Gen II on taking a client-first approach

This article is sponsored by Gen II.

Every fund administrator on the market vows to be an extension of their client’s office, with the response times and reliability of an in-house staff. And the industry has exploded largely because most of them do act like they’re part of the internal team. But the reality is a little more complicated.

Plenty of service providers can mimic the rigor and pace of their clients, but there is that rapport that takes everything up a notch. If that service provider looks at the world like that GP does, they can help devise solutions for problems that haven’t even shown up at their doorstep. It’s not merely being aware of the trends and culture of a given asset class. It’s often more specific than that, and specific to that particular manager.

The service provider tackling that fast-growing mega-fund brilliantly may forget the reality of that veteran mid-market fund that’s stayed faithful to their business model for 30 years. This isn’t to say that the same administrator might not be able to serve both kinds of GPs, but chances are their primary client liaison is the same person. And many administrators are very sensitive to the fact that rapport is key and will tap the person best suited to that account.

In the case of Gen II’s management company services business, it chose Phil Bruno, the firm’s former CFO, to lead the effort. We sat down with Bruno to talk about his career up to this point, and what he thinks is vital to management companies today.

How did your career lead you to this corner of the market? 

For the last five years, I have been Gen II’s CFO, and now I’m shifting over to lead the management company services business. And I think it makes a lot of sense, given my experience. My overall career has focused on accounting and finance starting as a CPA with a big four accounting firm and then developing a CFO skill set focusing on supporting a business in areas such as performance reporting and analysis, expense management, strategic planning and key initiatives including M&A and financial system implementations.

On the business side, I have focused on the alternative asset management business since 2007. Prior to Gen II, I was with Credit Suisse serving in various senior financial leadership roles supporting their global asset management division with a focus on alternative investment products – private equity, credit, real estate and hedge fund strategies.

During my time at Credit Suisse, the firm was actively building up their private equity business. And I was there to support that initiative from the management company perspective.

We launched a number of different strategies – direct leveraged buyout funds, fund of funds, secondary funds.  This required close partnership with our internal fund administration team in the execution of these activities. So my initial exposure to fund administration was on the captive side, doing fund admin for our own business.

While I was there, Credit Suisse did explore outsourcing. We asked if we were better off tapping a third-party administrator that could provide the dedicated skills and know-how along with the technology platform to scale with us versus continuing building the capability on our own.

At Credit Suisse we had the resources of a larger, global organization but were challenged with turnover, evolving technology and the pressures of having to meet the broader firm’s financial goals. In this case, we had to meet internal profit targets.

So, we launched a project to outsource, but that began by outsourcing our people to a lower-cost location. It was a first step, but eventually we moved a bunch of our internal products to Gen II, and that’s how I got exposed to the firm.

But one of the things that I believe is important to my ability to serve our clients now, is by being a client back then. I’ve wrestled with so many of the issues around technology, turnover and the growing demands of compliance matters that our clients are wrestling with right now. I’ve been in their shoes.

Following the financial crisis and the impact on the regulatory regime, Credit Suisse had to rethink its strategy regarding the private equity business so I ended up being heavily involved in spinning out a number of our PE funds. As that wound down, I began looking for my next opportunity that would allow me to be part of the growth story in private equity and ended up landing at Gen II.

Given all that time in the trenches, how has the industry changed over time? 

This business is people-dependent. Some element of technology has always been involved, but the real challenge was: how do you break the dependency on staff? The story was always, “We’re launching a new fund. I need more people.” Tech was something that might allow fewer people to do more, but it was only slowing the growth in staff, not halting it. Our big question was: is there any way, any technology, to automate activities to drive greater efficiency gains. And that began back then and still continues, but I still believe that we’re in the early digitization phase.

And we’re making strides, in the way we’re moving away from e-mail to portals and have automated some elements of the reporting process, but we’re still not there yet. The first admin to truly automate administration will jump to the head of the pack. However, even as we continue drive innovation to the to the next stage, our tools still do plenty to help lighten the load on clients.

Let’s say the next big leap in technology manages to automate everything but 25 percent of the work? How does that change the demands on administrators?

It would certainly change the value-add. Administrators will be able to focus on expanding the strategic value of their relationship with their clients rather than just supplementing the client’s staff while delivering processing skills and rigor.

They can partner with their clients on structures, provide compliance and regulatory support while identifying and sharing best practices, deliver data analytics and, last, maintain a focus continuous process improvement to deliver their services at a faster pace.

From the management company perspective, our focus is to leverage automation, process improvement and the use of technology coupled with our experiences and expertise to help our clients focus on what their expertise and experience should deliver: market-beating returns.