Watch this 20-minute conversation where Mark Quigley and I talk about building, designing and delivering our next gen Fund Subscription solution. We’ll also cover the private markets investor journey and discuss why the industry needs a solution that moves investor onboarding toward a centralised digital solution.
Watch the full recording or read the write-up below:
Stu: Talk to us about the challenges and opportunities that you encountered when you started designing our subscription solution.
Mark: We’ve been providing a light subscription product on our online platform since 2016 alongside with our better-known AML / KYC and FATCA / CRS services. This fits with our whole ethos, our one-and-done approach. Investors get one profile on IDR, which they can reuse for each subsequent investment so they don’t have to repeat the same laborious process each time.
For our initial subscription light offering we developed a standardised questionnaire working with many leading law firms. It was developed with a view to replacing the standard long form subscription questionnaire that’s commonplace across the industry so investors could complete it once and then simply sign on the dotted line. But uptake was low; understandably law firms and managers didn’t want to move away from their tried and tested sub book language.
However, we wanted to make this joined up approach accessible for all fund managers regardless of the content of their subscription agreements and also easier for investors (especially when reinvesting with managers for second or third time).
Stu: So, tell us how did you move the process forward?
Mark: First, we went back to our clients, fund managers and their law firms and asked, “what’ll make this work in practice?” We then took what we found back to our developers and built a super flexible, digital solution to replicate the substantive subscription questionnaire and the logic within it and then added some smart efficiencies with technology.
We also integrated this with DocuSign, to facilitate signing the rest of the content, including reps and warranties, online within our platform. We designed this in such a way as to enable investors to reuse their responses. So, when filling out another subscription questionnaire, they’re 90% complete right from the get-go.
We then logically integrated this as one part of the onboarding process in our hub, enabling investors to complete their subscription questionnaire and KYC and provide their tax documentation in one platform. They can log in, see all their information in one place and reuse it the next time they go to invest. So, it’s much easier the next time round.
Stu: It sounds like a key part of this whole thing is the user experience
Mark: That’s right, the challenge really is in building the UX. The technology takes logical thought but it’s almost the easy part, the tricky part is how do you create an experience that gets a client’s 300 investors subscribed to their fund on time, every time.
As a business we have more than six years’ experience providing managed services. We took the same approach we’ve taken for our AML / KYC and FATCA / CRS products and staffed a team of legal experts to support investors on their subscription journey.
We built dashboards for managers and their advisors to act as a golden source of truth and provide 24/7 access. We also built in app messaging aimed at fund counsel communicating with investors on subscription matters.
Stu: Why design in app messaging for law firms specifically?
Mark: Our teams have closed 100s of funds with our clients. We see a lot of back and forth on subscription agreements, typically by email, between fund counsel and investors until finally the investor can sign. We’ve recreated this subscription agreement online; investors complete it online and counsel can comment on the exact section the investor needs to action. The investor will then receive a link taking them directly to amendments. This creates a faster process with less email traffic and a smoother experience for everyone.
Stu: We see a lot of attempts to move paper processes online with PDFs investors can complete, is this the goal?
Mark: No, that’s been solved, everyone can use fillable PDFs. With a light digital process you don’t get the advantage of a smart questionnaire, for example if someone indicates they’re a natural person they will only get the set of questions appropriate for a natural person and this is replicated throughout. The advantage of a smart questionnaire over a PDF is that the process is quicker, easier and less mistake prone. Once digitised in a proper format, and the answers are stored, investors can reuse their information. Managers also have access to this information which is beneficial for reporting. For example, for annual form PF reporting (for fund managers in the United States) they can pull stats from the system easily.
Stu: You’ve described this very intentionally as fully digital, are there other benefits arising from the digital capture of an investor’s key info during onboarding?
Mark: The key benefit is visibility. The whole process is visible to managers via our portal. We’ve built client friendly dashboards where managers and service providers can see who’s reading the subs book, who’s signing it, who’s completing questionnaires, how much is left, what’s outstanding and so on. There’s no guessing and it’s all extractable. This gets away from sharing this information in Excel, which is out of date as soon as it’s updated.
Stu: As it’s all online, do others have access to info?
Mark: No, our platform is profile based – similar to how LinkedIn works. Investors can share their profile with consent. Managers can also control who they can connect and share documents with.
Stu: So, transparency – got that, better investor control over the data, what other benefits arise from a digitised process?
Mark: There are benefits on the data side for managers. If data is all in paper or PDF, this needs to be extracted to different systems – for instance CRM or administrative systems. By contrast data held digitally can be API linked to other systems. This reduces the time spent rekeying that data and also the capacity for errors.
Stu: Now Subscription 2.0 is fully up and running, what’s next?
Mark: We want to finish off the work we’ve started on our Side Letter and Most Favoured Nation management service. We’ve done about half of the development. The aim is to create a single location to store side letters and the obligations within them so they can be tracked and categorised. We’re also building the capability to manage the MFN election process digitally. There’s a lot of interest in this from managers and law firms and we think it will be really beneficial.
Questions from listeners:
Can you describe any objections or concerns you’ve encountered when discussing migration to a digital subscription approach.
Mark: For managers they’ve been looking after their investor book with a white glove treatment – they don’t want to rock the boat. But they recognise the process is not fit for purpose. With our solution, it’s not just about the technology, it’s also about the managed service element. Our team of experts provides white glove support. Typically, we find managers will sign with us for one small aspect of our service offering and then expand the range of services they use as they become comfortable with our approach.
One-and-done, does this apply to using investor data for other applications e.g., KYC and tax?
Mark: Yes, that’s right. Our view is, why should investors have to do this more than once? It doesn’t make sense. Investors can authenticate with us once, across subscription, KYC and Tax to a high standard and then invest across all key fund jurisdictions.