The user experience is of the utmost importance in every digital transaction today. Think about it: If it takes more than three clicks to purchase a product online, the majority of users abandon their shopping cart and purchase the same product on a competitor’s more user-friendly website (aka Amazon). A revenue opportunity lost.
Why would the expectations of completing a subscription agreement be any different in today’s digitized age?
The early 2000’s way of investing in a fund, like signing physical subscription agreements and faxing them to an office where an investor relations specialist manually enters the investor’s information into a database, is over. The new digital era of investor relations is upon us. Institutional investors demand a streamlined user experience from fund managers. This begins when a prospective investor shows interest in learning more about the fund offering to receiving ongoing reporting as an investor. A recent report by Roubini ThoughtLab showed that investors want to manage their investments the same way they shop—with secure digital tools.
Onboarding and reporting technology has transformed the way investment funds communicate with investors. Fund managers and fund administrators utilize enhanced LP portals designed for mobile and desktop use to offer investors a better experience. These portals combine Virtual Data Rooms (VDRs), AI-powered subscription agreements, customizable dashboards, and investment reporting in one place, providing investors instant access to visualize their investments and also serve as a workflow tool to lessen the burden of completing standard forms. At the same time, these new technologies provide investment firms and fund administrators with greater efficiency, help reduce human error and deepen client relationships.
This article will explore the new era of digitized investor onboarding and why it is critical to a positive investor experience.
Raising the Bar
Although not new, the growing role of automation and digitization of investor onboarding has been accelerated by two overarching trends: regulation and investors.
First, regulatory requirements are becoming more onerous, creating the need for greater efficiency so that fund administrators and fund managers can automate and complete the onboarding process in a timely manner while also performing all the required regulatory due diligence (e.g., KYC and AML reviews).
Second, investor experience expectations have grown substantially. Investors expect a faster, easier, and simpler investor experience. As a result, many fund managers and admins consider onboarding a crucial investor touchpoint that can serve as a differentiator in an increasingly competitive market. Key differentiators include:
- The time it takes to create an investor profile
- The speed and ease with which investors can provide the necessary and supporting documentation
- The user experience investors have in monitoring their investments
Investor onboarding technology has become a must-have for fund administrators and fund managers as investors push for a secure, digitized process. Many solutions today enable alternative fund managers to seamlessly manage all stages of the investor lifecycle on a single platform, providing transparency and efficiency for all parties involved. These technologies offer notable features, including:
- Virtual Data Rooms: Secure online staging sites that provide prospective investors access to fund documents and other information they need to evaluate a fund investment
- KYC/AML Compliance: Platforms are flexible to manage multi-jurisdictional anti-money laundering (AML) and know your customer (KYC) requirements and allow investors to upload and sign documentation simply and securely
- Digitized Documentation: AI-powered technology pre-maps fund subscription agreements to provide a better onboarding experience for investors while lessening the back-and-forth of incomplete documentation between investors and fund administrators
- Transparent Communication: Ongoing reporting and communication tools are embedded in the platforms allowing for a more seamless and transparent experience across all parties
These tools and a responsive and knowledgeable support team can provide investors with a better experience.
At Socium, we utilize Eleven, a leading digital investor engagement platform, to support the entire investor lifecycle. From initial investor conversations to onboarding to ongoing reporting, Eleven provides LPs with a uniquely seamless experience that reduces friction and saves all parties an enormous amount of time. With Eleven, our clients have been able to scale their operations and streamline how they communicate with investors, providing more frequent touchpoints and the information investors seek.
Today’s investor is sophisticated and seeks a simpler, streamlined, digitized investing experience. Like fund managers, investors desire to reduce the back-and-forth and make investing in alternative investments simpler. Digitized tools have emerged, allowing fund managers and fund administrators to deliver a better user experience to investors.