5 considerations to future-proof private fund operations
To meet the challenges of today and prepare for the future, private fund managers must think beyond short-term fixes and instead embed resilience into their organisational frameworks. This requires treating compliance and risk management as strategic pillars of the business, rather than as tactical functions.
For most, this is easier said than done. Regulatory obligations are increasing across all major markets. Cyber threats are escalating. Geopolitical instability is creating volatility, while rising operational and compliance costs are squeezing margins. In this environment, investors are paying attention to operational infrastructure just as closely as they do to fund performance.
Firms that will be best positioned to attract institutional capital will be those that embed resilience most effectively into their organisations. Let’s explore five priorities that should be top of mind of asset managers today.
1. Interweaving compliance throughout the organisation
Regulation now touches every function of an investment firm from deal origination and valuation to investor reporting. The Securities and Exchange Commission’s (SEC) private fund adviser rules, Europe’s DORA (Digital Operational Resilience Act) and NIS2 directives, and evolving privacy regimes such as GDPR and CCPA illustrate how obligations now span governance, data protection, and operational resilience.
Too often, managers respond to these rules reactively, treating compliance as a box-ticking exercise. This approach creates gaps and risks credibility with both regulators and investors. Operationally focused managers instead interweave compliance throughout the organisation, embedding it in governance structures and investment decision-making.
Investors increasingly evaluate operational infrastructure alongside track record. This means that compliance should not only sit only with the Chief Compliance Officer or legal team. Deal teams should be trained to understand how new regulatory requirements affect transaction structures. Valuation committees should incorporate compliance considerations when reviewing methodologies. Investor relations professionals should be fluent in disclosure obligations so they can communicate transparently with LPs. Embedding compliance throughout the organisation sets the stage, but without the right tools it becomes expensive and inefficient. This is where investing in RegTech comes in.
2. Investing in RegTech and automation
The cost of compliance continues to rise as does the urgency to replace manual processes with automation. According to PwC, 74% of asset managers plan to increase their use of technology to meet regulatory obligations.
Adopting RegTech and automation accomplishes two things: creates efficiency and demonstrates a firm’s institutional-grade infrastructure to investors. This signal matters, particularly as operational due diligence has become as rigorous as investment due diligence. Investors increasingly want to know that the data underpinning valuations, performance reports, and regulatory filings is accurate, consistent and timely.
However, for many firms, building middle and back-office systems and teams in-house is not realistic. Instead, they partner with providers who can deliver expertise and technology as part of an outsourced solution. Technology can ease regulatory complexity, but it also introduces vulnerabilities. That is why the next priority is investing in cyber defence.
3. Investing in cyber defence
Cyber risk has become one of the biggest threats to private funds and global regulators are demanding higher levels of compliance and security. For example, DORA in Europe requires firms to demonstrate that they can withstand, respond to, and recover from cyber incidents.
For private funds, the real test of cyber resilience is whether a firm can demonstrate preparedness. Investors now expect to see cyber governance as part of their manager selection process, asking for evidence of policies and board oversight. A fund manager that can present a cyber policy covering prevention, detection, and recovery instils greater confidence that it can safeguard sensitive financial and personal data, ultimately becoming a differentiator that can tip the scale in favour of a manager during fundraising.
4. Building operational agility
The global landscape remains volatile. While managers cannot control external events, they can demonstrate agility in their operations. Investors pay close attention to how well a manager handles sudden regulatory changes, for example, looking for evidence that reporting remains accurate and that capital can still be deployed or reserved strategically.
Operational agility requires the right tools and infrastructure. Advanced workflow platforms enable managers to track processes in real-time, providing both internal teams and service providers with visibility into the status of tasks and projects, thereby driving greater efficiency and improving communication. Consolidated reporting systems bring together data from multiple sources into a single view, reducing duplication of effort and allowing for faster decision-making. These capabilities not only enhance transparency but also create internal efficiencies, allowing managers to pivot quickly when markets shift or new compliance requirements emerge.
5. Seeing outsourcing as a strategic advantage
Not many fund managers can create strong compliance, cyber security, and regulatory reporting functions internally. The scope is too broad and the pace of change too fast. Managers today view outsourcing as a strategic lever.
By partnering with trusted providers, managers can access deep expertise, scalable infrastructure, and cross border knowledge. This reduces the need to hire and train scarce talent internally, while still meeting regulatory and investor reporting timelines. Outsourcing also alleviates pressure on senior executives, particularly CFOs and CCOs, enabling them to focus on value-adding activities.
Flexibility in outsourcing models has also expanded, allowing managers to choose the approach that best matches their needs. Some prefer fully outsourced fund administration, moving entire functions to external providers to gain efficiency and global reach. Others adopt a co-sourcing model, where responsibilities are shared between the manager’s internal team and a fund administrator. Co-sourcing enables firms to retain direct control over certain high-touch activities like investor relations, while relying on external expertise for areas such as regulatory filings and fund administration. This hybrid model is particularly attractive for larger managers who want the assurance of in-house oversight combined with the scalability and expertise of outsourced support. Another outsourcing model that is gaining traction among mid-sized and growth-stage managers is the lift-out model. With this servicing arrangement, a trusted fund administration partner absorbs a manager’s back-office team, enabling the firm to be more agile and focused in an increasingly competitive landscape.
Resilience as the foundation of success
The pressures facing private funds in the current environment are real and rising. At TMF Group, we believe resilience has become a capital raising necessity. By embedding it into their operating models, private fund managers can convert today’s challenges into tomorrow’s opportunities securing long-term success.
