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The New Normal: Outsourced Private Equity Administration

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Private equity continues to gain popularity among investors. According to Preqin the number of private equity funds seeking capital hit a record 1,908 funds at the beginning of Q2 2017.(1) We anticipate that number will continue to grow as investors seek alternatives to more traditional equity and fixed income investments. At UMB Fund Services (UMB), we see that demand reflected in our own business.

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A Case for Outsourcing

As more institutional and retail investors take interest in private equity funds, the need for transparency and accountability increases as do the corresponding reporting requirements. This level of reporting requires a great deal of administrative support and experience.

We are seeing an increase in the number of private equity managers who are outsourcing their back office administration to gain efficiencies, reduce risk and meet regulatory and compliance requirements. Given the various demands and complexities that managers face, many find that outsourcing allows them to spend more time focusing on the fund instead of administrative functions.

There are several benefits of outsourcing that managers should consider, including:

  • Gain efficiencies as providing back-office services to complex fund structures and complex investment types are a strength of fund administrators;
  • Reduce risk by benefitting from proven controls, processes and technologies that can be costly and time consuming to implement in their own shops;
  • Meet regulatory requirements by staying ahead of the curve and responding quickly to evolving regulatory pressures;
  • Meet investor demand by satisfying requests for independent fund and investor valuation.

Overall, the greatest benefits of allowing a third-party administrator to manage the administrative functions for a private equity fund are increased efficiency and reduced operational burden.

Partnering for Success

There are still managers that are leery of outsourcing due to the perceived loss of control, lack of understanding about their product by the administrator or the need for transparency Those concerns are best addressed by partnering with an administrator who is willing to take the time to understand your fund and embrace your unique needs.

In making this decision, managers should conduct extensive due diligence to ensure that the administrator is reputable and has proven policies, procedures and controls in place to ensure all aspects of fund administration will be conducted in accordance with the manager’s expectations.

Key Administrative Services

An experienced administrator can provide a wealth of services to private equity managers, including:

Full back office administration

  • Accounting
  • Tax preparation, compliance and reporting
  • Investor servicing
  • Custody services (2)
  • Product launches/conversions via turnkey solutions

Critical to all of this is the technology platform supporting each function – a key differentiator in the administrator space. Private equity funds are each unique and the technology supporting these funds needs to reflect their specific needs. Quality administrators in this space have technology that is customizable and tailored to manager needs while also evolving with the industry demand for electronic data.

Interested to gain more insights from thought leaders at UMB Fund Services‡? Check out our News and Insights section and follow us on LinkedIn‡ to stay informed of the latest trends in fund administration.

1. Preqin Quarterly Update Private Equity & Venture Captial Q1 2017
2. Typically provided by an affiliated bank or broker-dealer.


Jill Calton is senior vice president, Director of Alternative Investment Operations, for UMB Fund Services and provides leadership and oversight to all of the company’s alternative investment client servicing teams.



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Fort Worth Team Will Make Iconic Move in 2018

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Our Fort Worth office has signed a 10-year lease for nearly 20,000 square feet in office and lobby space previously held by Frost Bank.

UMB Fort Worth office expansion

The space is located in downtown Fort Worth, with our team planning to move in 2018. We will have 12,000-square-feet of office space on the fifth floor, a newly remodeled 7,000-square feet space in the lobby and exterior signage on the building.

“Since entering the Texas market four years ago, and with our recent acquisition of Meridian Bank, UMB Bank’s growth in this region has been off the charts,” said Cliff Keiser, president of UMB Bank’s Fort Worth operations and commercial banking team. “As we continue to build relationships in the corporate sector and expand our services, it seems only fitting that we showcase our commitment to Fort worth with a long-term lease at one of the city’s most iconic buildings.”

Check out articles in the Dallas Business Journal and Fort Worth Business Press for more details on this exciting expansion.

Visit umb.com to learn how we can help your business.

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UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Mortgage applications: In person or digital?

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Our world is becoming more and more digital, from voice-controlled electronics and self-driving cars, to thumbprint recognition and smart home devices. But how does the growing influence of technology impact how people buy homes?

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According to a recent study by the American Bankers Association, it doesn’t. More than half of those interested in purchasing a home prefer to apply for their mortgage face-to-face. Only 17 percent said they would apply for a mortgage online. Contrary to the technology trends in other aspects of our lives, individuals and families are sticking to the tried-and-true method of speaking with a mortgage professional in person before signing on the dotted line.

Additional survey results showed that people are not confident about their knowledge of mortgage ins and outs. Review our mortgage calculators and articles to learn more about the home buying process.

(Click to Enlarge)

Source: American Bankers Association

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Inside UMB: Finding a Career Match

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Ram Shankar joined us one year ago today as executive vice president and chief financial officer for UMB Financial Corporation. As our CFO, he is responsible for corporate and regional finance, corporate treasury, regulatory reporting, strategic planning, and investor relations, as well as management and board reporting. Watch the below video and read his Kansas City Business Journal Newsmaker profile to learn more about why Ram says this is his “dream job.”

Are you looking for your dream job? Visit our careers page to search current openings.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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UMB Leadership Series: Dave Bonner

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Every year, UMB presents Leadership Awards to a select group of associates who best demonstrate the attributes and behaviors our company values most. The UMB Leadership Series highlights our award winners who are leading the way at UMB.  

Dave Bonner, Vice President/Director of Operations, was honored with a Leadership Award for nurturing relationships by demonstrating dignity and respect. In the Q&A session below, Dave explains the importance of building relationships – based on common core values and goals – to achieve success in the business world.

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How would you describe your leadership style?
I would describe my leadership style as participative. Everyone’s voice deserves to be heard. I’m fortunate to be surrounded by talented and knowledgeable team members. We strive toward a common goal of providing the best service to our customers.

What is one characteristic you believe every leader should possess?
It’s difficult to pick one; however, possessing common core values are important for earning respect and fostering an environment in which team members share ideas and feedback.

How do you effectively manage the needs of a business while still nurturing relationships? 
Positive associate experiences and relationships are critical for high-performing companies. They are key building blocks for success and stability and assist in motivation, goal achievement, professional growth and customer satisfaction.

Leaders must nurture and maintain credibility within their teams to gain trust and support during times of change. UMB is committed to delivering the unparalleled customer experience to both our customers and our associates. Focusing on this concept of putting customers first – both internally and externally – fosters an environment of success for our associates, customers and business goals. In the highly competitive banking industry, this is one way UMB sets itself apart.

Is there a person who has had an impact on you as a leader?
My dad was my inspiration. He was humble and had a strong work ethic. He instilled many important values within me that shaped my personal and professional life.

What are some tips on continuing to grow and develop as a leader?
Listen, learn and adapt.

Any parting words of advice?
It’s alright to create fires, as long as they’re controlled and managed.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Monthly Media Update – July

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NPR discusses the fears of a emerging farm crisis with our ag division, CNBC Powerlunch and Bloomberg Radio talk to UMB’s CIO, our Colorado Springs community bank president supports the city’s downtown redevelopment, and why hospitals are spending millions of dollars developing electronic health records are a few media coverage highlights from July.

Stay informed on industry trends and noteworthy company news by visiting our UMB in the News section on umb.com, which is updated weekly for timely viewing.

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UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Market Minutes: Earnings, Tech Stocks and Valuations

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Chief Investment Officer KC Mathews recently shared his thoughts on current market conditions with Bloomberg and CNBC. Review the below media highlights to learn more about items he’s watching.

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*Bloomberg Radio with Pimm Fox and Lisa Abramowicz (audio): UMB’s Mathews: People Conflated Trump Bump With Earnings Rally ‡

*CNBC (video): Tech leadership names will likely rotate

*Bloomberg: Maybe ETFs Aren’t the Reason You Can’t Find Any Stocks to Buy

Also, read KC’s recent economic articles, which give more detailed information on where we’ve been and where we’re headed.

Follow UMB‡ and KC Mathews‡ on LinkedIn to stay informed of the latest economic trends.

Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Product Evolution Critical to Long-Term Success

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Challenging Landscape

More than ever before, investment managers are in a challenging environment that is prompting them to bring a more diversified product set to clients. In addition, this diversified product set needs to be rooted in a unique investment philosophy. This combination is at the core of being a successful manager and it is a key component to attracting and retaining investors.

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It will come as no surprise that 2016 was a tough year for mutual funds. According to a February 2017 report by FUSE Research Network,‡ mutual fund outflows reached $127 billion in 2016 – greatly surpassing the $36.5 billion in outflows seen in 2015. These outflows hit almost every category of mutual funds with U.S. equity funds taking the brunt. The only exceptions were taxable bond, municipal bond and commodities funds.

Survival in this ultra-competitive space is going to require an open mind and willingness to evolve product offerings and mix while continuing to hone in on a unique investment perspective – a challenge to be sure.

Define the Opportunity

Before launching any new products, it is critical to understand your target market and to gauge how best to position your firm in this rapidly changing environment. Get focused on where you have real opportunity based on market demand and product performance. We know that “shelf space” is limited and any new product needs to respond to a niche demand. Understanding the opportunity in the marketplace first requires that managers understand their clientele.

We continue to see the need for depth and focus. Managers cannot be everything to everyone and often try to do so to their detriment. Honing in on the real opportunity requires critical analysis of the current client base and the marketplace’s appetite for a given product. Essentially, knowing what you do really well and marrying that with what investors are actively seeking from a product perspective will provide the best likelihood for success.

Product Evolution and Consultative Approach

Not long ago, diversification meant a mix of equity and fixed income with exposure to both domestic and international companies. Today, following and in response to a prolonged low interest rate environment and an often irrational and volatile market, investors are looking to a different product mix for better and more predictable returns.

We see some managers taking their existing successful strategies and finding new opportunities to repackage those in the marketplace by launching ETFs, continuously offered closed-end funds, collective trusts and liquid alternatives, all while weighing passive versus active offerings.

As mutual fund launches continue to decline year-over-year, we continue to work with managers to determine the best way to package their strategy for ultimate success.  The industry is seeing an increased focus on alternative strategies and the transfer agency is evolving to support a broader product set.

Some key questions we ask clients to consider when evaluating new product opportunities include:

  • Why do you want to launch this product?
  • Who is your target market?
  • How does your unique investment strategy complement this product type?
  • What does the marketplace opportunity look like for this strategy?
  • What sets you apart from the competition?
  • How will it be marketed/distributed?
  • What is a competitive/attractive fee structure? 

Successful product launches require the assistance of an experienced fund administrator. The ever-changing regulatory environment partnered with the ongoing reporting and service demands of these products is complex. It is important to identify a fund administrator that has experience in that particular product offering and works as a true extension of your operation.

Scott Schulenburg oversees the Investor Services & Transfer Agency functions for UMB Fund Services.

Interested to gain more insights from thought leaders at UMB Fund Services‡? Check out our News and Insights section and follow us on LinkedIn‡ to stay informed of the latest trends in fund administration. 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Scott oversees the Investor Services & Transfer Agency functions for UMB Fund Services. Scott previously served the Company in the roles of Client Relations Manager, Global Relationship Manager, and Vice President / Head of Client Servicing & Operations. Before joining UMB Fund Services in 2005, he served as a relationship manager and director of business development with a national broker-dealer. Scott earned a bachelor’s degree in economics from the University of Minnesota and an MBA from the University of Phoenix.



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CEO Corner: UMBF Earnings Summary

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Yesterday we shared our earnings report for the second quarter of 2017. I’m pleased to share some high-level results and notable milestones achieved during the second quarter.

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Loan growth

Increasing loan balances are a driver of revenue growth for our company, and we again delivered solid results with average balances for the second quarter increasing 9.4 percent year-over-year, led by C&I loans.

Key Metrics

Our ongoing efforts to drive positive operating leverage are paying off. For the first half of 2017, revenue growth outpaced operating expense growth, resulting in increased operating leverage of 3.7 percent. On a year-over-year quarterly basis, operating leverage was 4.7 percent, as revenue increased 10.6 percent while expenses increased 5.9 percent. We remain focused on generating and improving the positive operating leverage as we continue to invest in our business to drive revenue growth.

Over the past 13 years, our net charge-off (NCO) ratio has averaged 0.29 percent, while our loan book has more than tripled. More recently, NCOs have averaged just 0.23 percent quarterly over the past five years.

That said, credit trends can be inconsistent from one quarter to another, and, as such, NCOs for the second quarter came in at $10 million, or 0.37 percent of loans. The increase in commercial charge-offs was driven primarily by one credit to a manufacturing and distribution company, which accounted for more than half the charge-offs in the quarter. We periodically have anomalies in our charge-offs – however, given what we know today and the characteristics of our portfolio, we expect our NCOs to return to a level more in-line with historical rates.

Milestones

Several of our businesses hit remarkable milestones during the second quarter.

  • Healthcare Services saw their number of health savings accounts (HSAs) pass the 1 million mark and posted a 30 percent increase in deposits compared to one year ago. Healthcare Services now holds $1.8 billion in deposits and represents 11.5 percent of our total deposits. In general, HSAs continue to show impressive growth, and as the fifth largest HSA provider (by accounts) in the U.S., we are in an extremely strong position to capitalize on this industry trend.
  • Fund Services had a great quarter as well, as assets under administration topped the $200 billion mark. The team brought in new servicing and custody business during the quarter, which helped drive a $1 million improvement in revenue compared to first quarter.
  • Finally, we saw tremendous growth in our Agribusiness division. According to the American Bankers Association’s Top Farm Lenders list, UMB ranked as the No. 20 Ag lender in the nation, which is a remarkable jump from 2012, when we ranked No. 49.

I would like to thank our dedicated associates for their commitment to customer service. And, of course, none of this would be possible without the trust and support of our clients.


Mariner is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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July Outlook by the Numbers

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Do you have questions on the housing market, labor market and interest rates? Check out UMB Investment Management team’s July 2017 Outlook by the Numbers for a quick snapshot on these and other economic drivers.

Also, be sure to review the following articles for more market and wealth management information…

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Follow UMB‡ on LinkedIn to stay informed of the latest economic trends.

 Interested in learning more about our Private Wealth Management division? See what we mean when we say, “Your story is our focus.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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