Contributed by Thalius Hecksher, Global Director of Fund Services at Trident Trust
Several years ago, MIT Sloan Management Review published an article, “Don’t Confuse Reputation With Brand,” describing the differences between a business’s brand and reputation.
The distinction the article makes is simple but compelling:
- Brand is a “customer-centric” concept that focuses on what a product, service or company has promised to its customers and what that commitment means to them.
- Reputation is a “company-centric” concept that focuses on the credibility and respect that an organization has among a broad set of constituencies, including employees, investors, regulators, journalists and local communities — as well as customers.
In other words, brand is about relevancy and differentiation (with respect to the customer), and reputation is about legitimacy (of the organization with respect to a wide range of stakeholder groups, including but not limited to customers).
While a firm’s brand and its reputation are often closely aligned, the distinction between the two can be important, particularly to investors considering the funds with which they will invest. Investors want to associate their accounts with the highest quality providers and managers. Investors and their advisors screen hard for investment partners who will bring them the best chance of meeting portfolio goals, and expect the same from the services partners affiliated with these managers.
Actions Speak Louder Than Words
The third party relationships that managers establish for their funds should elevate the delivery of all the services that are required, from administration to audit, legal to compliance. The reputations of the various outsource partners are meaningful in making choices that support the establishment of lasting relationships.
To use fund administration data management as one example of this, there are several important considerations managers should focus on that feed into the reputation of such service partners. Some of the advantages a strong data management partner can bring to a fund manager include:
- Security: Robust security measurements system-wide, including networks, safeguarding of sensitive information, backup procedures, etc.
- Compliance: Authentication of client information and compliance with KYC (Know Your Customer) regulations
- Policies: A comprehensive set of policies and procedures around the control of information and data privacy
- Resources: Appropriate use of and access to company resources, both at the service provider and internally for the fund
- Support: Technical and online support to aid in client reporting and transparency demands
- Recordkeeping: Support with establishing controls to assist with recordkeeping fulfillment and compliance
- IT Development: Ongoing software development that keeps pace with the growing industry demands
All of these functions are essential to the operational efficiency of a fund, though few are responsibilities that a fund can afford to handle or is equipped to take on independently. Yet investors demand the highest levels of competence for these functions, and refuse to lower their expectations for the handling of their data and information.
Fund managers who choose their administration provider wisely can offer a comprehensive list of data management services to their investors from day one, and can assure their clients that the fund can and will keep pace with the industry’s evolving demands.
Some Additional Thoughts On Reputation
Managers who are evaluating potential service providers in the area of fund administration and client data management might ask themselves the following questions:
- Does the provider have breadth of global presence and coverage necessary for the fund’s business?
- Does the provider have familiarity with each jurisdiction’s regulations in which the fund has exposure?
- Does the provider have years of experience and demonstrated growth in the industry?
- Does the provider have a record of keeping abreast of changing investor demands for reporting and transparency?
Partnering with a service provider that can answer these questions affirmatively can do much to enhance a smaller fund’s attractiveness to outside investors and increase the fund’s reputation as a high quality investment option. The impact of such factors can also help fund managers to market the business effectively.
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