This week’s 2018 PERE CFO/COO Forum in New York drew the largest group of chief financial officers and chief operating officers in its five-year history and was one of the widest-ranging in terms of topics: from Securities and Exchange Commission updates, to outsourcing, to end-of-life funds, to the role of women in the industry. Across these topics, however, better communication was typically the answer to many of the issues the sector’s finance and operating officers are currently grappling with:
- Problem: Running afoul of the SEC
Solution: The number one thing CFOs and COOs should be doing is making disclosures on fees and expenses as clear as possible. One speaker provided an example of a manager that had included language in the limited partnership agreement that was unclear and left investors unsure as to who was going to pay promotes. On the flipside, she has observed more managers trying to provide as much as detail as possible in SEC exams, as more specific disclosures tend to keep a manager in the SEC’s good graces.
- Problem: Unconscious bias against women
Solution: To ensure more women are hired at firms, particularly in non-administrative roles, managers need to ensure they are interviewing more people who are female. But such an initiative cannot be driven by the firm’s female staff only. In fact, because male executives often make most of the hiring decisions at private real estate firms, “we need to invite more men into the conversation,” said one female CFO. “People tend to look for people similar to them, people they can see themselves traveling with. It’s a perception that people aren’t aware of.”
- Problem: Being vulnerable to a cyber-attack or data breach
Solution: A firm needs to keep the lines of communication open among its staff so everyone knows exactly what needs to be done if an attack or breach does occur. For example, if a manager suffers a data breach involving investor information, the capital markets or investor relations team needs to be made aware. On a similar note, firms also need to get an incident response plan drafted with buy-in from IT staff and management, as well as the legal team. But that plan should not just be put away in a drawer, and instead should become the basis for further dialogue, said one panelist: “This is an ongoing discussion that needs to keep happening.”
- Problem: Manager and administrator disagreement
Solution: For work to be properly outsourced, a firm and its administrator have to be on the same page regarding tasks the latter needs to take on. One outsourcing services firm said that in more than 50 percent of cases it worked on, there was not enough clarity in terms of what issues needed to be addressed. A “discovery meeting” is very important in helping both parties understand what the expectations are, said one panelist.
- Problem: Lack of employee engagement
Solution: Managers can make employees feel more engaged by making sure they have access to important information about what is going on at the firm. Also, something as simple as the top executives at the firm walking around the office and saying hello to employees also makes people feel like they are part of the organization. One panelist called this practice “walk the floor” and said such a small gesture “goes a really long way.”
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