Administrators are usually licensed in their jurisdiction and are appointed by the fund, not the manager. Their work product, the NAV series and the register, is what auditors test and what allocators underwrite as a track record. Because the administrator sees every position and every investor, it is also central to anti-money-laundering controls.
Choosing an administrator involves independence, licensing, NAV frequency, asset-class coverage, technology and pricing. Traditional administrators charge basis points on assets plus monthly or annual minimums, which is the main fixed cost that makes small funds uneconomic.