Data-driven decisions are the way forward to managing investor relations.
The fact that investors are demanding more transparency than ever, supports this trend. A 2022 DiligentVault survey found that a significant percentage (~70%) of investors ask for DDQs and RFIs, which must be tailored to their interests. Another study found that nearly 90% of buy-side investors expected more due diligence to be done by issuers to understand their background, interests, and objectives prior to meeting them.
In the aggressive capital markets scenario, investment decisions must be made promptly and accurately. There’s only a small window of time that asset managers have to access new information around investment opportunities, which must be leveraged before it becomes generally known. Therefore, quick access to reliable insights and data-driven decision making are becoming the differentiating factors for asset managers to stay competitive. It’s not surprizing that research by SIX found that 50% of asset managers interviewed, prioritize speed before volume in their efforts to harness data informing investment strategy.
Given these circumstances, asset managers find themselves relying heavily on consultant database solutions to unearth new investment possibilities and map prospective investors to fund managers. Consultant databases help them vet firms and shortlist investment opportunities using various filters around the kind of sector and market cap among other parameters. These are also seen as a handy means of finding numerous tools that allow them to readily track, analyze, and understand investment performance over time.
Amid heightened scrutiny of regulatory bodies, asset management companies are also under pressure to monitor investment compliance. Again, they are helped by consultant databases to maintain and access historical data, create an audit trail that support transparency of investment data and compliance requirements.
Macro-trends influencing financial asset management
Several macro developments have contributed to the current scenario of complexities for asset managers. The asset management industry rebounded from a disappointing 2022 when it almost went up to USD120 trillion in the following year. However, this recovery does not signify that their path to growth has become free of roadblocks.
In fact, it presents new challenges for asset managers. Research points to investors preferring passively managed funds and other products that entail a smaller fee and lower risk, amid highly volatile market conditions. This tendency raises overheads for asset managers besides narrowing their growth opportunities and profitability. In the past, they have managed to make revenue gains owing chiefly to capital appreciation – this is predicted to hit a slump in the coming years and may not be enough of a factor in offsetting these deterrents to growth.
Asset managers must be in a strong position to discover prospective investors as well as areas ripe for renewed investor engagement and relations. Many heavily rely on third-party consultants (via the consultant database) to widen their field of access to such opportunities.
Why investor relations merits focused attention
Investors are interested in finding investment opportunities with high potential to add to their wealth and ways to make the most of their existing investments.
In managing their portfolios, asset managers typically help them find the right investment opportunities on which to focus. Without doubt, asset managers are under pressure to offer something new that gives them potential differentiation. But, often they have met with resistance from investors more inclined towards relatively well-known and successful products.
These factors can be seen as an opportunity for asset managers to revisit their strategies around continued growth and improved operational efficiency. Rethinking their approach to investor engagement and relations will be a good place to start.
Challenges in managing consultant databases
While consultant databases certainly augment investment decision-making, managing these databases across multiple platforms is both complex and tedious for in-house investor relations teams. These databases must be kept up to date and accurate in order to attract likely investors and retain their interest in the products on offer. Besides, today’s investors may be more receptive to a highly personalized pitch that is built on a deep understanding of their preferences and interests.
In-house investment management teams are already burdened by having to navigate complexities of brand-building for strengthening investor trust, raising capital and investor engagement. Additionally, they must support investor and regulatory reporting by keeping faithful documentation of audit trails and reporting data on assets under management.
Often, meeting these responsibilities involves manually intensive processes, diverse demands, and frequent updates, which can be a huge drain on valuable resources. There is also greater leeway for errors and inefficiencies.
Being hard-pressed for time, asset managers may have to resort to adopting expensive tools and measures to ensure clean data as well as hiring human resources to update the consultant database. However, these are mostly quick-fixes, which add to the overheads without guaranteeing data quality or process improvements as desired.
Ways to overcome these challenges and strengthen investor relations in the process
Asset managers need consultant database management solutions that resolve their data requirements and challenges comprehensively.
Ideally, these solutions should be able to:
- Assess data needs across consultant platforms
- Augment responses with data for RFPs with required customization
- Quickly produce in-depth reporting pertaining to company governance, investment team profile etc.
- Provide for data cleansing and standardization
- Simplify data sharing through automation pipelines and reduce manual dependencies
- Structure standard operating procedures and checklists for high-quality database management and updates
The Decimal Point Analytics advantage
At Decimal Point Analytics, we ensure tailored consultant database services to help improve their management. We aim to optimize workflows, automate processes, and ensure data accuracy that make for stronger investor engagement and operational efficiency.
Find out how you could leverage our consultant database solutions here.
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