FTI Consulting/Wealth Management Real Estate Survey: More Commercial Real Estate Investors and Investment Managers Are Outsourcing Investment Administration
Investors that Outsource Fund Administration Value Industry Knowledge, Experience and Client Service, According to Outsourcing and Commercial Real Estate Investment Findings
Half of all respondents outsource at least some business functions, and 16% have outsourced in the past, but don’t currently outsource, according to Outsourcing and
“The real estate investment community’s overall perception of outsourcing has slowly shifted from a commodity to more of a value-add,”
Among those that already outsource, the three most influential factors in the selection of a fund administrator are experience with funds and/or portfolios similar to theirs (47%), client service/relationship management (40%), and real estate experience (37%).
Companies are now thinking about outsourcing more strategically, seeking solutions that help them better manage their investment portfolios or attract more LPs due to greater visibility into asset-level performance. For example, 80% of LP survey participants believe it is important to varying degrees for a fund manager/general partner (“GP”) to use a third-party administrator. Similarly, 86% of LP respondents believe it is important to varying degrees that third-party administrators have independence from asset-level providers.
Other key findings from the Outsourcing and
- Of the respondents currently outsourcing, 83% believe it is beneficial for the fund administrator to deliver integrated tax services.
- 75% of respondents that currently outsource believe independent oversight of other third-party providers, particularly at the asset level, is “very important” or “critical.”
- 56% of respondents that already outsource are considering outsourcing additional functions.
- The importance of their firms owning the technology stack varied among respondents, with 41% saying it was very important and 37% saying it was only somewhat important.
- Pricing (49%) was the most influential criteria among respondents that have never outsourced, followed by real estate expertise (45%), and technology solutions and capabilities (41%). Only 17% each cited integrated services, client service/relationship management, and cultural fit as the most influential criteria.
Participants who are not outsourcing any functions were asked about the quality of past outsourcing experiences and deterrents. Among those respondents, 27% said they had not found the right partner, and 25% said that management or external stakeholders believe the function is core and strategic. Of investors not currently outsourcing, 74% are considering a move to outsourcing within the next two years, reflecting a potential shift in attitude toward third-party service providers.
“With some executives hesitant to relinquish control over the performance of outsourced functions, finding a partner they can trust and consider an extension of the organization — especially those with real estate expertise and technology capabilities — can result in more positive outcomes,”
About the Survey
A range of commercial real estate investors, including institutions, pension funds, public and private REITs, sovereign wealth funds, investment managers, and private equity firms participated in the Outsourcing and
About the FTI Consulting Real Estate Solutions Industry Practice
FTI Consulting Real Estate Solutions professionals have the industry expertise and experience to help real estate owners, users, investors and lenders better navigate the market’s complexities and manage its inherent risks. As unbiased and independent advisors,
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Source: FTI Consulting, Inc.