Noel is a Finance Graduate from Maynooth University with over 20 years client-facing experience in the funds industry with leading international financial services companies in North America and Europe. Prior to joining Centaur in 2009, Noel was an Investor Services Group Manager in Citi Hedge Fund Services (formerly Bisys Hedge Fund Services) in Bermuda. Noel has also held various operational roles with Citigroup and Irish Life Investment Managers. Noel has sat on both the Transfer Agency and AML Irish Funds Work Groups in the past.
In this interview, Ben and Noel talk about how the transfer agency and funds industry has developed in recent years, the skills needed to excel in the industry, future trend predictions and advice for any graduates interested in transfer agency jobs.
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Read the interview in full below:
Ben McShane 0:06
Hello, and welcome. I'm Ben McShane and I'm the Director of the Finance and Legal team in Cpl. Over this series of podcasts, I will discuss a range of trends in the Financial Services and FinTech space at present. In this episode, we will be discussing transfer agency and what the future of the transfer agency landscape looks like. I am delighted to be joined today by Noel McGrath, who is head of transfer agency at Centaur Fund Services and someone who I've known and worked with for a long, long time. So Noel you're very welcome this morning.
Noel McGrath 0:38
Yeah, thanks, Ben. Good to be here.
Ben McShane 0:41
You might give us a little intro and background on yourself.
Noel McGrath 0:45
Yeah, of course. Well, firstly, you know, it's great to take part in this, we're delighted to be asked. I'm a 22 year veteran of the funds industry, if it kills me to say, even though I think I'm still a young fella. I started off my career back in 1999, with Citibank, I had five great years there and then moved on to the investment house and Irish life in Ireland, and a wonderful place to work and really enjoyed that. But then out of the blue an opportunity came for myself, my wife to relocate to Bermuda, she's a qualified accountant and she got offered a position there.
So that left a bit of a difficult situation for me, I had to look at potential opportunities and it's much more limited there, as you can imagine. I ended up in the transfer agency space and I began my transfer agency journey in 2006. With with basis who are no longer in the space, as with a lot of fundamentals, you know, there's a lot of amalgamations and consolidations, which continues today. So that became city hedge fund services in 2009 and the senior guys at the city hedge fund services business left that organization and set up their own company called Centaur.
So I had an opportunity to come back to Ireland to work with those guys. Centaur was born in October 2009 and it's been a wonderful 12 years since. There was just six of us to begin with and today, I think we sit at 175 people in six different countries and seven different offices throughout Europe and North America. It's been a good journey.
Ben McShane 2:36
That's a fantastic success story Noel and I suppose in the Fund services industry, it's such a competitive industry and obviously, people are at the forefront of your business. In Centaur, you've always had incredible retention levels. What do you put that down to?
Noel McGrath 2:58
Yeah, well, I suppose if you've touched on even with the question Ben, in our industry, the assets are your people, you know, we don't have, obviously we've got good technology, that's a given, and everybody has good technologies. So the key then, are the quality or people so from day one, like the three founders of the business, Karen Malone, Roland Daily, Eric Bertrand, you know, have a vast experience, have worked together since the mid-90s, have run big businesses, and they were very, very singular and their vision for the company, they felt there was a gap in the market for a bespoke fund administrator, you know, we don't do anything else.
We don't have a custodian license, we don't bank, we don't sell insurance. We're a fund administrator. So from day one, they put the priority on hiring the right people. And giving those people the tools to enable them to run the business. Retention has been key to that we have a very strong culture. Ben, you've been in our office many times, we have we have a logo, accountability counts, very simple, but it's to the core of everything we do.
So at the very beginning of the process, we have to hire correctly. Recruitment is such a big thing. It's such a challenge for everybody. So we have to get our recruitment, right. We put a lot of time and effort into it. We use, you know, external parties like yourselves who are vital in the process, but we also internally put a lot of resources into it. And we have a template of the type of person we're looking for. It's not a coincidence that people that we hire, tend to be people with an entrepreneurial spirit, they want to learn they've got the right attitude, they want to progress.
They're not afraid to ask difficult questions and then we have the tools, one of those tools is exposure to the senior management. So, it's fairly simple, there are no offices in our building, nobody's in offices anymore, but back in the back in the good old days, we had a completely open floor and so the guys that own the business, the guys that sign the checks are sitting next to the guys that are cutting the knobs and we think that's a great environment for people to progress in.
Ben McShane 5:15
It is very impressive how that business operates on and it is a very you know open policy really there within the company where everyone can you know as I say the founders are on the floor and then you have your people there who are doing the investor services and it's all you know and it all seems to work incredibly well and it's great for you to know when you guys are hiring graduates or you know people who are a little bit more up and coming and junior positions, for those guys to be able to get exposure to the senior executives in the firm is absolutely incredible you know. Not many companies can offer that. I know you've had some great success as well Noel, on your graduate programs. Would you have any advice for graduates looking to get into funds services or particularly transfer agency?
Noel McGrath 6:09
Yeah it's incredible, we have tried to change it, but I always say that our industry is the industry that nobody knows anything about. What I mean by that right so everybody knows the big four, everybody knows but the audits, everybody knows who those guys are but like there's the 17,000 people work in the funds industry directly and I think the funds industry in total supports something like 33,000 jobs. Yet nobody knows about us.
What we have done, we've locked in on one university in particular and we've had great success out of Maynooth. We go and speak to the business and finance classes because nobody knows about our industry. It's incredible, there are so many people are gonna end up working in this industry and yet as an industry we've done a very bad job of selling ourselves.
What we would say with the undergrads, who then become the grads that we engage with, is just to learn about the industry and to understand it's one of the very few things that Ireland's a global leader. I think 40% of all the alternative investment funds in the world are administrated out of Ireland which is an incredible number. The sheer numbers would blow you away you know I think there's just under 6 trillion and dollars in assets under administration in Ireland, which you know again huge numbers.
Our advice to graduates is always to engage, to read up as much as you can to understand the industry and where our part in it is because we always say when we interview graduates a lot of them are very new to this space and a lot of people think that we're the investment managers that it's us coming up with the strategies and making the trades and stuff like that. We have to explain to them know what our role in the food chain is and that's a very important thing.
The advice we would always, always offer is to research as much as you can. You can never know too much about the industry or indeed but the company that potentially you're going to work for
Ben McShane 8:22
Solid advice Noel. In terms of transfer agency which is obviously a massive part of the fund administration services as such, can you tell us, I'm very lucky obviously to have done a stint and transfer agency prior to moving into recruitment, but could you give us an overview of exactly what is transfer agency?
Noel McGrath 9:05
Transfer agency, and obviously I'm very biased, but transfer agency for me is definitely the most important part of the piece. We are the link between the investor and the fund. An investment manager will come up with a strategy and he and there can be other than we would have very diverse strategies within the funds we look after we have one client that moves commodities around Africa and a lot of our investment managers are very straightforward, you know financial product strategies but in theory, it can be anything.
What the transfer agent does, we have a couple of steps in the process. The first step is an investor that wants to come into the fund will need to complete subscription documentation the transfer agent will review that and as the regulation has increased over the years that I've been in the industry, and there's a huge onboarding process, the investor will need to provide KYC know, or anti-money laundering documents, the need to provide tax documentation. So all this initial onboarding of the investor into the fund is handled by the transfer agency team.
Then on an ongoing basis, we will produce the fund accountants and you know, Centaur isn't functionalized. So, our guys will own the entire relationship... When I come into the industry, the transfer agency piece was always sort of left to the end, and a lot of companies didn't actually specialize in it. It was something that the fund accountants tend to do at the end of their day, but the industry has changed dramatically. With two key things, I suppose, increased regulation and the investor is now key. So as unusual as it seems to say, back in my early days in the industry the investor was taken for granted.
Now, with increased investor due diligence across the board, the investor now has the ultimate say, so the investor experience has to be very good. The transfer agent will determine how that investor experiences and at Centaur it's something we pride ourselves on. We complete a lot of investors due diligence, we work with a lot of the large endowments in the US and have got their approval over the years.
We are very, very hands-on with investors, and it's something our investment managers love. We treat every investor onboard very seriously to get the job done right and ensure that they have as smooth as possible a transition into the fund. I've mentioned regulation several times already but over the years it's left a lot of work to be done before an investor can come into a fund. We try and make that as straightforward and as smooth a process for the investor as possible.
Ben McShane 12:33
Very good. Thanks for that. In terms of transfer agents today, it's crucial that they have strong client relationship skills, is that be correct. So you're dealing both from an investor side and then also from the investment management side. They're managing sort of relationships on both sides. That's obviously a critical part of the role?
Noel McGrath 12:58
A huge part of it Ben. In our space we typically, were in the alternative space whether that be your you know, traditional, open-ended hedge fund or your closed and private equity fund, the investors we deal with, with all due respect to ourselves aren't, you know, people like us that might be showing five or 10 grand into a fund, these are big endowments - institutions, high net worth, some very influential people.
The level of attention to detail that the transfer agent must have to ensure that everything goes to plan is very important. It's the ultimate in customer service because you're dealing with people and there's always a lot of money at stake. If that was putting in 150 million into a fund, and the transfer agent antagonizes them, that could have serious repercussions for the investment manager if they decide not to proceed with the investment. It's client service on a whole different level.
Ben McShane 14:07
I think that brings us back to what we discussed at the start, in your recruitment process and how thorough you guys are in your recruitment because at the end of the day the transfer agents are dealing with high profile investment managers, high profile investors, so, it's crucial that you get people of the right calibre, really.
In terms of your approach, and I know you are very thorough in your own screening and interviewing of candidates, but what do you look for in a recruiter when you're partnering with a recruiter for hiring and of staff? What is it that you would look for in a recruiter?
Noel McGrath 14:50
It's fairly straightforward to us, Ben. I think this is why we have worked so much with yourself with Cpl over the years. We want somebody that understands our business. That then breeds the trust that you develop over a number of years. In the early years of our business, we didn't use recruitment firms, it was a very different landscape, obviously, we set up in 2009.
There weren't many other people hiring in the first few years. It was very straightforward that then changed after four or five years. We worked with several recruitment companies, but it definitely the I don't know how to say this without upsetting anyone, but the range of quality of recruitment firms varies dramatically. We found yourself and Cpl were a good home for us because they understood our business, and you understand our business, and you understand exactly how important recruitment is to us. You don't waste our time.
I think it's very important that the recruiter understands the business, and especially a business like ours, where recruitment is so important, and we have a type of person that we want to recruit all the time. Over the years, we've had a couple of really tough roles to fill that we didn't think we could get and thankfully, Ben, you've been able to look after us and provide exactly what we've been looking for. I suppose it's two-fold. It's the recruiter understanding your business and taking the time to understand your business and the trust that builds up over a certain amount of time.
Ben McShane 16:32
I'd agree, it really becomes a partnership. We've certainly felt with our partnership that we've been part of the journey. It's been an incredible success story for Centaur and for us to be able to add value to you guys, that really means a lot. Noel, I'm conscious, you're a very busy man and I don't want to take up too much of your time. If we were to finish up with a final question for you, in terms of the future of transfer agency, what does it look like? What's next?
Noel McGrath 17:14
That's a great question. The future is very promising for both our industry and for the transfer agency part of it. We finally have got the ILP regulation over the line here in Ireland, which is a huge result, we've not been able to compete at level terms for the closed-ended space up to this creates huge opportunities. For transfer agents in general it's gonna be very interesting.
The technology in my time is beyond recognition from where it's where it was to where it is now. That is only going to continue a at a huge pace that, we are seeing the demand for simple things such as electronic sub docs, that's coming in, we're developing a tool for that. Then, you know, AI is something that I have been very interested in, I went to a conference three or four years ago, and I left and I thought, I'm going to be out of a job very soon.
Because there still is, especially in the transfer agency piece, because of the high touch client service that's required there still is space, regardless of how good the technology gets, and it is getting good and it will enable us to operate at higher volumes, but we still need to keep that that high-touch client service which is becoming more important all the time.
It's gonna be very interesting to see where the balance lies Ben because the temptation for an organization is to go all the way down the technology road. We do invest a huge amount every year in our technology, and we'll continue to do so but we cannot forget the human touch side of transfer agency. As a firm, it's something we do well and, you know, we do transition a lot of business from other administrators and or investment managers do love our high touch and but it's going to be very interesting. I would love to see in 5/10 years where exactly it ends up but I don't think we can ever lose the importance of the high touch client service.
Ben McShane 19:55
I agree. I think you know, even from our side now technology is constantly evolving pause but as you say, it's such an important aspect is to be having that sort of high touchpoint with your clients and to be constantly in contact and having that client relationship. It's something that technology can't take away, you know.
Noel McGrath 20:20
Listen that's the differentiator, it's what makes us stand out from the crowd. When we're competing for business people are just going to assume that the technology is in play. I think that's how it should be, and you're gonna win and lose business on your client service, in my opinion.
Ben McShane 20:49
Just to finish up, for any graduates out there who are who might not have a full understanding of what they want to do in their career, I personally feel the transfer agency is a superb foundation for anyone starting out in their career.
The skills you learn, the exposure you get, whether or not you stay in transfer agency or move into a different role within the funds industry or outside of it, you learn a phenomenal set of skills. I must say, I count myself very lucky to have had a foundation and to transfer agency world. Noel, you're obviously a veteran of the game. No better man to tell us all about it.
Noel McGrath 21:37
It's hard to accept sometimes they are a veteran, but we do hire graduates every year, and we haven't hired anybody that was born in this millennium. I think this year might be the year we do that and that would be very hard for me to accept. I already have a guy on my team who was born after I started working so that was a that was a rude awakening.
Ben McShane 22:13
Good stuff. I really appreciate you taking the time out this morning. Great conversation around the world of transfer agency and great to hear more about your own career and Centaur as well. We really appreciate you taking the time this morning.
Noel McGrath 22:27
Not at all, Ben absolutely delighted to be asked.
Ben McShane 22:30
Thanks so much everybody for tuning in this morning. If anybody is interested in a career in transfer agency or as any questions on the market please reach out to myself directly at Ben.firstname.lastname@example.org
Please note this text was transcribed from the audio interview and has been slightly edited.