Due to increased visibility of hedge funds, the favorable returns achieved, the growth of the industry and the latest regulatory focus, alternative funds are under greater scrutiny by both regulators and investors, alike, to ensure that internal infrastructure is impeccable. The Capco Report, first released in March, 2003, underscored the need for focus on proper operational diligence. Alternatives TLC adds value to a firm’s marketability and mitigation of risk by helping them create and maintain a cost-efficient, tailored and scaleable operational infrastructure by stepping clients through as much (or as little) of the process as they desire:
- Needs Assessments (what does a specific firm really need now and two years from now?)
- GAP Analyses (what do they have already versus what has been determined that they need?)
- Product Availability Searches and qualifications (Requests for Information, Requests for Proposals)
- Total Cost of Ownership Analyses (3-5 year Cost-Benefit Analyses)
- Solution Decisions (including build/buy/outsource and any combination)
- Solution Implementation
- Procedural Manual Documentation
- Project Management
This higher visibility and accountability has also created a definitive, growing void of talent in the fund accounting and back office personnel space. Salaries for good, experienced fund accountants are at a premium; Turnover is at an all time high. The skills needed for competent fund accountants are not ones that are readily available or easily obtained; indeed, hedge fund accounting has few books, let alone formal training classes. Hedge fund back offices are mission critical departments, yet on-the-job training is the primary mode of learning and that is, at best, on-the-fly. Most firms do not have the staffing resources necessary to be able to spend the time to appropriately evaluate, let alone train, new personnel on the basics and nuances of the industry, the specific accounting tasks in their department, compliance issues to look for or even best practices within their own firm.
Firms that currently offer industry training classes for just some of the above skills are located in New York City or other metropolitan areas. They offer formal classes at their own sites, tend to use trainers that do not have recent hands-on experience and focus on generalized accounting concepts that include concepts that are not germane to the assignment, while excluding critical issues that are.
Alternatives TLC adds value by providing clients with the ability to hire less experienced and, consequently, less costly personnel whose skillsets can be evaluated more quickly and will appreciate faster, with a substantially reduced ramp up time. It allows a firm to hone the skillsets of its seasoned personnel. Training courses are conducted by experienced staff that, through active student participation, allow new and experienced fund accountants to enhance and broaden their knowledge base of the industry, the components of fund accounting priciples and the exposure to the new culture of compliance that has been mandated under the SEC regulations. These training classes can be tailored in a variety of ways to provide anywhere from supplemental to comprehensive information regarding the client’s own internal structure. Finally, by creating a proper training and support atmosphere, employee loyalty and retention increase, as well.