[WEBINAR] Untangling the Alternative Investments Information Workflow

On October 8, 2020, Blue Vault Partners hosted a webinar entitled “Untangling the Alternative Investments Information Workflow: How FAs Win by Going All In with Automation.” Participants included Michelle Thomas, AVP, Marketing & Business Development at CNB Custody, Brian Jones, Executive Vice President at Envision Financial Systems, Inc., and WealthForge’s own Bill Robbins. The trio, along with moderator Stacy Chitty of Blue Vault Partners, came together to discuss the importance of industry adoption of automated processing and the challenges such technology can help firms overcome.

After an introduction to each firm, their role in the industry, and how they are helping drive the technology revolution that is happenings within the alternative investment industry, the panel began by discussing the operational challenges financial reps and advisors frequently have with alternative investments. The requirements various custodians and other service providers have for accepting paperwork for alts has long been a sticking point in the industry, and needs to be standardized for true straight through processing to work. Some custodians are making it easier than others, by accepting electronic signatures rather than medallion guaranteed wet signature paper documents.

Outside of connections to service providers, even the in-house portion of processing is difficult. Onboarding new clients, submitting subscriptions, and generating distributions and statements takes hours or even days, when it could take minutes. And even with all that extra time, the NIGO (not-in-good-order) error rate for these types of transactions is enormous, 40% or higher. Using technology can reduce these rates to low single digits, while also speeding up the process. Brian compared manual processes for alternative investments to using a hammer to hit a screw into a wall. It might get the job done, but a screwdriver would be a lot easier and create a better outcome.

The group also discussed how investor preferences are changing. Clients expect digital experiences with information at their finger-tips, and reps that are still providing outdated, slow, and error-prone services are putting their reputations at risk. While automation seems like a no-brainer, adoption has been slow. One problem is that firms get stuck in their ways, and are resistant to changing how they have always done things. Reps need education on how automation can make their lives and their clients lives easier, their work with alternatives less painful and expensive, and how adoption is in their best interest.

Firms that are too slow to adopt or decide against automation are risking becoming obsolete. They will have difficulty retaining clients and reps, both of whom will migrate to more competitive firms that are equipped for modern processing. Even asset managers will feel the pressure, as their distribution partners sign selling agreements with alternative investment sponsors that accept electronic signatures and have the ability to process digital paperwork.

The cost of automating alternative investments may look expensive initially, but once firms factor in the unnecessary time spent, and high operational expenses and opportunity costs of maintaining outdated processes, they are likely to find that automation is actually cost-savings measure with a positive ROI. Bill closes by stressing that the time to adopt digital processing technology is now. There are solutions, including our own Altigo electronic processing platform, that are available on the market and already being used by financial advisors and registered reps and have said they are never going back to manual processes.