The WEF released an interesting White Paper this month as part of their Future of Capital Markets Initiative, on Broadening Access to Private Markets. In collaboration with Accenture and Lazard, they explore the “opportunities, risks and innovations required to responsibly broaden access to individuals.”
Insights around barriers to access for retail investors include:
Education: both investor understanding of the asset class and manager understanding of retail investors’ needs. The paper highlights the breadth of the retail investor category and the distinct characteristics of the types of investors it encompasses.
Means of Access: such as, regulatory restrictions, steep investment minimums and high fees.
Managing liquidity: with respect to how managers can provide this and investors’ differing liquidity requirements.
Technology: The difficulty associated with navigating the investment process across KYC, subscription and tax reporting without an expert team was highlighted, alongside the fragmentation of platforms leading to a disjointed investor experience.
With respect to investor onboarding, the paper identified various pain points associated with KYC, accreditation and subscription, notably:
- Understanding of the asset class and associated documentation;
- Confusion around inputting information correctly;
- Reliance on manual process;
- Time taken to find and verify information;
- Complex legal documentation (for Accreditation and Subscription).
What are we seeing in the private markets today?
These insights align with our knowledge and first-hand experience gained working with more than 300 private markets fund managers and 40,000 investors. In addition to these barriers, other challenges we often see include frustration associated with the back-and-forth process of correcting errors in forms, the rising time and cost associated with onboarding processes for fund managers as well as investor concerns around sharing sensitive information such as passports, utility bills and so on via email and with multiple parties.
In today’s competitive fundraising environment, fund managers are also prioritising the experience they offer their investors and actively seeking solutions which reduce touch points to investors and enable them to deliver a white glove service at scale.
IDR’s solution: an investor onboarding clearing house for the private markets.
- Our vision has always been to build a trusted onboarding clearing house for the private markets. Public markets style infrastructure will be critical as the industry grows beyond institutional capital.
- With IDR, investors authenticate once to a universally compliant standard across Subscription, KYC and Tax in one platform. Ensuring a seamless investment journey.
- Investors have access to our expert team throughout the process. So, the lack of a big team is not a barrier to entry.
- Fund managers can raise bigger funds faster and more cost effectively with access to a wider pool of pre-approved investors. More than 50% of the world’s private market investors already hold a profile on our hub.
The WEF predicts: “Technology will enable every stage of the investor journey in a way that delivers the same seamlessness of public markets.”
From an onboarding perspective, we are already delivering this for more than 40,000 investors across 5600 funds and 300 managers. Why not join them?