Conversions: “Turning lemons into lemonade”

The move to a new administrator platform can go sweetly and smoothly if it’s planned carefully and managed by a dedicated, experienced team

Back in September 2015, when I was a panellist at the Bloomberg hedge fund conference, one topic caused an awkward exchange with another administrator’s CEO. The topic was conversions – or migrating funds from one administrator platform to another. 

“What are your thoughts about conversions Nate?” asked the moderator. I answered: “They can be ugly if you partner with the wrong firm.” My advice was to choose an administrator that has a solid reputation, deep resources and all the services that you might need in future. 

The CEO disagreed. He told the audience of roughly 500: “Conversions are easy. You run parallel for two months and go live month three.” I retorted: “This is exactly what sales teams tell clients on sales pitches.” There was a roar of laughter.

Even so, there is some truth in the CEO’s sales pitch. Conversions can go smoothly if they’re handled by experienced project managers, planned properly and implemented by skilled IT teams.

Checklist for a successful conversion

Citco has converted more than US$150 billion in assets over the past four years. This includes the conversion of 20 private fund managers with over US$2 billion in assets onto our fund services platform. Our experience with projects that include a great deal of complexity has helped us develop the following five pointers to a successful conversion.

Experience

Professional project managers, entirely focused on conversions, can see the good, the bad and the ugly. They set the tone for the onboarding process. Some firms have accountants performing conversions in addition to their day jobs. Citco project managers deploy a step-by-step process with controls that ensure that the project runs smoothly.

Manpower

Managers considering whether to switch administrators must have sufficient manpower. In the past, we have seen firms stretched thin without the resources internally for the conversion. We view our relationships as partnerships. As part of the onboarding process, we offer solutions and advice about best practices. Solutions we have offered include providing Citco staff to work at the client’s office or engaging a third party to act as an additional resource. 

Detailed planning

Projects must start with detailed planning, followed by monitoring. Many clients do not realise how much effort goes into a conversion, especially in exercises such as database creation, legal changes, extract, file testing, middle office services and risk management. Citco emphasises the importance of in-depth meetings to ensure we create the right service level agreements (SLAs). 

Integration management

A strict integration plan ensures conversion dates will be met. Factors that managers must consider include: finalising legal documents; SLA definition; database build; reporting and data extracts; trade, price and loader development; prime broker and counterparty connectivity; and investor reporting.

Technology 

Moving data from one administrator to another is always an IT challenge: there are many formatting and extraction issues to work through even before the data can be set up on the new system, so a skilled development team is always a key component of a successful conversion. The best IT departments help transform a potentially sour process into something that runs sweetly – ‘turning lemons into lemonade’.

Our contacts

Nate Goodman

Nate Goodman

Sales and Marketing, Fund Services

T+1 201 793 5949
Enagoodman@citco.com
LNew York