Finance in Asset Management: Fund and Firm Accounting

Asset management is the one part of regulated finance where the finance function routinely accounts for two entirely separate things: the funds, which belong to investors, and the management company, which belongs to its shareholders. They have different reporting entities, different cycles, different audiences and often different auditors – and businesses that blur them in a job specification end up with shortlists full of the wrong people.

This guide is written for employers hiring into an asset manager’s finance team and for accountants thinking about moving into one. It sets out what sits on each side of the fund/firm line, the prudential and regulatory reporting obligations that fall on the management company, where the accounting judgement concentrates (fee income above all), how the roles are structured and paid, and how to specify a hire so that the shortlist is relevant. It deliberately does not repeat the mechanics of NAV production – those are covered in our guide to fund accounting basics.

The two sides

The practical implication for hiring is that a strong financial accountant is not a substitute for a fund accountant, and the reverse is equally true. Our fund accountant job description and salary guide covers the fund-side role in detail. The rest of this page concentrates on the firm side – the management company – because that is where most Financial Controller, Finance Manager and regulatory reporting hires sit, and where the obligations are least understood by candidates arriving from commercial finance.

What the fund side involves

NAV production or oversight. The central deliverable. Many UK managers outsource administration and keep an oversight function, reviewing and challenging the administrator’s NAV rather than producing it. That is a genuinely different skill set – reconciliation, challenge and supplier management rather than production – and it is the distinction most often left out of a job advert.

Valuation. Straightforward for liquid funds and the core difficulty for private markets, where the valuation policy, the committee process and the evidence behind each holding are where auditors and investors focus.

Fee calculation at fund level. Management fees, performance fees, equalisation and, in private markets, carried interest and the distribution waterfall. This is where fund accounting stops being mechanical – and the fund-level calculation is also the starting point for the firm’s revenue, which is why the two sides cannot be run in isolation.

Investor reporting and the fund audit. Capital statements, drawdown and distribution notices, periodic reports and factsheet data, plus a fund audit that is a separate engagement from the firm audit, with its own timetable and findings.

What the firm side involves

Everything a Financial Controller owns in any business – the close, the balance sheet, statutory accounts, the audit, payroll oversight, the team – plus the prudential and reporting obligations that apply because the manager is FCA-authorised. Our overview of the month-end close at a regulated firm shows how those obligations change the timetable.

Revenue recognition on management and performance fees

Fee income is the firm’s revenue and frequently the largest judgement in its accounts. Management fees are usually a percentage of AUM or committed capital, recognised as the service is provided, with the complications coming from rebates, fee waivers, share-class differences and fees paid away to distributors or platforms (where the question of whether income is shown gross or net needs a considered answer).

Performance fees are harder. Under IFRS 15 they are variable consideration, which can only be recognised to the extent it is highly probable that a significant reversal will not occur. Because fund performance can reverse before the end of the measurement period, performance fees are in practice often not recognised until they crystallise – and an accrual made earlier is a recurring audit conversation. Carried interest raises the same issue over a much longer horizon, with clawback provisions adding a further layer. UK GAAP preparers should note that the FRS 102 periodic review changes, effective for periods beginning on or after 1 January 2026, bring revenue recognition much closer to the IFRS 15 five-step model. Our guide to revenue recognition under IFRS 15 covers the framework.

Regulatory capital: MIFIDPRU, ICARA and IPRU-INV

Which prudential regime applies depends on the firm’s permissions, and establishing that is the first thing any incoming FC should do.

• MiFID investment managers (discretionary managers of segregated mandates, for example) are MIFIDPRU firms under the Investment Firms Prudential Regime. The own funds requirement is the highest of the permanent minimum requirement, the fixed overheads requirement and, for non-SNI firms, the K-factor requirement – with K-AUM (0.02% of average assets under management) the factor that matters most to a manager. There is a basic liquid assets requirement too.
• The ICARA (Internal Capital Adequacy and Risk Assessment) sits on top: the firm’s own assessment of whether its capital and liquidity are adequate for the harms its business could cause, including an orderly wind-down plan, reviewed at least annually and reported to the FCA.
• Full-scope UK AIFMs and UCITS management companies that do not hold MiFID top-up permissions are generally prudentially regulated under chapter 11 of IPRU-INV rather than MIFIDPRU, with a base capital requirement, an AUM-related element and cover for professional liability risk. Collective portfolio management investment (CPMI) firms – AIFMs or UCITS managers that also carry on MiFID business – broadly have to satisfy both sets of requirements. The detail is permission-specific, so check the firm’s Part 4A permissions and the current Handbook text before relying on any summary.

For the finance team this is not a once-a-year exercise. Capital and liquidity headroom should appear in the monthly management pack alongside the P&L, so the board sees the effect of a large hire or a fall in AUM before it becomes a breach – the approach set out in our guide to regulatory capital in management accounts. The wider framework is covered in ICARA and the IFPR, and the reporting skills employers test for in MIFIDPRU and IFPR reporting skills.

Regulatory returns via RegData

Prudential and other returns are submitted through the FCA’s RegData platform, which replaced GABRIEL. Depending on permissions, a manager’s reporting calendar can include the MIFIDPRU returns (own funds, requirements, concentration and liquidity data, and the ICARA questionnaire), AIFMD Annex IV transparency reporting, CASS returns where client money or assets are held, and financial statements. The FC usually owns the prudential returns and signs off the data feeding the rest. Our guide to regulatory reporting through RegData explains the platform and the wider reporting landscape.

Client money and assets under CASS, where relevant

Many managers hold no client money at all: fund assets sit with a depositary and custodian, and segregated mandate assets with the client’s own custodian. Others – particularly those running retail platforms or managing money directly for private clients – hold client money under CASS 7 or custody assets under CASS 6. Establishing which is true is one of the first questions in any search, because it changes the role materially and narrows the candidate pool. Our introduction to CASS and client money covers the framework.

Cost allocation between the firm and the funds

The quietly contentious one: what may properly be charged to a fund under its documentation, and what must be borne by the manager. Getting it wrong is both an investor issue and a regulatory one, because authorised fund managers must carry out an annual assessment of value and the Consumer Duty’s price and value outcome applies across retail products. Finance supplies much of the evidence – cost per fund, fee levels against comparable share classes, the cost of services provided – and should own the methodology behind it.

Where the difficulty concentrates

The boundary between fund and firm. Cost allocation, expense caps and rebates sit exactly on it, and they are where investor complaints and audit findings cluster.

Private markets fee mechanics. Waterfall calculations, carried interest and equalisation are complex, done by few people, and rarely as simple as the fund documentation makes them sound.

Administrator oversight that is nominal. Where production is outsourced, someone still has to challenge the output. A firm that receives a NAV and publishes it without interrogation has outsourced the work and kept the responsibility.

Capital headroom that falls with markets. AUM-driven income and the K-AUM requirement move together, but fixed costs do not. A market fall can squeeze headroom faster than the annual ICARA cycle notices, which is why monthly monitoring matters.

Data across systems. Portfolio management, administrator platform, CRM and ledger rarely agree on entity or share-class definitions, which makes K-factor reporting, fee reconciliation and investor analysis harder than it should be – the problem described in our guide to data quality in the finance function.

Finance roles in an asset manager

Team shape depends on AUM, asset class and how much is outsourced, but the firm-side roles below recur.

• Financial Controller. Owns the management company’s close, statutory accounts, audit, capital and liquidity monitoring and prudential returns. In smaller managers, often the most senior finance hire reporting to a COO or CFO, and sometimes the de facto owner of the ICARA. See our asset management FC practice.
• Management Accountant / Finance Manager. Fee income reconciliation, cost allocation, budgeting and the monthly pack.
• Regulatory Reporting Accountant. Prudential returns, Annex IV data and the ICARA model in larger managers.
• Fund Accountant / Fund Controller. The fund side – production or oversight.
• Head of Finance / CFO. Strategy, investor and board relationships, often holding a senior manager function. CFO and FD searches usually run with our sister firm FD Capital.

Under the Senior Managers and Certification Regime, the most senior finance holder may need FCA approval (SMF2 Chief Finance Function in an enhanced firm), and compliance and money laundering reporting roles are SMF16 and SMF17. Those senior regulated appointments are handled by our sister firm SMF Capital; our guide to SM&CR for finance teams explains what the regime means below that level.

Asset management finance salaries

Regulated-sector roles typically pay a premium of 15–25% over equivalent commercial roles, and three further premiums are consistent in asset management. Private markets pays above liquid funds at equivalent seniority, because waterfall and carried interest experience is scarcer. Buy-side over administrator: moving from a fund administrator to a manager typically carries an uplift, which is why it is the most common career step in the sector. And multi-jurisdiction structures add further. Wider benchmarks are in our regulated-firm finance salary guide and the Financial Controller salary guide. Bonus and deferral for material risk takers fall within the FCA’s remuneration requirements, so check the firm’s remuneration policy before quoting a total package.

Specifying the role

Five things decide whether the shortlist is relevant.

Fund side, firm side, or both? The first and most important. Say it plainly and, if both, roughly in what proportion.

Production or oversight? Whether you produce NAVs in-house or review an administrator’s. Someone whose whole career has been production often finds oversight unsatisfying, and the reverse candidate may lack the hands-on depth.

Fund structures and asset class. Open-ended or closed-ended, UCITS, AIF, LP; liquid or private markets. Private markets and daily-dealt funds are different disciplines and the pools barely overlap.

Which prudential regime applies. MIFIDPRU, IPRU-INV or both, SNI or non-SNI. A candidate who has run an ICARA for a non-SNI firm is a different proposition from one who has only seen an SNI return.

Whether the firm holds client money or assets. It changes the role and narrows the pool.

Qualification – ICAEW, ACCA or CIMA – is the baseline; sector and structure experience is what you are buying. Industry context from the Investment Association is useful background for candidates moving in from outside. For an interim cover, our guide to briefing an interim finance search sets out what to prepare.

Moving into asset management finance

For candidates, the realistic routes are: from a fund administrator to a manager’s fund team; from audit, having audited managers or funds; and from another FCA-authorised firm, bringing prudential reporting experience. Commercial FCs can make the move into firm-side roles, particularly at smaller managers, if they invest in understanding MIFIDPRU and fee recognition first. Our guide to moving into regulated finance covers the transition, and finance in an investment firm the closely related wider sector.

Frequently asked questions

What is the difference between fund accounting and firm accounting?

Fund accounting covers the funds themselves – NAV, investor allocations, fund financial statements – on a daily to quarterly cycle. Firm accounting covers the management company: its own P&L and balance sheet, regulatory capital, returns and statutory accounts. They need different skills and are often done by different people.

Is an asset manager subject to MIFIDPRU?

It depends on permissions. MiFID investment managers are MIFIDPRU firms and must run an ICARA. Full-scope AIFMs and UCITS management companies without MiFID top-up permissions are generally under IPRU-INV 11 instead, and CPMI firms broadly have to meet both. Always check the firm’s permissions and the current Handbook.

When should performance fees be recognised?

Under IFRS 15, only when it is highly probable that a significant reversal will not occur – which in practice often means at crystallisation. Earlier accruals need strong evidence and will be challenged by the auditor.

What does a Financial Controller at an asset manager earn?

Typically £75k–£110k in London and £64k–£94k regionally for a firm-side FC, with interim FCs at about £450–£750 a day in London. Private markets and multi-jurisdiction experience push towards the top of the range.

Do asset managers hold client money?

Many do not – fund assets are held by a depositary. Those running platforms or private client services may hold client money under CASS 7 or assets under CASS 6, which adds reconciliations, a CASS audit and a CASS oversight responsibility.