What Modern Managers Get Right About Fund Administration

A new generation of fund managers is approaching fund operations differently. Many are spinning out from traditional institutions, bringing hard-won lessons about what works and what doesn't. They've experienced legacy systems firsthand and are building their firms with a clear view of how modern fund operations should function.

This shift comes at a notable moment. Investors are actively seeking alternatives to large, traditional managers. A 2025 Industry report, found that approximately a quarter of investors plan to change managers within the next year. Of those, 42% specifically seek smaller, more specialised managers. The appeal isn't just about performance; it reflects frustration with operational inertia at many traditional firms.

What sets these modern managers apart is their approach to operational infrastructure. They treat operations as foundational to success, not an afterthought. Here's what they're doing differently.

Starting with Infrastructure, Not Retrofitting Later

Traditional fund managers often treat operational infrastructure as something to address after raising capital. Modern managers do the opposite, establishing robust back-office systems before their first capital raise.

This approach stems from experience. Many of these professionals spent years at larger firms wrestling with legacy systems or managing complex spreadsheets. They've watched simple tasks consume hours due to fragmented workflows. They've witnessed the chaos of retroactive system implementations: difficult data migrations, investor confusion during transitions, and the discovery that years of ad-hoc processes don't map cleanly onto modern platforms.

By implementing comprehensive fund administration systems from the start, these managers avoid technical debt. They're not building complex custom workflows that require expensive reconfiguration later. Instead, they adopt proven, scalable processes from day one.

Example: Net Funds, a New Zealand alternative asset manager, focused on building operational infrastructure before launching their multi-pillar platform. By implementing a professional-grade fund administration system from the start, they provided institutional-level onboarding and reporting immediately. Managing Director Michael Karabassis explained this allowed them to create "an ecosystem designed to support investors across their full financial journey" rather than retrofitting systems after launch.

Digital Workflows as Standard Practice

Modern managers see digital operations as their natural environment. They've lived through the inefficiencies of paper-based subscriptions, manual KYC processes, and email-based document distribution. They've fielded calls from investors unable to access basic account information. They've experienced week-long delays for routine tasks while legacy administrators provided no visibility into processes or timelines.

These managers implement digital workflows from day one:

• Investor onboarding & AML / KYC via an intuitive digital experience
• Digital datarooms with integrated digital applications and subscription e-signing
• Online redemption submission and automated processing Automated distribution calculations with instant statement delivery
• Real-time investor access to documents, transactions and performance data via a secure investor portal

This digital-first approach delivers immediate benefits. One modern private credit manager using Caruso reported that fully digital onboarding reduced time-to-investment from weeks to days, allowing faster capital deployment in competitive situations. More importantly, it signals to investors—particularly younger allocators—that the fund operates with modern efficiency.

Adopting Best Practices Over Custom Solutions

Perhaps the most notable characteristic of modern fund managers is their openness to external expertise. Unlike traditional firms that defend legacy processes with "this is how we've always done it," new managers actively seek guidance on optimal workflows.

This approach stems from understanding that operational excellence means implementing proven methodologies efficiently, not reinventing processes. Modern managers regularly ask questions traditional firms rarely voice:

• What's the industry standard for investor reporting frequency?
• How should we structure compliance workflows?
• What detail do sophisticated investors expect in distribution statements?

By adopting traditional best practices rather than developing bespoke processes, these managers avoid common pitfalls while accelerating their operational maturity. They understand that investors value predictable, standardised processes over creative interpretations of fund administration.

Modern managers recognise that regulatory obligations don't scale with fund size. The same AML/KYC requirements that apply to firms managing $5 billion apply equally to those managing $50 million. Rather than treating compliance as something to enhance later, these managers implement comprehensive compliance programmes from inception. They know that retroactive implementation is more expensive and disruptive, while exposing the fund to unnecessary regulatory risk during its most vulnerable early stages.

Using Technology to Build Credibility

For modern managers without traditional track records, every investor interaction becomes crucial for building credibility. These firms discover that sophisticated operational infrastructure can compensate for lack of tenure, signalling institutional quality despite their often immature status.

Consider the contrast in first impressions:

• An traditional fund with a decade-long track record sends prospective investors a 30-page paper subscription document requiring printing, signing, scanning, and posting
• A modern manager using directs the same investor to a rich dataroom, with integrating digital subscription flow and instant investment confirmation.

This technology leverage extends beyond appearances. When modern managers provide investors with real-time access to performance data, transaction histories, and document libraries through branded portals, they deliver transparency that many traditional firms struggle to provide. This operational sophistication becomes a differentiator in competitive fundraising situations, particularly with investors frustrated by opaque, manual processes elsewhere.

What This Means for the Industry

These trends among modern managers carry implications for the broader fund management industry. As new entrants set higher operational standards from day one, traditional firms face increasing pressure to modernise or risk appearing outdated.

The gap between modern and traditional managers' operational capabilities creates an interesting dynamic: newer, smaller firms often provide superior investor experiences compared to larger, more traditional competitors. This inversion of traditional expectations forces the entire industry to reconsider assumptions about scale, sophistication, and operational excellence.

For fund administrations firms, this shift creates both opportunities and responsibilities. Modern managers need partners who understand their unique position and are sophisticated enough to support institutional-grade operations but flexible enough to accommodate growth and evolution.

Looking Forward

The operational strategies pioneered by modern fund managers today will likely become industry standards tomorrow. Their focus on digital-first operations, standardised best practices, and technology-enabled investor experiences represents a fundamental reimagining of fund administration.

For traditional firms, these modern managers offer lessons about the dangers of operational complacency. For investors, they provide a preview of what modern fund management can deliver when technology and operational excellence are prioritised from inception.

As this generation of fund managers continues to grow, their influence will extend beyond individual firms. They're establishing new baselines for what investors should expect from any manager, regardless of size or tenure. This transformation arrives at a critical moment: the next generation of allocators, accustomed to seamless digital experiences in their financial lives, will view these operational standards as fundamental requirements, not impressive innovations.

For fund managers looking to establish institutional-grade operations from day one, modern fund administration platforms like Caruso provide the infrastructure needed to compete effectively, regardless of size or tenure. To learn more about building scalable fund operations, contact [email protected].