Can Your Administrator Scale with You? What to Ask Before You Commit

Author: Rob Larson

The alternative investment landscape continues to evolve, with fund managers facing increasingly complex operational and regulatory burdens that threaten to neutralize the value of their hard-won competitive advantages.

In this environment, many managers find themselves drawn to specialist fund administrators, attracted by promises of personalized service, operational flexibility, and competitive fee structures that public-company administrators can't match.

Behind these compelling advantages lies a key question: Will your administrator scale with you as your business grows?

The key to making a discerning choice lies in asking the right questions of the administrator upfront – questions that reach beyond surface-level capabilities to reveal whether your potential partner has the infrastructure, expertise, and commitment to support your ambitions.

To help distinguish between administrators who can truly grow with you and those who might stumble, the following evaluation framework can serve as a guide to assessing an administrator's potential to successfully support a larger, more mature version of the business you have today.

Understanding Scalability in Fund Administration

Scalability in fund administration extends far beyond simple asset growth. Consider the full spectrum of growth vectors: increasingly institutional investors, evolving fund strategies and asset classes, and expanding regulatory requirements across multiple jurisdictions.  

Each of these factors places different demands on your administrator's capabilities. A boutique firm that excels at managing a single domestic fund with 50 investors may struggle when that same client launches international feeder funds, introduces complex derivatives strategies, or attracts institutional investors with more stringent due diligence and operational requirements.

Key Questions You Might Ask

• How are your teams across the firm structured to accommodate both volume growth and increases in operational and regulatory complexity?
• Can you provide specific examples of clients you've supported through significant scaling phases?
• Have you experienced client departures to larger administrators, and if so, what were the underlying factors that drove their decisions?  

The answers to these questions will reveal whether the administrator has a realistic understanding of scaling challenges and has developed both the deep benches and systematic approaches necessary to address them effectively.

Operational Infrastructure Assessment

Your administrator's technology foundation directly impacts their ability to scale efficiently with your growth. Whether they rely on proprietary or third-party systems, the technology stack must align with both your current needs and future growth trajectory. Proprietary systems can offer customization advantages but may limit scalability if the administrator lacks sufficient resources for ongoing development and maintenance. 

Beyond the underlying technology platform, data management capabilities become increasingly critical as funds grow. Your administrator should be able to provide robust data governance and cybersecurity protocols, scalable reporting infrastructure, and the ability to handle increasing transaction volumes without performance degradation. The quality and flexibility of their reporting capabilities will directly impact your ability to meet your funds’ governance needs, satisfy investor expectations and responsibly address increased regulatory requirements as you scale.

Equally important to these day-to-day operational systems are business continuity and disaster recovery protocols, which reveal how seriously an administrator takes operational risk management. Smaller firms may lack the redundancy and backup systems that become essential as your fund grows and investor expectations increase.

Key Questions You Might Ask

• Do you utilize proprietary accounting software or established third-party systems?
• If proprietary, what does your technology reinvestment roadmap look like, and how easily can data and reporting be customized or exported?
• If third-party systems are leveraged, what is the process for updating those systems in a responsible way?
• How do you approach risk mitigation, particularly regarding cybersecurity and business continuity planning?

Responses should include specific examples and concrete details, and reference established programs and procedures as opposed to ad hoc processes. 

Human Capital & Depth of Expertise

The human element remains paramount in fund administration. Specialist administrators hold appeal for the strength of their personal relationships and dedicated service models, but these advantages must be paired with an ability to scale with your ambitions and evolving needs.

Staff-to-client ratios offer valuable insight into service quality and sustainability, but the critical question is whether a firm can maintain service levels as a client’s scale and complexity increase. Related and equally important is the depth of specialized expertise across functional areas, including regulatory compliance, financial reporting, and investor relations. Knowledge retention strategies and management of key person risk become especially crucial for boutique firms that lack the redundancy of larger organizations – without them, the departure of specific personnel can disproportionately impact service quality and operational continuity.

Senior leadership accessibility often differentiates administrators initially, but this advantage must be sustainable. As the administrator plans for the potential growth of their own client base, are they protecting each client’s meaningful access to decision-makers and subject matter experts?

Key Questions You Might Ask

• What is the size and average experience level of each functional team?
• Is the current staffing level appropriate for your fund's complexity, and how would the team expand as your funds grow or increase in complexity?
• What knowledge management and cross-training protocols ensure service continuity in the event of turnover? 

Look for evidence of systematic approaches to talent acquisition and development rather than reliance on specific individual contributors.

Regulatory & Compliance Readiness

Regulatory complexity often increases with fund growth, particularly as managers expand across jurisdictions or introduce new investment strategies. Your administrator's regulatory capabilities must scale accordingly.

Multi-jurisdictional competency becomes essential for managers with international ambitions. This requires not just familiarity with different regulatory regimes, but active relationships with local counsel, auditors, and regulatory bodies. The administrator's regulatory change management processes reveal their ability to adapt to evolving requirements without disrupting ongoing operations.

Auditors increasingly scrutinize administrator capabilities, and deficiencies in this area can create significant obstacles during fundraising or investor due diligence processes. Audit experience with larger, more complex funds provides meaningful insight into the administrator's ability to support your growth trajectory.

Key Questions You Might Ask

• Is your regulatory and compliance team structured to work collaboratively on compliance programs as clients scale?
• Can you provide examples of successfully supporting clients through regulatory examinations or significant compliance challenges?

Seek administrators who demonstrate an ability to digest regulatory changes efficiently and provide flexibility in their compliance support, scaling their involvement based on your evolving needs rather than offering one-size-fits-all approaches.

Financial Stability & Investment in Growth

The financial health of your administrator directly impacts their ability to invest in the infrastructure and talent necessary to support your needs as you grow.

Understanding the administrator's typical client profile provides insight into their growth trajectory and business model sustainability. Administrators serving only small funds may lack the resources and experience necessary to support significant client growth. Conversely, those working with a range of fund sizes demonstrate proven scalability.

Evidence of reinvestment in technology and talent indicates commitment to long-term growth rather than short-term profit maximization. This includes technology platform upgrades, staff expansion, and development in key functional areas.

Key Questions You Might Ask

• What does your most typical client engagement look like, and who are your largest, most complex clients?
• How do you balance profitability with reinvestment in capabilities that support client growth?

Look for administrators who work with funds throughout the entire lifecycle, demonstrating both the commitment to long-term partnerships and the capabilities to service growing clients well.

Red Flags to Watch For:

Certain responses during your evaluation process should trigger immediate concern about an administrator's scaling capability:

• Inability to provide specific examples of clients supported through significant growth phases and changes in portfolio composition;
• Vague responses about technology capabilities, staffing plans, or regulatory competencies;
• Reluctance to discuss client departures or provide reference contacts with similarly-scaled clients; or
• References that don't align with your growth trajectory or complexity requirements

Building a Partnership for Growth

Specialist administrators can be the best long-term choice for many fund managers if they can demonstrate genuine scalability across all critical dimensions. The key to making the right choice lies in undertaking thorough due diligence up front that goes beyond surface-level capabilities to examine the administrator’s commitment to the fundamental infrastructure, expertise, and commitment necessary to support your ambitions.

Your choice of administrator is ultimately an investment in your fund's operational foundation. By asking the right questions and insisting on substantive answers, you can identify a partner capable of scaling with you, while avoiding those that may become tomorrow's operational constraint. The time invested in your evaluation process will pay dividends throughout your fund's growth journey, ensuring that your administrator’s operational, professional, and technological infrastructure serves as strong support for your ambitions rather than limiting factors.