Fund administrators, fund custodians, prime brokers, basically all kinds of service providers in the hedge fund industry should not rest on their laurels when it comes to managing their client relationship to hedge funds. 25 percent of surveyed hedge funds changed at least one service provider over the previous year.

The main reason for changing service provider is costs, which is why 55 percent of the surveyed hedge funds were found to have changed service provider. However, good service is also something worth providing. 21 percent cited dissatisfaction of service as the main reason for changing service provider.

Prime brokers were the service provider category that most hedge funds had chosen to change. 39 percent changed their prime broker while the smallest proportion changed (19 percent) were the fund custodians.

20 percent of the hedge funds changing service providers had changed their law firm. 42 percent of those citing cost as a main reason for switching and one third citing bad quality of service as main reason.

Amy Bensted, Head of Hedge Fund Products at Preqin says:

"In order to retain hedge fund clients and win new business, service providers need to address concerns over cost and quality of service, particularly as investor scrutiny over fees and performance continues to grow. These firms will need to maintain a careful balance by improving their service offering while still reducing costs."