A full depositary relationship is typically set as part of the launch process, often under time pressure and as one item on a long list. Depositary-lite may be agreed even earlier, particularly where a manager needs to name a provider for marketing purposes. Either way, the arrangement can remain in place long after the fund and the manager’s operational needs have evolved.
Fast forward five years: the strategy has matured, AUM has grown and the fund structure may be more complex. But the oversight relationship has not necessarily kept pace. For finance and compliance teams, triggering a review feels like creating work. There is the comfort of the familiar and, in some cases, concern about regulatory scrutiny. That hesitation is understandable. But where the relationship is no longer efficient, responsive or proportionate, staying put can cost money, management time and operational risk.
Why switch?
In our experience, the managers who make changes proactively, rather than reactively, tend to do so when one or more of the following becomes difficult to ignore.
Service quality has eroded. Queries take longer. The named contact changes without notice. Work is handed off to junior team members without senior oversight. Strict internal procedures are followed to the letter, whilst a reluctance to think beyond the script leads to repeated requests for information that is not relevant or does not exist.
Your depositary or depositary-lite provider should be a trusted partner: consultative and more effective year on year as institutional knowledge builds on both sides. It should not be absorbing increasing amounts of time.
What the process actually looks like
The perception of a depositary change as a major operational undertaking is, in most cases, disproportionate to the reality. A well-managed transition typically runs over eight to twelve weeks from appointment of the new provider to full go-live.
For more complex structures, or where the outgoing depositary is uncooperative, that timeline can extend, but it remains manageable. Most of the work comes from the need to build out new investor and asset registers. These are the foundation everything else sits on: a structured record of who owns what, drawn directly from the administrator’s books and reconciled against the underlying fund documents and capital activity. Once they are complete, the relationship runs as normal, without the need to work on backdated fund activity.
The key workstreams are not unfamiliar territory for a CFO or CCO:
- Legal documentation: new agreements with the incoming provider, amendments to fund documents where required and any ancillary arrangements with the administrator.
- Regulatory notification: a change of depositary requires notification to the relevant regulator, but this is generally procedural rather than an approval process.
- Operational handover: data transfer, account creation, process mapping and oversight procedures.
- Investor and asset registers: establishing the records required for ongoing oversight and monitoring.
The process mapping stage is key and is often where the greatest efficiency gains can be made. In practice, this means agreeing a monitoring plan for different fund activities: what will be reviewed, what evidence will be needed and how more complex transactions or capital events will be tested.
One of the most common frustrations with incumbent providers is their lack of flexibility in their own testing processes and poor understanding of illiquid asset classes. Choosing a depositary who adapts their processes to how your funds operate in practice is crucial, with understanding and mutual agreement built at this stage leading to a smooth relationship over the life of the fund.
The transition date itself is also important. At the point of change, one provider stops acting and the other begins. The outgoing provider remains responsible for the period during which it acted, while the incoming provider assumes responsibility from appointment. In practice, the process is less about reopening historic activity and more about ensuring the new relationship starts with clear records, agreed processes and a practical understanding of the fund.
What to look for in a new provider
Selection criteria for a new provider should be driven by what matters to the manager’s specific operation, not a generic checklist. That said, a few questions tend to separate the good conversations from the average ones:
- Does this provider actually understand your fund structure and asset class? Work that touches private credit, real assets, or complicated deal structuring requires genuine expertise. A provider with tailored processes and deep experience with each asset class will need to ask fewer questions to complete its work and will only ask for the documentation that is genuinely required.
- Who will you actually deal with? The pitch will always involve senior people. The test is whether those senior people remain involved once you are onboarded or whether the relationship migrates to a service desk. Ask for references from clients of similar size and complexity, and ask them specifically about day-to-day responsiveness, as well as continued senior engagement.
- How is the service team structured? Many providers now rely heavily on offshore or junior delivery teams. Managers should understand who will handle the work day-to-day, where they are located, what training and supervision they receive and when senior judgement is brought in.
- Will the interactions and operational impact on your team actually improve? For many managers, the issue is not one major failure but “death by a thousand cuts”: repeated information requests, rigid checklists and too much time spent revisiting the same points. A strong provider should be able to show how it would reduce that friction in practice, including by workshopping a complex transaction and pointing to relevant peer-manager migration experience.
The cost of doing nothing
There is a version of this argument that frames a switch as a bold or disruptive move. We would suggest the opposite framing. The bold move is the one most managers are already making: staying in a relationship that is not delivering, year after year, because the alternative feels complicated and low priority.
The depositary relationship is operationally material and carries regulatory significance. It intersects with everything the finance team does and can take up a meaningful share of their time.
The mechanics of a change are manageable, the process is understood, the regulatory framework accommodates it and the benefits are tangible. For most managers, the hardest part is simply recognising the relationship has stopped working and making the decision to address it.
