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Navigating the Challenges of Diverse Investments

As alternative investment products gain popularity among a growing retail audience, firms in the industry face the challenge of adapting their back-office infrastructure, originally designed for retail mutual funds. This adjustment blurs the lines between operational and technical support for retail/40 act and alternative investments, putting strain on back-office workers and managers. To illustrate:

  • Despite using a common language, the support for retail and alternative investments can feel vastly different. For instance, does "AIP" refer to an automatic investment program or an alternative investment product?
  • Given the stark differences between retail and alternative investments, most firms opt to segregate their support teams. Each type typically has its own set of processes, regulatory requirements, and sometimes systems. Thus, it becomes impractical and ineffective to expect the same individual to support both distinct investor bases. And, as noted in the next bullet point, when the firm attempts to use a retail focused systems, for alternative products, it often leads to inefficient operations.
  • Many retail investor recordkeeping systems aren't optimized for non-daily processes like future-dated events such as capital calls or monthly pricing. Consequently, every capital call, interval fund investment, or redemption requires immediate recording in the system on the same day as the event, leading to a manual influx of hundreds of purchase trades in a short period.

Unlocking Simplicity with Versatile Technology

Adopting adaptable technology becomes a solution to this complexity. Utilizing technology capable of accommodating the intricacies between retail and alternative investment products can alleviate this challenge. Versatile recordkeeping technology should seamlessly manage both business segments, eliminating the need for manual intervention.

In this short video, Kelly Lynch overviews what she is hearing and how we respond:

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