Selecting the right operating model and fund administrator for your firm
Key takeaways
Is your operating model holding you back when it could be setting you apart?
Your back-office operations must run at peak performance—both to facilitate your growth plans and to satisfy current and prospective investors’ queries for real-time performance data, analytics and transparent reporting. Achieving such performance requires operating models fueled by best-in-class talent, which is not always available or affordable, along with the latest technologies, which typically introduce their own set of integration and maintenance challenges.
These realities are forcing managers to carefully reconsider how to optimize their current back-office operating model.
This guide can help you assess where your current fund administration operating model stands—and how it may need to change.
We designed this guide to help private fund chief financial officers make the best strategic choices for their fund’s operating model and service provider. Use it to compare different fund administration models and their benefits, explore strategic options and learn how RSM Fund Services+ can help turn fund administration into a competitive advantage.
Fund administration isn’t getting any easier
Challenges complicating fund administration
More stringent investor due diligence and increased reporting demands
91%
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Expanding regulatory requirements
- Growing expectations for more detailed limited partner (LP) reporting
- Mandated due diligence on third-party service providers
- Updated Institutional Limited Partners Association (ILPA) standards for reporting and performance
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Growing tax complexity
- Increased range and complexity of fund structure
- Multiple reporting deadlines
- The addition of K2 and K3 forms
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Expanding digital transformation expectations
- Improved data collection, tracking, analysis and presentation
- Required investment in automation and advanced technology to produce quality real-time data at increasingly granular levels
- Required significant financial and human capital resources and ongoing maintenance to keep pace
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Widening talent gaps
- Growing need for in-demand accounting and technical talent to handle critical back-office functions and prevent delays in fundraising efforts or responding to investor needs
- Increased recruiting and retention challenges, heighted by limited career growth opportunities for administrative and technical professionals within most alternative asset management firms
Choosing fund administration operating models and the growing need for third-party support
The three primary operating models for fund administration are insourcing, co-sourcing and outsourcing.
Insource
Own everythingBest for firms wanting full control and customization, with deep internal capabilities
Co-source
Own tech, outsource talentBest for firms seeking shared oversight, efficiency and control over data/tech, plus scale
Outsource
Outsource everythingBest for firms wanting turnkey solutions, full segregation of duties, speed and simplicity
Given the complexities of modern fund administration and the hefty investment required to update legacy processes and keep pace with innovation, operating models are changing. While there is no correct answer to which operating model you should choose, it’s important to note that more alternative asset management firms are turning to external service providers for help. According to the Private Funds CFO Insights 2025 survey, 41% of firms say they will increase fund accounting outsourcing in the next 12 months.
Fund administration operating models—which one is right for your firm?
Ultimately, your firm’s specific circumstances and growth plans will dictate the best operating model for your strategic priorities. Remember that insourcing, co-sourcing and outsourcing form a spectrum, and many firms pivot from one approach to another over time. It’s also possible to incorporate elements of each approach to build a custom model that fully supports your strategy.
41%
Considerations for fund operating models
As you contemplate your operating model alternatives, use this table to better understand the strengths and challenges of each model, including the effects on agility, risk, cost and the ability to scale without friction. For each decision area, consider key questions to help determine what’s most important to your firm and which model aligns best with your strategy and can meet the demands of today’s environment.
| Decision area | Insource: Own everything | Co-source: Own tech, outsource talent | Outsource: Outsource everything |
|---|---|---|---|
| People | Pro: Full control over team culture and structure Con: High cost of hiring, training and retention |
Pro: Access to specialized expertise without full-time headcount Con: Requires coordination between internal and external teams |
Pro: Scalable team with industry experience and lower overhead Con: Perceived loss of control |
| Process | Pro: Full control to tailor processes and reporting Con: Often manual and dependent on internal know-how |
Pro: Shared accountability enables process optimization Con: Requires governance |
Pro: Proven, standardized best practices accelerate efficiency Con: Limited flexibility |
| Technology and data | Pro: Direct ownership and control over platforms and data Con: High cost and risk of silos |
Pro: Own platforms and data, joint access for managed support Con: Requires alignment |
Pro: Integrated tech stack, consolidated dashboards Con: Perceived limitations to customize |
| Cost and efficiency | Pro: Third-party fees avoided and direct control over tech spend maintained Con: High ongoing investment in talent, tech and oversight |
Pro: Shared costs, scalable support Con: Need for governance and coordination |
Pro: Lower overhead, predictable costs Con: Potential for hidden costs if not managed |
| Risk and control | Pro: Maximum oversight and control Con: Risk of internal errors or resource gaps |
Pro: Shared risk Con: Some loss of direct control; requires trust and clear agreements |
Pro: Provider manages risk Con: Less direct oversight; potential for service gaps |
| Scalability | Pro: Ability to quickly scale by reallocating internal resources and making real-time decisions without relying on third parties Con: Dependent on internal resources and hiring capacity |
Pro: Flexible, can scale with business needs Con: Requires coordination |
Pro: Highly scalable; provider handles growth Con: Potential for less customization |
| Reporting and compliance | Pro: Full responsibility for compliance and reporting Con: May strain resources |
Pro: Shared responsibility; access to compliance expertise Con: Requires coordination |
Pro: Provider offers robust compliance and reporting Con: Must ensure provider quality |
| Core competency | Pro: Full focus on fund administration Con: May detract from strategic initiatives |
Pro: Balance between control and external support Con: Potential for overlap/confusion |
Pro: More time for strategic focus, less administrative burden Con: Risk of disconnect from details |
Ask yourself
Can you attract and retain the specialized talent needed for critical back-office functions?
Do you need highly customized processes or would standardized best practices suffice?
Do you need highly customized processes or would standardized best practices suffice?
Do you have the resources to maintain, integrate and innovate your technology platform?
Does your current approach deliver the best value for your firm’s size, complexity and growth plans?
How much oversight and control do you require over operations and data?
Will your current model support future fund launches, growth and increasing complexity?
Is your firm able to deliver complete, accurate and timely reporting that meets investor and regulatory demands?
Are fund administration duties detracting from your ability to focus on your core business?
What to look for in a fund administrator
As more private equity and alternative asset managers look to third-party providers to help support fund administration, it’s important to remember that not all fund administrators are created equal. That’s why core capabilities should be only a starting point for selecting the best provider. Look for an organization that excels in the basics of fund administration, including fund accounting, investor reporting and tax compliance. Then, go beyond depth and breadth of services to consider how well that fund administrator is positioned to make the right decisions as fiduciaries for your fund today and in the future.
LPs are increasing their own due diligence efforts, so investors may want to evaluate and approve your fund administrator before investing. It’s therefore important to choose wisely.
Criteria for selecting a fund administrator
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Leading-edge technology that enables speed and agility
- Up to date with the latest advancements, including artificial intelligence
- Commitment to innovation in fund administration
- Fully integrated technology platform, ideally incorporating both book-side information and tax-side information
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Scalable, tech-enabled teams
- Deep technical knowledge
- Willingness to collaborate to meet increasing reporting demands
- Ability to scale as funds grow in volume and/or complexity
- Solid talent policies and training regimen
- Low employee turnover
- Cross-functional delivery team including information technology, business and industry professionals
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Strong commitment to regulatory compliance
- Mature compliance practices
- Investments to stay current with the latest standards from federal and industry regulators, including data and cybersecurity standards and environmental, social and governance (ESG) issues
- Solid brand reputation, credibility and compliance track record
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Good cultural fit and service model flexibility
- Collaborative, works as an extension of the internal team
- Aligns with your firm’s values, communication style and working rhythm
- Ability to adapt and evolve delivery models as the fund’s and your investors’ requirements change
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Solid pricing justification
- Clear pricing structures
- Strong pricing rationale covering scope of services, technology investment, talent quality and regulatory oversight
- Complete transparency with no hidden costs or unclear add-ons
Our integrated solution
RSM Fund Services+
At RSM, our fund administration services are built for both emerging and well-established private capital funds of all types and designed to support any operating model you choose. We offer best in-class talent, technology and processes, going above and beyond a typical fund administrator when it comes to capabilities, quality and private capital experience.
Plus, through the breadth, comprehensive scope of services and global footprint of RSM, we can support your full range of compliance and advisory needs. With access to a dedicated project management office (PMO) function and client hub, we make it easy for you to streamline and consolidate the right support that scales with your business.
How you win: The RSM advantage
- Audit-ready quality: CPA-reviewed workbooks and centralized tax/GAAP reporting provide accuracy and compliance
- Skilled team: A highly capable group of CPAs and industry professionals with deep private equity knowledge is supported by more than 20 hours of annual CPE training
- Operational efficiency: A dedicated PMO drives coordination across service lines
- Client insight tools: Key performance indicator dashboards and the Microsoft Power BI-enabled client hub provide real-time visibility
Inside our engagements
Growing stakeholder confidence through enhanced reporting and data visualization
The client:
Our client is a private equity and real estate firm with more than $14 billion in assets under management (AUM), registered with the U.S. Securities and Exchange Commission, and with three Cayman Islands-domiciled funds.
The challenge:
With lean resources, the firm needed a fund administrator capable of prioritizing their clients and delivering consistent levels of services and support.
The impact:
By fully outsourcing fund administration to RSM, the firm gained trusted experience and a responsive team capable of handling everything from first-year audit support and cost segregation to anti-money laundering processes, investor onboarding, Form PF and Form ADV filings, as well as all required Cayman Islands Monetary Authority reporting. A custom investor portal and performance metrics dashboards helped strengthen communication and relationships with key stakeholders, setting up the firm for ongoing success.
Creating space for strategic initiatives through comprehensive high-touch services
The client:
Our client is a U.S.-based private equity firm with $7.2 billion in AUM and multiple funds.
The challenge:
The firm’s incumbent fund administrator was unable or unwilling to provide high-touch services and the subpar quality of their work resulted in multiple data errors, late reports and poorly kept books.
The impact:
The firm was already working with RSM for tax work, and the CFO asked RSM to take over fully outsourced fund administration and management oversight, including all investor servicing and investor communications. Additionally, RSM vetted all historical data, facilitated the firm’s transition to Allvue Systems and now oversees management of the technology and provides fully outsourced fund administration. Dramatic improvements in service and efficiency have allowed the firm’s leadership to turn their focus from administrative headaches to strategic initiatives.
Creating a platform for increased cost efficiency and strategic acceleration through proactive advice
The client:
Our client is a private equity firm specializing in buyouts, with $1.3 billion in AUM.
The challenge:
Dissatisfied with its current fund administration, the firm was seeking experienced, proactive advice beyond just debits and credits along with advanced technology solutions and higher quality industry standard reporting.
The impact:
By delivering a range of advisory services along with staff augmentation, technology implementation, and accounting and audit support, RSM helped the firm improve reporting accuracy and overall financial management. Proactive advice on transactions, tax implications and other financial matters helped inform decisions, keeping the firm ahead of issues that could affect fund performance.
Is it time to change the way you operate?
Your back office can be a source of support and a competitive advantage that propels your fund forward. If it feels more like a source of constant challenges or a drain on your resources, then it may be time to make a change.
Data quality and accuracy risks
- Excessive data errors or discrepancies
- CFO or audit team spending significant time reviewing data and vetting accuracy
- Excessive effort spent on reviews, revisions and corrections
Reporting and compliance pressure
- Late reports or missed deadlines (client‑imposed or regulatory)
- Inability to quickly respond to investor or regulator requests for information
- Unwanted tax implications
Capacity, talent and technology constraints
- Insufficient resources (talent and/or technology) to support fund volume growth or more complex fund structures
Drained resources: financial, human capital or otherwise
Service provider limitations and stakeholder concerns
- Investor or LP concerns related to your current service providers
- Current fund administrator unable to provide strategic insights or guidance to meet evolving needs
RSM is ready when you are
When you’re ready to take the next step and start a conversation about what the right fund administration model looks like for your firm, RSM is ready to respond with the advice, support and services you need to make fund administration an advantage that sets you apart instead of holding you back.