3 Takeaways from Our Roundtable on IR Best Practices: Adapting to Regulations & Investor Demands

Ashley Kramer wrote this on April 12, 2018

Over the last several years, the evolution of investor servicing in the hedge fund industry has been fueled by the changing requirements of investors and regulators alike. What was once an opaque world where hedge funds kept their operations private and investors did not ask questions, has been transforming into a transparent one with more sophisticated and inquisitive institutional investors asking for more than ever before.


Investor servicing departments have been steadily increasing in size over the years to handle the increase in investor demands. The requests are twofold, however, coming directly from both investors and regulators, forcing many investor services professionals to operate with dual lenses to satisfy the requirements from both these vocal interested parties.  

At the ALTSLA Conference in March, we co-hosted a roundtable with a $5 Billion LA-based Hedge Fund on the evolution of regulatory and investor servicing demands, and strategies for managing their changing requests. What made this roundtable particularly fruitful, was the participation of several other IR professionals from hedge funds and private equity funds. The roundtable acted as a forum for these individuals to freely discuss the challenges they face in the current investor servicing environment. 

Our co-host, a seasoned investor relations professional, shed some light on her experience in this space which spans nearly 15 years. She started off her career at Blackstone’s hedge fund solutions group where she witnessed firsthand the beginning of the investor services evolution. Blackstone is credited with being one of the firms at the forefront of providing greater transparency to sophisticated investors who demand more reporting from their fund managers. 

Our co-host took the experiences she had at Blackstone and built on them in her current role as Director of Client Services at the hedge fund. Here are the top 3 takeaways from our conversation: 


1. The importance of data management in investor servicing

Blackstone’s investor servicing team realized early on the value of proper data management and chose to leverage a CRM as the vessel for all their investor data and reporting. This proved to be a very successful strategy for managing investor and underlying manager communication and tracking related compliance data and documents. 

Our co-host knew the value of deploying a CRM that that was built specifically to handle the alternative asset management industry’s unique data management and reporting needs. In fact, although the fund already had a hedge fund focused CRM in place, she and her team chose to replace it with a more powerful product that could natively support their reporting and compliance tracking functions, which allowed them to scale as a business while maximizing controls and minimizing the volume of manual work 

2. The shift to web portals as the primary communication tool

Web portals have been around for almost as long as CRMs, but it wasn’t until the last few years that asset managers have begun heavily adopting them as part of their investor servicing toolset. When a web portal seamlessly integrates with your CRM, it can be leveraged as the control center for publishing documents, reports and performance numbers, as well as controlling permissions to allow investors or prospects to view important information.  

Regulators and even in-house compliance teams have been big proponents in the adoption of web portals as they provide a more secure way for investors and prospects to access information. Additionally, portals design for the alternatives industry, dynamically put the controls in place, such as disclosure expiration dates and document watermarking, asset managers need to safeguard this information. This is an increasingly important point considering the new GDPR regulation and the requirements managers must deal with to adhere to it. 

Web portals allow managers to gain transparency into web users’ activities including analytics on what documents were downloaded and who downloaded them, as well as what pages and content was viewed. Some attendees discussed how they are strategically utilizing this data to better target investors and prospects with relevant reports and information. 

3. It's never too early to have some sort of CRM in place

No fund manager is too young, too small in AUM, or too 'simple' operationally to not have a CRM. Nearly everyone who attended our roundtable had some sort of CRM as part of their investor servicing strategy. This doesn’t mean funds need to have every bell and whistle under the sun, but they should absolutely have a CRM in place. CRMs that are built for the asset management industry help users demonstrate a culture of compliance to regulators and investors. What's more, the best platforms enable them to institutionalize the investor relations and fund marketing processes and manage them in a way investors have come to expect from every manager they invest with.  

When shopping for CRMs, it's essential to consider what stage your firm is in now and what your current needs are, as well as what your needs will be two and five years down the line. For example, as an emerging manager, you might not need to be tracking subscriptions and redemptions or transfer activities across onshore and offshore funds right off the bat, but this might be something you will be doing two years from now. Considering these types of scenarios from day one will help identify the right CRM that compliments your firm’s current needs and enables you to avoid a potentially costly conversion a couple of years down the line. 

The needs of this industry and the demands investor servicing professionals face on a daily basis are not going away. The key to success for many managers will be their ability to establish a process that empowers their investor services team to stay agile and to deploy the right software tools that complement and support their team’s compliance, data management, and reporting needs.