The nature and pace by which fund managers communicate with their investors is shifting across multiple touch-points, driven by investors’ need for enhanced information and higher levels of security, which can be most effectively facilitated though digitization and automation.

We see the demands of managers first-hand with the rapidity of how they are attuning the information they provide to investors’ needs evident on a daily basis. Technological innovation has changed investor relations beyond recognition in the past decade, but will the pace of this change remain consistent over the decade to come?

Fast, connected and transparent

It is clear that investors and managers are demanding better access to data and more transparency.

Investors increasingly expect to be able see and track trades electronically, right through the investment process. This necessitates hosting all fund documents digitally (online) and end-to-end tracking from trade submission to registration. The use of a portal materially increases efficiency by eliminating needless information exchange via email with their fund managers.

Similarly, managers expect less email interaction, primarily for security reasons, and to communicate through portal use and data feeds direct to their in-house sales/CRM systems. Investor documents and key investor data can be accessed by managers directly from a portal, enabling them to review sensitive documentation immediately, without the need to contact their administrator.

Both groups rely heavily on the smooth functioning of an investor relations process. This is managed through reliance on data processing and transparency, ideally achieved through utilizing automated workflow within a proprietary transfer agency system. Consequently, they have seamless access to a trove of dynamic data and systematic reports available entirely ‘on-demand’, a further nod to data security.

The need for readily-available and accessible information will only amplify in the coming years with API connections to managers, investors and third party systems already in motion. Secure sharing, editing and interrogation of real time data will become more critical for successful investor communications; however, for this to happen, it will need to be underpinned by increased automation, data integrity and accessibility.

Out with paper, in with automation

We have seen a clear uptick among managers in facilitating online trading. Uptake on the investor side has been slower, however, their feedback following the introduction of online trading capabilities has been extremely positive and both groups are particularly interested in online static data updates.

The risks associated with trades submitted via fax or email are mitigated by the move to electronic trading. This ensures secure trade delivery plus accurate trade booking and rapid confirmation. A fully systematic workflow process can achieve this, from NAV sign-off, report auto-generation and release of statements to investors, trade finalization and settlement of redemption proceeds.

Automated reporting is key: managers require reporting delivered at a set time or stated points within the NAV cycle. They expect a full suite of standard reporting as well as tailored reports that can be scheduled to be made available to them without manual intervention. This ensures the correct data is sourced directly from an administration system and is available on demand.

We are now at a stage in the development of investor communications where all parties accept that technology enriches an administrator’s interaction with managers and enhances their communication with investors. They require a full end-to-end solution, digitized subscriptions and redemptions, full automation on investor set-up and order processing, and immediate confirmation of trading – all of which are made possible by the emergence of increased automation.  

Given the rapidity of its adoption, will the pace of change continue? We expect it will as the industry moves further away from paper-based trading and signed letters of authorization for static data updates. We will see more flexible technical solutions in future, allowing managers and investors to trade, report and share data in a way that completely removes any manual operation processes from the equation.

KYI: Know Your Investor

One of the obvious advantages of greater connectivity stemming from increased automation is more efficient collection of AML/KYC data, which needs to be securely acquired and stored. We have certainly seen increased interest from managers in security and portal usage in their interaction with investors more generally.

Managers are aware of the continued expectation in the industry that a fund really ‘knows its customer’. They are also aware that more extensive AML regimes now typically require full transparency on beneficial owners/controllers and on the source of wealth of those individuals. 

The move to direct connectivity between manager and investor mentioned above removes the possibility of fraudulent instructions. Yet what do they expect when it comes to the security of investor data?

A secure data room where managers can communicate electronically with their prospects as well as live investors is a must. Within a data room, managers should be able to control all access to data and have full transparency on who is accessing it at the touch of a button.

The rise in online trading requires more security options underpinning it, such as Dual Factor Authentication, watermarked documents, SMS one-time passcode on trade signing, and digital certificates embedded in the document that are tamper-proof once signed.

In order to meet this ever-increasing data security need, flexible technology will continue to be a must - providing investors and managers with unprecedented levels of data control and security, where investors and managers can own and systematically reconcile their own data.

In closing, we are operating in an era of increased connectivity and security – underpinned by intelligent automation, through smart technology application. There are no signs that manager expectations on this will decrease and, in fact, the future of investor relations will be even faster, more transparent, secure and flexible, allowing managers more time and energy to focus on investor prospecting and management.