AlphaWeek Q&A: Chris Meader, Founding Director, North American Fund Administration Association
AlphaWeek’s Greg Winterton discussed the genesis of and plans for the new North American Fund Administration Association with Chris Meader, Founding Director of NAFAA. Meader launched the association in January 2018.
GW: Chris, thanks for taking the time. What was missing that made you decide to launch the NAFAA?
CM: Hi Greg, thanks for allowing me to talk to you a bit about the association. There currently is no other business association for fund administrators in the US. While most administrators are members of associations such as the Hedge Fund Association or the Alternative Investment Management Association or the Managed Fund Association, these associations represent the best interests of the investment management industry and in speaking with various colleagues in the fund administration industry there was an identified need for an association to represent the best interests of fund administrators.
GW: Apex is your first member. They’ve been busy, acquiring Deutsche bank’s fund services business, and MM & Warburg & Co’s asset servicing business. Indeed, there’s been a lot of consolidation in the space. What’s your view on how much more of this there is to go?
CM: There is going to be additional consolidation as it is a way increase market share of the business and acquire new clientele. The volume of new fund launches is lower than it had been in the past and convincing managers to change administrators can be a challenge as it can be time consuming, may require time and effort by the manager to assist and can potentially be disruptive to investors. Additionally, when converting a fund from a competitor, the existing books and record may not be to the standard of the new administrator and they may need to replicate the entire history of the fund rather than simply load taxlots as of a point in time. If, as an industry we can establish standards for services across the industry then this could improve this process, level the playing field and make it easier to transition business from administrator to administrator.
GW: Your background is in hedge funds; you spent time at State Street, Citi and JP Morgan. Is the remit of the NAFAA primarily in the alternatives space, or will you be looking to be a voice for the mutual fund administrators as well?
CM: Although I started off working in mutual funds, the majority of my experience is in alternatives. As an industry, I expect the division between mutual fund administration and alternative fund administration to reduce as we see mutual fund managers launching hedge, private equity and hybrid funds and also see administrators merging or considering merging servicing platforms to provide a seamless experience to these clients. Due to this, we expect the association to represent both.
GW: As you sign up new members, many of them will have a global purview. Why the emphasis on North America, and what about the rest of the world?
CM: The initial focus of the association is on North America due to the lack of requirements to enter the industry, and we envision expanding and creating additional chapters in other locations in the future. I agree that most in the industry have a global presence, and we want to make the global best practices of our members the standards in the industry.
GW: Fast forward to January 2019. What will success look like to you in year 1?
CM: Success in year 1 would be to have 30-50 administrators, as well as some other service providers, signed up as members to the association and to have established committees of the association that are working towards an initial set of operating standards.
GW: What are some of the other goals of NAFAA?
CM: In addition to defining operating standards for service, the association will become a venue for administrators to meet and discuss trends in the industry. For example, identifying valuation and service methodologies for cryptocurrency funds, or valuation and verification of illiquid assets. It will also then be a way for administrators to monitor and address new regulations or proposed changes to regulations and provide feedback to regulators.