Why Workflow Standardization Matters in Investor Due Diligence
The following article was contributed by Ledgex Systems, a provider of portfolio visualization and research management solutions for endowments and foundations, family offices, wealth advisors, pensions, consultants, funds of funds, hedge funds and private equity firms.
Most alternatives investors believe they have some type of workflow standardization when it comes to selecting prospective fund managers — even if they rely more on instinct than anything else. However, Ledgex has seen the same mistakes occur again and again if firms don’t have the right steps in place. If you’re looking to minimize the risks that you take, it may be time to tighten up your processes.
What Is Workflow Standardization?
Workflow standardization is a somewhat ambiguous term that can be defined in a variety of ways. When it comes to the due diligence process though, it can’t just be a set of rough guidelines laid out by a company before making an important decision on a prospective manager or investments. Firms need to create a rigid system that spells out exactly what must be done and the order it must be completed in. There should also be tools to track every stage of the due diligence pipeline, so flags can be raised if a step is skipped or only partially completed. Many companies forget about the importance of thorough validation when it comes to internal processes.
What Should Workflow Standardization Do?
To a certain extent, workflow standardization is determined by the company, with the goal being to define the risks and calculate the rewards of each investment. Without collecting and analyzing the right data, it’s easy to miss a compliance measure that could land the company in hot water later on. For example, if the firm is trying to move an investment through the initial stages without a thorough Initial Disclosure Document, there needs to be some way to catch the mistake so there’s no wasted time, effort, or money. Ideally, research analysts should have a way to define the necessary parameters and a method of overseeing how each box is checked off.
How Can a Software Platform Help?
Part of finding the right strategy is having the right support at your fingertips. A lot of time can be lost trying to track down the right information during due diligence, which can lead employees to make a crucial error. Tools, such as Ledgex, makes it possible to easily quantify judgments for prospective managers, so decision-makers are confident they have the right information before pulling the trigger. You set the terms and procedures, and we follow them to the letter.
The Ledgex platform makes it easy to enter measurable financial information, such as AUM, as well as more abstract information, such as the history and background of the founder of the firm. Aggregating the data gives financial firms a clear picture of the exact benefits and risks they’re taking. Finally, Ledgex gives companies the means to track each task or event, so there’s no question about who did what and when.
About Ledgex Systems
Ledgex Systems is transforming the way endowments and foundations, family offices, wealth advisors, pensions, consultants, funds of funds, hedge funds and private equity firms manage their portfolios and client relations, make investment decisions and meet investor demands. The powerful Ledgex platform is an integrated technology suite that streamlines front and middle office functions of investment management firms. The comprehensive suite delivers solutions for: Portfolio Management & Analytics, Research Management and Due Diligence, Liquidity Management, Investor CRM.