Technology Drives Effectiveness, Retention

MiFID II to Boost Automation

Technology is a key driver of effectiveness and retention, as it automates manual tasks and allows professionals to spend time on the most valuable activities, according to a new study from Backstop Solutions.

Only 55% of BD/IR professionals are satisfied or very satisfied with their technology solutions, while nearly 80% think “there must be a better way of doing this” on a daily basis, according to the findings.

Backstop Solutions’ 2022 Alternative Investment Manager Productivity Survey of Investor Relations (IR) and Business Development (BD) Professionals found that professionals at alternative asset managers could be working more efficiently overall and using technology more effectively.

Maryling Yu

“The tasks that prompted those thoughts most frequently — manually entering fund admin data and reconciling fund admin data — are responsibilities that technology can easily automate,” said Maryling Yu, Chief Marketing Officer of Backstop Solutions.

In addition, current market conditions seem to be impacting the ability to fundraise, as the study found.

Yu said if fund managers don’t already have a technology solution in place, it may delay an alternative asset managers’ (Alt AM) decision to procure and implement new technology.

“Alt AMs are looking for ways obtain operational success even during a downturn by being able to scale their operations up and down as needed,” she  told Traders Magazine.

Tasks that are not core and not value-adding (waste of time) are good candidates for automation, Yu stressed.

“In the case of alt AMs, they are experiencing pain in the areas of manual input and reconciliation of fund admin data, which is multiplied by the number of funds they have,” she said.

This is an opportunity for automation to step in which would free up about five hours a week, according to the study.

Yu added that another area is identifying the allocators that are actually allocating to their asset class.

This would require more than automation, as it also requires the integration and presentation of accurate data into their prospecting processes, she said.

“Being able to do this could potentially free up another seven hours a week for BD/IR professionals, based on our research,” she said.

Asset managers are often working in two roles — hunting for new allocators and cultivating existing relationships, which doesn’t come without its challenges.

“If you do both, you need software that tracks data and information for both sides of the equation effectively. For asset managers tasked with double duty, a “CRM can be a really critical source of organization value,” one asset manager said.

“Another stressor involves a critical job for asset managers: finding the investors that are actually allocating. They’re a bit of a needle in a haystack, managers tell us,” Yu said.

“Much of my outreach searching for allocators requires a normal grind of data gathering and front-end lifting. Where that process actually bears fruit is with the follow-up emails after the initial ‘first touch,’ a fund manager said.

Yu said that disciplined use of a CRM could potentially solve this problem for asset managers, allowing teams to collaborate via a portal where calls and meetings with allocators are available to all.

Technology has transformed the working world, automating manual tasks and allowing professionals to spend time on the most valuable responsibilities.

CRMs are the technology solution that managers are most — and least — satisfied with, according to the survey.

“Most people overcomplicate their CRM to a point where it becomes annoying for people to use and difficult and time-consuming,” one asset manager said.

Yu added that discipline and data hygiene are important when maintaining a CRM, and data feeds are an important part of streamlining that.

She added that among institutional investors, it’s very hard to use a generic CRM for your specific needs — repurposing it so that it represents the strategies you have, the funds you have underneath each strategy, the vehicles you have underneath each fund, and the share classes you might have underneath each vehicle.

An area of future research would be to explore the different practices between those who give their CRM high marks and those who don’t, she said. “Our hypothesis is that the more disciplined the organization’s approach to data hygiene and completeness of records, the more valuable the CRM is as a solution,” she said.

In terms of the impact of technology satisfaction on BD/IR professionals, this may impact their happiness at work, which is relevant in the context of the “Great Resignation,” Yu commented.

If performance is difficult right now, client servicing becomes even more important, said Yu, adding this means the BD/IR team needs to be able to provide client servicing at a very high level to differentiate themselves and retain allocations. “Having the right technology in place, therefore, has a double impact: it increases their ability to do their jobs (retain capital), and also the BD/IR team’s happiness at work (retain talent),” she said.

Commissioned by Backstop, the study surveyed 103 BD/IR professionals from alternative asset management firms conducted from May 29 to June 29, 2022.

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