Investor onboarding refers to the process by which alternative investment firms (AIFs) bring new investor clients onto their platform to build and maintain long-term relationships. This process is the investor’s first impression of the firm’s operations and lays the foundation for a productive long-term relationship.
Successful relationships, in turn, are fostered through transparency and trust.
An AIF may have the most compelling investment strategy and priorities that align with the investor’s goals, but without a relationship that inspires trust, investors will not commit and readily take their capital elsewhere.
One of the most effective ways to build trust is to make the onboarding process as streamlined and frictionless as possible, with platforms such as Scaling Fund’s Investor Relations Portal. Despite significant moves towards digitization of the entire industry, the onboarding process followed by AIFs is still largely manual, cumbersome, and can drag on for months, causing delays in closing and the actual capital collection.
There is always the possibility of investors pulling out as they become frustrated with the seemingly never-ending back-and-forth interactions with the firms over minutiae. The ultimate aim of any customer-centric and growth-oriented AIF should be to optimise the onboarding process, to have a system in place that allows for quick and easy communication, and finally, to facilitate the transfer of capital. This is where Scaling Funds can really add value.
The traditional investor onboarding process starts after the official agreement between the fund manager and the investor. It involves the submission of a series of forms and documents by the investor that are normally delivered on paper and require many signatures and verifications to ensure that everything is in compliance. Typically, it involves:
Discover how ScalingFunds has automated and centralised that entire process.
The challenges for efficient and seamless investors’ onboarding are manifold:
In short, the majority of the process is manual, slow, labour-intensive, with a high chance of compliance errors and client dissatisfaction. This can have major consequences in the form of increased turnover of investors, who abandon the process before it is completed and missed investment opportunities and profits. In addition to that, incomplete or erroneous investor KYC AML files could attract fines and penalties from regulators as well as internal risk escalations.
The recent pandemic limited face-to-face meetings and spurred innovative ways to reach clients, with technology playing a major role in facilitating interactions. Notwithstanding the debate on whether virtual meetings are better than traditional in-person ones, there is no doubt that the investor onboarding process alone can benefit immensely from automation and large-scale digitization.
While customer relationship management (CRM) platforms for investors have existed for years, their functionalities are mostly limited to transaction facilitation and lack the technology to meet the evolving needs of investor-fund manager relationship networks.
A CRM that supports investor relations must necessarily address the pressure points in the traditional onboarding process. It should:
To this end, a great Investor Relations CRM must include technical functionalities such as:
ScalingFunds’ Investor Relations Professional was specifically developed to meet the challenges of the onboarding process by providing a single digital communication channel that integrates fund managers, investors, transfer agents, and placement agents. Recent results suggest that our platform onboards investors 4 to 6 times faster through a simplified process and enhanced visibility over communication between investors and the other parties involved in the process.
A tiresome onboarding process can reflect poorly on an AIF’s operational integrity and overall efficiency. In turn, a streamlined and expedited process can signal a fund’s appreciation for the investor’s commitment by providing them with a seamless and pleasant experience. When choosing an Investor Relations CRM, consider those like our Investor Relations Professional that allows managers to automatically generate and deliver online subscriptions, enable secure logins and sign-offs for investors, facilitate data collection and entry, and provide a dashboard that monitors progress and maintains direct communication between investor, fund managers, and transfer agents. Automating the process through a customer-focused Investor Relations CRM, which prioritises communication and maintains transparency throughout the process, can help build trust with existing and new investors, releasing time for the fund manager to focus on the high-impact work that matters: actively investing and sustaining investor relationships that are critical to the company's future fundraising.