PE Tech Report


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Simplify investor onboarding for a competitive edge

As hedge fund managers jostle for investor attention and investor requirements become more onerous, creating operational efficiencies within areas like investor onboarding can provide managers with a competitive advantage while also helping to ensure the longevity of their business.


As hedge fund managers jostle for investor attention and investor requirements become more onerous, creating operational efficiencies within areas like investor onboarding can provide managers with a competitive advantage while also helping to ensure the longevity of their business.

“The fund industry is growing rapidly, yet the capital raising, and investor onboarding experience has failed to evolve materially in decades,” observes Paula Fontecilla (pictured), Product Manager, Opus Fund Services, “Covid has also made the due diligence process much harder, limiting the ability to perform onsite visits. Fund managers need to adapt to these challenges and use technology to address the investors’ changing demands.”

Managers need to stand out from the crowd as competition for capital continues to rise. They invest a significant amount of time building pipelines of interested investors and these lists need to be actively managed, providing regular updates and news to all interested parties. This process is challenging and has historically been completed using a combination of e-mail, spreadsheets, word processors and PDF, which was a burdensome process, with a high margin of error.

However, as investor requirements become more urgent, managers need solutions which allow them to meet investor demands quickly, efficiently, and professionally.

“Opus has addressed these challenges with our new Digital Subscription solution. This has turned a highly cumbersome process and made it fit for the modern-day investor. The new tool set, deployed within the Opus Client and Investor Portals, simplifies the process of sending and tracking online invitations whilst providing ability to monitor investor engagement in real-time,” Fontecilla details, “The dashboard shows who has been issued an invite, who has opened, how far they have progressed, and if subsequent proceeds have cleared the funds’ bank account. This allows for better informed interactions with investors to help convert possible investor interest, into a confirmed new subscription.”

Faster, easier, more secure

Opus Digital Subscriptions makes the investor onboarding process much faster, easier, and more secure. Documents are completed, electronically signed, and submitted quickly, while being tracked securely and transparently.

It also provides collaborative functionality which allows multiple financial advisors such as tax and legal to participate without needing to distribute the document in an unsecured e-mail format. Further, smart branching ensures only questions relevant to the investor’s vehicle type are shown. This means that time and attention is focused on the questions that matter.

Fontecilla outlines a few relevant examples: “If the investor is an individual, then no wording related to entities will be shown. Further, if the answer to a question does not require additional clarification, then the software wizard automatically moves to the next section. So, if the investor confirms they are excluded from new issue income, then no other questions relating to eligibility are displayed.”

She further explains that the inherent limitation of legacy PDF subscription documents means every possible question needs to be shown to an investor, but the Opus customisable interface allows the manager to only choose the questions relevant to their fund.

“So, if no plans exist to trade new issues, then those eligibility specific questions can be excluded at the click of a button. If the fund is planning on taking advantage of the 3c1 exemption and only attracts accredited investors, then all questions relating to qualified investor criteria can be removed. This allows the subscription document to be dynamic and highly customizable to the funds’ unique and evolving needs,” Fontecilla says.

There are also logic-based controls built into Digital Subscriptions. These alert the preparer of any errors requiring remediation. “The simplicity of using Opus Digital Subscriptions affords a much-improved investor experience. And after the initial setup is completed once, the universal investor profile is used for future investments in any other private fund, thereby saving the need to replicate, whilst eliminating the risk of data discrepancies across multiple investments,” notes Fontecilla.

Reducing errors

The prospect of reducing errors appeals to managers, especially in light of the fact that in a review of the last 1,000 paper-based or PDF initial subscription documents received by Opus, 91% were completed with at least one error.

Fontecilla describes the clunky and cumbersome legacy process of investing in a private fund: “It involves emailing a PDF document and asking the investor to print it out, fill it in, scan it, and e-mail it back. This process takes many hours and needs legal and tax expertise.

“In view of constant legal and regulatory changes, the challenges are getting greater, not fewer. Investors are hit with the perfect storm of increasingly complex documentation to complete, greater due diligence expectations, together with reduced available time to complete the entire process. Most subscription documents are over 60 pages long and include specific questions for every investing vehicle type possible.

“Too much time is spent trying to decipher complex legal language to see if the question is even relevant. And when making multiple investments, new documentation needs to be completed each time with different documents, in different formats, with different wording.”

Fully integrated solution

The Opus solution differs from other systems in that it has zero reliance on third-party, form-based e-signature providers, which can be cumbersome and most often don’t benefit from smart branching and rule-based logic.

Being a fully integrated software solution, the Opus Digital Subscriptions offering removes the additional time, complexity and costs needed for third party integrations. Data from the completed subscription document, flows seamlessly into the Opus operational systems removing the risks of data transmission or typographical errors. The Opus Digital Subscriptions process is a unique turnkey solution, fully integrated into the Opus operational environment making it immediately available to tens of thousands of investors and clients via their existing portal login.

“Opus’ experience onboarding over 50,000 new investors affords a unique understanding of the requirements and common pitfalls investors make when subscribing into funds. This diverse insight has allowed us to build a solution to address all known client and investor challenges,” Fontecilla concludes.

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