Paving the Way for Investor Onboarding

Effective investor onboarding is crucial for the smooth operation of a fund. Still, fund managers often rely on manual onboarding processes, which are expensive, resource-intensive and time-consuming. These often involve frequent back-and-forth email interactions over document requirements, multiple in-person or video calls and meetings with investors, seemingly endless paper forms, and repeated follow-ups and re-submissions of substantially similar documents. 

Let’s take a typical example. As the documentation is received, a fund manager usually has to manually enter the collected data into the system which then begins the verification process, including KYC and AML checks to authenticate investor data.

At each stage of the verification process, fund managers may have to follow up with the investor to get additional information, leading to an often-unpredictable timeline, delayed onboarding, and more manual work that only increases the risk of human error and non-compliance with the requirements. These inefficiencies put a strain on all the parties involved which inevitably leads to increased possibilities of investor dropouts, and missed investment opportunities.

This is where asking an experienced third-party to step in and support both the investors and the fund manager every step of the way until they successfully get across the finish line can prove beneficial.

Providing investors guidance as they fill their LPAs

Correctly filling in LPAs may be a challenging task for investors as they may not completely understand the terms or the risks and obligations they are signing on to. For this reason, a professional third party can proactively assist investors, offering them clarity around data and documentation requirements, addressing any questions or concerns, and helping make the entire onboarding process seamless. 

Staying right beside the investors throughout the process

Communicating not only information requirements but also progress updates for every stage of the process is essential. Transparent communication facilitates information exchange, which also helps manage expectations, particularly around lead times, thereby reducing the probability of the investor dropping out midway. This is where an extra helping hand from a professional third party may be required to make sure investors receive same-day acknowledgment of their LPAs and timely updates on the status of their documentation, and that they feel engaged in the process. 

Educating investors on LPAs to streamline future fundraises

Educating investors continuously on common mistakes when filling LPAs, such as incomplete bank details, missing AML documentation or signatures, and helping them make informed decisions when the time comes is essential to making sure that they will be ready to hop on to the next fund as soon as announced it. With the support of an experienced fund admin, investors will be better equipped to handle LPAs and fund managers will ensure their future fundraises will go as smoothly as possible. 

Working with fund managers to improve and simplify LPA documents

Very often investors do not fully understand the rationale behind the onboarding checklist, so the entire process may seem quite unwieldy and invasive to them. That is why working with an external fund admin to improve and simplify LPA documentation may be handy. In fact, an experienced third party can help spot  areas that may require some improvement and help develop optimized investor onboarding flows that aggregate industry-wide standards in a simpler format. 

Working with fund managers to fill knowledge gaps about jurisdictional requirements

Knowing different jurisdictional requirements and how these may affect investors, and staying up-to-date with the changes in local regulations is something that must not be overlooked. Partnering with an international fund admin that has a global presence in all major fund centres and local knowledge of each country’s legal requirements would equip fund managers with the information they need to succeed in venture.

To explore in more detail what a dedicated fund administration firm can do for you, please contact me at dsmith@tridenttrust.com.