Are you too busy to save time?
Fund analysts must find time to innovate. The products they research have become more complex and recent industry events, such as those reported at Woodford Investments, mean more oversight of managers and their investment products is required, not less. It’s no surprise that 69% of fund buyers say time constraints limit their effectiveness* when the due diligence questionnaire (DDQ) process has hardly changed in the past 20 years.
DDQs are often used by fund analysts to gather information from asset managers to monitor the firms and products in which they invest. Each year, thousands of Word documents, Excel sheets and pdfs wing their way over email to asset managers. Fund analysts must maintain a high quality, relevant questionnaire. They send it out. They chase it up. And they chase it up again…
Reviewing asset managers’ current responses against previous questionnaires is a laborious process. Has anything changed that may require further investigation? Will changes to the portfolio management team impact the investment proposition and expected returns? It’s wasted time reviewing information that hasn’t changed, just in case it has.
Time wasted collecting and reviewing information is a cost to a fund analyst’s business: people, time and opportunity. Analysts are paying much more than the explicit cost of an asset manager’s fund. And it’s a growing issue. For those investors that don’t issue DDQs, a more robust process may be needed going forward.
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The DDQ process is also inefficient from the asset managers’ perspective. They’re seeing volumes growing by double digit figures and can receive between 50 and 5,000 DDQs each year, depending on the size and geography of their client base. RFP specialists work long hours to meet deadlines and undertake repetitive tasks responding to DDQs. Significant input and oversight is required from their investment teams and other subject matter experts. Both groups could be focusing on more value-adding tasks.
Read About: Door for Asset Managers
In an environment of falling margins, this is a process that must be digitised for the benefit of all. And not just digitised, but standardised. Asset managers can’t just swap 5,000 Word document DDQs for 5,000 online questionnaires. The workload won’t fall.
By responding to a single, robust, standard questionnaire, managers save their clients’ time and money and make their lives easier. This is important. 76% of fund buyers state poor client experience as a contributing factor to firing managers*. It’s time that fund investors and asset managers benefited from the dual efficiencies of standardisation and digitisation in due diligence. It’s time to put wheels on the cart.
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*CaseyQuirk. Distribution 2.0, How technology will redefine relationships with asset management clients, 2019
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