Five Questions To Consider When Selecting A Form PF Service Provider

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By   on January 16th, 2013

in  Compliance Coding

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Now that the first few Form PF filings by large private funds have been filed, and smaller advisers are preparing to file for the first time, more attention than ever is being paid to the Form PF solutions that are being provided by software companies and fund administrators. This is being driven by large filers that may be re-examining their home-grown Form PF solution, and comparing it to what is on the market, and smaller filers that may be looking for a standardized platform in order to complete a process that they haven’t undertaken before.

Using a third-party Form PF solution can help provide your firm with an auditable, repeatable process for filing Form PF, and at a more reasonable cost than using internal resources. Since many third party service providers have assisted in the preparation of numerous Form PF filings, they can provide first- hand information on how other filers have answered the more ambiguous questions on the Form. Finally, purchasing an external solution can help in keeping up with changes in the format of the Form.

Given the large amount of solutions to choose from, taking the time to select the right product for your firm is an important part of creating a successful Form PF program. With the regulatory landscape moving towards increased reporting and transparency for alternatives products, choosing the right technology partner now may result in fewer headaches further down the line.

With this in mind, below are five questions to consider when going through the Form PF solution selection process.

  1. How much support are you looking for?
    The range of support for preparing and filing Form PF varies from providing a desktop software install where the Form can be filled out completely by the client, to a full service option, where the third party, in consultation with the filer, prepares the entire Form from start to finish. If your firm decides to do a full-service outsourcing, you will need to decide whether you want to partner with an administrator, a compliance consulting firm, a technology firm, or a combination of one or more of the three. The answer to these questions will play an important role in determining which providers that you consider.
  2. What unique time saving benefits does the product offer your firm?
    Most products will offer standard features such as audit tracking, permissions, and formatting an electronic filing to SEC standards. In order to differentiate between various products, you should determine whether a particular solution has an existing relationship with one of your current administrators or data vendors. If it does, there may be built-in efficiencies that your firm will want to consider leveraging. Do you need to provide risk calculations (eg. filers completing Schedule 2 of the Form)? You may then want to consider products that have risk calculators built in, or have partnerships with your risk metrics vendor. Finally, if you have an existing relationship with a trusted software provider that has a Form PF solution, all other things being equal, it may make sense to deepen the partnership with this firm.
  3. What is the payment/pricing model?
    We have found that there are almost as many pricing models for Form PF products, as there are vendors. When selecting a product, ensure that you are only paying for what you need. For example, if you are comfortable filling out the Form, but are looking for a software solution for audit and consistency purposes only, ensure that the firm that you select has flexible payment options that do not charge for additional technology or consulting services . Some software companies will charge on a per filing basis, while others will charge an annual licensing fee. No matter which firm you choose, it is worth your time to comparison shop on price to ensure that you are getting the most bang for your buck.
  4. Do you want a hosted solution or a local installation?
    A hosted solution will help you avoid what could be a costly installation project, as well as the need to ensure that you are using the latest version of a product. This, however, may result in higher fees, and open your firm to the risks of having your Form PF data stored externally. Fund administrators will generally only provide a hosted a solution, whereas software vendors will be more likely to offer a local install option. The direction that you decide to go in will help narrow down the providers that you choose from.
  5. What enhancements is the vendor working on?
    Although the solutions that you are considering may not yet be the perfect match for your firm from a data input or user functionality standpoint, the vendors may be working on enhancements that will soon be available. For example, the vendors may be developing customized data feeds for your data providers, or enhancing user functionality features, such as being able to drill down to position level detail of numeric results for certain Form PF questions.

About IMP Consulting

IMP Consulting works with asset managers and hedge funds to select and implement effective technology solutions. Our team of industry experts includes former portfolio managers, traders, compliance and operations professionals, and IT managers and engineers from leading OMS/IMS and accounting systems providers.

Our team’s intimate knowledge of market-leading products and our industry contacts keep IMP on the inside track of the best products to use and the top vendors in the industry. The net result: a team uniquely qualified to efficiently and expertly match your needs with the full capabilities of your investment management systems.

This article was authored by Roger Binggeli, Senior Compliance Consultant. For more information, please contact Roger Binggeli at rbinggeli@impconsults.com or send an email to jmstabile@impconsults.com. Our office phone is 617-314-7415. Roger can be reached at extension 118, or dial the office manager at x101.