The challenges associated with effective manager allocation can be complex enough to allocators without onerous due diligence obligations. And with the ever-changing industry and regulatory ecosystem, conducting due diligence confidently is becoming increasingly difficult. This is where effective digital due diligence solutions can help.
By leveraging all-in-one due diligence solutions, allocators can optimize their due diligence processes, achieve overall operational efficiencies, and streamline fund allocations considerably. The efficiency and ease provided by such solutions means allocators can focus on not only meeting regulatory requirements, but leveraging data insights for intelligent operational decision making that can improve their competitive edge.
Why allocators are looking to optimize their due diligence processes
Both market and regulatory changes, as well as shifts in how business is done post the pandemic, have resulted in a keen focus on process optimization across operations. Faced with the growing need to embrace virtual solutions, fund allocators have sought ways to improve their due diligence processes to increase efficiency and save costs.
By carefully considering how to minimize resources in compliance without increased risk exposure, firms that have turned to technology for their due diligence solution have experienced not only saved costs and increased revenue, but better process alignment and management for both compliance and operation purposes. This degree of insight not only benefits compliance in terms of ensuring regulatory requirements are consistently being met, but allows allocators to confidently demonstrate to regulators that their due diligence processes are satisfactory and drive risk mitigation effectively.
How optimized due diligence processes improve efficiencies
Firms that have recognized the need to automate and optimize their due diligence processes, and have adopted technological due diligence solutions as a result, have discovered that beyond saving on expenses, effective due diligence solutions result in more streamlined and efficient processes overall, improving workflows across the organization. Some of these process improvements are outlined below.
Minimizing resources without increased risk
While there has been increased focus on compliance as a business function that can afford resource minimization, firms do stand to face increased risk exposure if this resource minimization is not managed effectively. No matter how great the potential for cost-cutting, an insufficient due diligence process means risking non-compliance, and the financial and reputational costs associated with non-compliance would be difficult to recover, even with cut costs.
But by leveraging a sound due diligence solution enabled by technology, that offers process-optimizing functionality like data aggregation and standardization, firms can minimize the risks associated with compliance failures whilst enjoying efficient resource utilization and management.
Automating manual processes
Allocation due diligence activities like analysis, document sharing, onboarding and ongoing monitoring and management tend to be largely manual processes. Manual processes can be particularly costly, especially when human error leads to low-risk considerations being prioritized and high-risk considerations being overlooked, for example.
By automating manual processes, allocators can conduct their analysis and screening across multiple entities and data sources more quickly, respond to and process questionnaires more swiftly, and escalate flagged risks for further investigation with less hassle. This screening optimization can greatly reduce a firm’s overall cost per check when conducting due diligence processes.
Centralized and secure data management and storage
Another pitfall of manual processes is that they create barriers to collaboration across teams involved in the due diligence process. Different information, documentation, and ways of working used across multiple parties usually means disjointed communication and inconsistent results. Disparate data sources, insufficient version control and untracked inputs all hinder optimal due diligence processes.
An effective due diligence solution combats this by providing compliance teams with centralized data management and storage capabilities within a single user platform, creating a single, reliable source of information for all involved team members to refer to and work with, streamlining communications and allocations.
Leveraging all-in-one due diligence solutions like AlternativeSoft
In a complex investment landscape where changing regulatory, process and management demands are putting increased due diligence pressure on allocators, technology offers sophisticated, all-in-one due diligence solutions that can help. Recognizing the need to ease manual due diligence work for our clients, AlternativeSoft developed our Due Diligence Exchange (DD-x) platform, which provides investors with all the tools needed to run efficient due diligence in a fraction of the time.
With over USD1.5 trillion in client assets under management, AlternativeSoft’s clients include some of the world’s largest pension funds, sovereign wealth funds, endowments, fund of funds and wealth managers. These clients use AlternativeSoft’s solutions to create a unique funds universe and perform complex quantitative analysis to identify top-performing funds, collect and store due diligence documents and subsequently build and optimize portfolios.
By digitizing, automating and streamlining the entire due diligence process, the cloud-based due diligence solution provides a single due diligence AIMA questionnaire in a digital format, and dates of when the questionnaire was sent, received, updated and how much was filled are all automatically recorded. This helps allocators ensure full compliance while understanding the risk profile of their client base.
Summary
Meeting regulatory requirements and confidently ensuring compliance can be challenging to achieve when your due diligence process for fund allocations leaves much to be desired. Where industry and regulatory complexities continue to increase, opting for a digital all-in-one due diligence solution can be an invaluable addition to your due diligence process, and help take much of the manual guesswork out of your due diligence.
Software solutions like AlternativeSoft can greatly assist allocators with streamlining their fund allocation process, by making their due diligence requirements a breeze to manage. To learn more about how AlternativeSoft can help you, talk to our expert due diligence team, or download our handy guide to choosing the right portfolio risk management tools for more insights.
