To what extent has your role become more strategic in recent years?
As firms become larger and there are more funds raised and operated, the role of the CFO has shifted away from just keeping the books to being the trusted partner in running the affairs of the firm. The modern-day funds CFO oversees operations; sources and implements technology to streamline processes; works closely with investor relations on fundraising and various fund performance requests; works through carry administration and other compensation plans; and supports other general strategies, including diversity, equity and inclusion initiatives and employee performance. The CFO also works with the GP, legal, and compliance personnel to ensure that all fund requirements are met.
“LP portals are now a way of life for communicating with LPs on a regular basis”
How are regulatory changes affecting you?
Regulation, though now a familiar landscape for PE firms, is ever-changing. The recent SEC guidance on registered investment advisers seems to codify compliance that has been happening within firms, but now it ensures that compliance is a priority. Firms that have been registered with the SEC for years and following a rigorous compliance discipline, including having a full-time CCO and compliance program, will find this guidance not too onerous. However, firms without such a program will need to spend time getting up to speed.
How are CFOs’ responsibilities shifting in response to industry trends?
The modern-day CFO spends more time keeping abreast of present and future changes in the industry and ensures that the GP and the firm adapt to the ever-increasing demands of regulators and investors alike. The CFO has also become a CTO/COO where technology can be used to help in process improvement and investor reporting at a reduced cost to the firm. CFOs are looking to strike the perfect balance of keeping certain functions inhouse and outsourcing others to keep abreast of increasing demands.
How is your interaction with LPs changing?
LP demands are always growing, and CFOs are looking for ways to automate and streamline investor reporting. LP portals are now a way of life for communicating with LPs on a regular basis. Data visualization is an increasing trend, where firms use tools to extract information from their underlying financial systems, and present dashboards and other interactive reporting to LPs. However, direct communication with investors remains an imperative.
What is keeping you up at night?
One key concern is resource allocation, which is becoming scarce in the post-covid era. Being able to operate that next fund or co-investment with existing resources while remaining commercially viable continues to be a focus. Technology and outsourcing can reduce that pressure.