NEW YORK (HedgeWorld.com)—No two hedge funds are alike, but all managers—regardless of size or strategy—face operations and compliance issues as they build their business. So how do they learn how to properly construct each unique fund? That's the aim of the "Alternatives Industry Resource Guide," created by Carol Kaufman, founder and chief executive of the consulting firm Alternatives TLC LLC, and Kate Dressel, president of the compliance and operations consultant Strategic Compliance Solutions LLC. The guide offers a jumping-off point for managers to get ideas about where to search for the capabilities they need, from back-office systems to marketing to compliance to databases. The guide, jointly provided by Ridgewood, N.J.-based Alternatives TLC, and Strategic Compliance Solutions, Essex, Conn., was created by Ms. Kaufman and Ms. Dressel and first distributed at the Managed Funds Association Network 2007, an event for alternative investment industry professionals held in Key Biscayne, Fla. in early February. It is a list—not an endorsement, Ms. Kaufman and Ms. Dressel specified—of news, databases, consulting services, alternatives industry organizations, conferences, links and compliance- and operations-specific resources to help managers find the information they need to build their funds. It is free of charge and includes products and firms spanning "low-, medium- and high-cost, to give a flavor of what's out there," Ms. Kaufman said. The guide's resources and web links include those with which Ms. Kaufman and Ms. Dressel are familiar as well as outside contributions from their clients and peers. "We encourage people with resources we haven't found to email them to us," Ms. Kaufman said. When a new firm or product comes to their attention, Ms. Kaufman and Ms. Dressel get on the Internet to check that the source is appropriate and useful before adding it to the list. "If we can't get access to a firm we won't incorporate it," Ms. Kaufman said. Ms. Kaufman and Ms. Dressel met through the MFA, as they both sit on the conference committee. Despite their differing backgrounds—Ms. Kaufman deals with accounting and operations and Ms. Dressel works on the compliance side—they found parallels in their focus and approach to educating managers. Each had compiled her own resource guide based on her area of expertise, and they decided to merge their efforts to cover every aspect of the business, "not to tell people what's best for them, but give them a solid starting point," Ms. Dressel said. In discussing their approach, Ms. Kaufman cited a March 2003 white paper from Capco, "Understanding and Mitigating Operational Risk in Hedge Fund Investments," which noted that 50% of hedge fund failures are due to operational issues. "The whole industry is focused on risk, and you have to continue to evaluate and control all the risk you can," she said. "No matter the size of the manager, the biggest risk that's also the easiest to control is to sit down and create and maintain organized operations and compliance systems." She added that the guide can help people understand the volume of information available and how to apply it to mitigate some risks. In addition to operational risk the guide deals with compliance issues, such as regularly updating documentation materials and meeting requirements to register for industry organizations, Ms. Dressel said. "Compliance isn't all that popular. It's dry as toast, so people try to avoid it and make it as simple as possible." This can lead to firms opting for what she called "canned manuals," which are fully compliant templates that certain providers offer to firms. "They're broad, not at all tailored to your firm," and they can force managers to comply with things that are inapplicable to their firm, she said. "A template can be helpful, but when you have somebody that's not super knowledgeable … or has time constraints it can be a problem." "[The guide] provides a layout of options to take care of a fund's needs," Ms. Dressel said. "You can pick a mix that will fit your firm and have a good idea of where costs are going to be." Ms. Kaufman started her career as a senior vice president at the commodity trading adviser Kaufman Commodities Research and Management, launched by her husband, Perry Kaufman, in the late 1970s. Ms. Kaufman was responsible for the back-office and accounting systems. In 1982 she started her own software firm, Organizer Systems Inc. She said during her career she realized the lack of information that everyone had in general. "When you are in a fund you see only what you know how to do well," Ms. Kaufman said. "You … have no idea about all the different components involved. A fund is a business." Ms. Kaufman's company was acquired in 2002 by SunGard, and she started Alternatives TLC in 2005. Ms. Dressel began in 1992 at ARA Portfolio Management Co. LLC, a CTA and commodity pool operator hedge fund. After working in "all facets of the business," she ended up overseeing compliance. "I didn't have a resource guide," she said. "A lot of information was hard-won on my part. And having been an on-the-ground, end user of this information for 11 years, and building a business in the process, I have a pretty good idea of what it takes to grow [a fund] efficiently." She formed Strategic Compliance Solutions in 2003. Ms. Dressel and Ms. Kaufman currently are discussing where to house the guide. It can be accessed by emailing Ms. Kaufman at ckaufman@alternativestlc.com or Ms. Dressel at Kate@StrategicComplianceSolutions.com. As for building a successful fund, Ms. Kaufman said two elements need to be in place. "You have to know what you're looking for, and you have to have a plan," said Ms. Kaufman. "You have to put thought into what you really need now and what you believe you will need six to 12 months out, and then talk to people. You can get a lot of information just by talking to your peers." "[Maintaining operations and compliance] is good for a firm's health and future," Ms. Dressel said. "Investors are expecting that now." MShea@HedgeWorld.com