. Investors are also conducting more due diligence when looking to commit capital to new GPs. As a result, investors are looking for an increase in face-to-face time with the CFO to help them better understand their background, capabilities and the function of the finance team at the GP.

CFOs spread thinly

Despite the tightening of regulation, the impact can be seen as positive. The role of a CFO is now increasingly varied. Rather than focusing simply on numbers, CFOs are now getting involved in all aspects of the business. Whether it be helping to support and drive business growth or overseeing key fund operations, the role has evolved alongside the main drivers of regulation and more thorough investor preference.

However, as a consequence of the added responsibility and an increase in the amount of moving parts, the role of a modern CFO can sometimes be overwhelming. In fact, according to Ocorian's own research conducted in Q4 2017; investment and fund accounting is the number one service to be outsourced (followed by financial statements and NAV calculations). The conference's emphasis on utilising specialist third party providers therefore seems warranted - easing the burden upon CFOs in the strive for operational excellence.

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