How fund managers can navigate complex operations smoothly

What are the top three challenges in the private equity industry today, and how should fund managers overcome them?

As the industry matures, one of the challenges that fund managers face is that their operating model may be fragmented and siloed, and unable to integrate operations across asset classes and geography. At the same time, there is a rise in competition and fee compression, which is weighing heavily on operational efficiency and value creation.

The increased complexity is fueling a race to automate, and that leads to the next challenge, which is leveraging advanced technologies. Fund managers are expected to speed up operations to focus on generating growth, with a long-term approach to using AI and advanced technologies.

To overcome these challenges, fund managers need a partner to help build comprehensive infrastructure solutions that go beyond traditional fund administration. The partner should be able to help with investor onboarding, anti-money laundering (AML) and Know Your Customer (KYC) processes, corporate services, systems connectivity, data management, reporting, and banking services to provide liquidity.

The bottom line is that to increase efficiency and generate scale, siloed models no longer suffice – as the market evolves rapidly, managers need an integrated infrastructure that can be delivered by a one-stop asset servicing partner.

How do you see regulatory changes impacting the role of fund administrators?

Recent changes in various jurisdictions do provide closer oversight of the private equity industry. They are fundamentally reshaping operational expectations, especially for fund administrators, which provide crucial growth support for fund managers.

For instance, recent amendments to Form PF by the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will change the frequency of reporting from quarterly to monthly.¹ In fact, we have already seen the frequency of reporting accelerate over the past five years. Although the compliance date has now been pushed back to October 2026 – a year later than its original proposed date² – the demand for transparency will continue to grow, and we will support our clients in this respect.

The regulatory changes are going to directly impact reporting, necessitating detailed portfolio and performance metrics, including expanded counterparty disclosure requirements, and far more granular disclosures.³ What’s more, there will be a greater focus on day-to-day operational support than historically – which will create inherent error risk, leading to greater reliance on third-party service providers.

As a result, fund administration is going to face operational challenges, but there is a strategic opportunity to add value. The increase in reporting complexity will naturally increase compliance complexity, too – so administrators must innovate and leverage the technology needed to help clients navigate this new environment, while achieving scale.

Which areas within private markets fund administration do you see as most ripe for AI innovation, and why?

One key area is document management – private capital fund administrators have used PDFs and Excel sheets for far too long. By automating the unstructured data into structured and digital data, we can automate the processing of the data from these documents for use in downstream processes.

Utilizing AI to ingest, normalize, enhance, and structure the data can help to facilitate downstream automation. Last year, we launched Citco Document Intelligence (CDI) – the first AI-plus-human platform to offer our clients a document management service that utilizes AI with an added human element to validate and insert fund expertise.

AI can also help with complex financial calculations. While there are already proprietary tools to automate carried interest for waterfall calculations, these calculations have continued to live in spreadsheets for years because of their complex and bespoke nature. It is now possible to automate calculations by bringing AI capabilities into play.

We also expect sophisticated AI-driven predictive analytics for investment decisions, enhanced integration of AI across the full investment life cycle, and advanced natural language generation for automated reporting. Integrated AI systems will be able to provide actionable insights for managers to generate returns.

Importantly, AI and machine learning will revolutionize scenario modeling and risk assessment, providing even more accurate and timely insights. We are observing particular interest in AI applications for data analytics, risk assessment, and operational efficiency. The focus is shifting from pure automation to sophisticated applications that enhance decision-making and create a competitive advantage.

What barriers have your clients encountered when implementing AI solutions, and how have you helped your clients to overcome them?

One of the key barriers is a lack of defined use cases, which leads to low adoption. A recommendation here is that firms start with clear business objectives by identifying operational inefficiencies rather than going headfirst with technology. Regardless of the level of investment in the implementation and maintenance of AI, firms that fail to ensure that staff are equipped to leverage it appropriately will fail to integrate the technology effectively. So, there needs to be regular evaluation of AI-system performance and high levels of training across teams – which can also help to mitigate risks of neglecting compliance, audit requirements, and risk management.

When choosing providers, firms also need to consider the potential for M&A as the tech industry consolidates. Identifying which provider has staying power is difficult, because this is a new industry with burgeoning capabilities. In turn, managers who find a strategic partner that is an expert at integration and has industry-leading solutions can mitigate that risk.

What are some things you would advise your clients to do to improve data quality?

Ultimately, data underpins AI, and that needs to be a key investment – the adage of ‘garbage in, garbage out’ holds true. Some of the largest clients that we have in this industry are focused on collecting system-agnostic, format-agnostic data that is highly reliable and robust.

With the high speed and volume of activity in the financial industry now, especially in private markets, the ability to harness data and make it quickly available on an intraday basis without a lag is what gives a service provider the competitive edge.

However, we believe that maintaining human oversight and expertise is crucial for data quality. AI platforms can transform documents into discoverable insights with high accuracy, freeing up professionals to focus on higher value strategic activities – yet these platforms must be coupled with subject matter experts who can contribute, provide oversight, and help mitigate risks. We believe that identifying these subject matter experts, who can analyze and synthesize vast amounts of data and provide insights that lead to more informed decision-making for fund managers, is critically important going forward.

Alongside automation, cybersecurity is becoming ever more critical in today’s data-driven environment, and so technology will play a key role as more clients adopt data-driven workflows.

At Citco, our goal is to be true partners with our clients, acting as their operational backbone so they can focus on their core investment strategies while we handle the complex administrative and technological requirements of modern alternative investment management.

About
Since becoming Head of Private Market Services at Citco Fund Services in 2022, Claudia has been instrumental in supporting the growth of the company’s Private Capital Markets’ assets under administration (AuA) from approximately $650bn to $1.2tn. This makes it the fastest-growing major division within the Citco group of companies (Citco), and all the growth has come organically via existing client growth and client recommendations to prospects, rather than M&A. In total, Claudia has over 25 years’ experience within the company, spanning senior roles in client service, accounting, and business development. She has also been a member of Citco Fund Services’ Management Team for over six years.

This article originally appeared in Private Equity in 2026.

_{1 https://www.sec.gov/rules-regulations/staff-guidance/division-investment-management-frequently-asked-questions/form-pf-faq
2 https://www.sec.gov/newsroom/press-releases/2025-119-sec-cftc-extend-form-pf-compliance-date-oct-1-2026
3 https://corpgov.law.harvard.edu/2024/05/01/the-sec-and-cftc-overhaul-form-pf}

_{This is a sponsored opinion by Citco. The views expressed are provided as of October 2025, do not constitute an endorsement, recommendation, or any other advice, and are subject to change. The following content does not necessarily reflect the views of BlackRock, Preqin, or any of its affiliates. Citco is not affiliated with Preqin. Preqin received compensation from Citco in exchange for publishing this content.}