Our Insights

Five minute focus with Priya Nair

Enhancing the private capital client experience

As allocations into private capital continue to grow, the demand for detailed reporting, analytics and solutions that streamline complex operational processes is also increasing. How can fund managers scale-up their operations through automation to more effectively manage these complex asset classes and help simplify administrative burdens?

Priya Nair, Global Head of Product Management, Private Capital services at RBC Investor & Treasury Services’ (RBC I&TS), discusses the current private capital environment and the path forward.

1. What is driving the demand for more sophisticated private capital reporting solutions?

Institutional investors have become accustomed to a certain reporting standard for their liquid assets, and expect that level of consistency and transparency across their portfolio, including private capital holdings. From a regulatory standpoint, Europe’s introduction of the Alternative Investment Fund Managers Directive (AIFMD) in 2013 helped satisfy investment policy requirements for independent oversight from a depositary. However, limited automation and digitization capabilities have influenced the level of detail and reporting flexibility required by investors.

2. Can you describe some of the private capital data challenges that exist today?

The need for a streamlined, integrated technology and operations infrastructure is becoming a priority. One of the common challenges limiting a manager’s ability to provide a digitized experience to their investor clients is that data generally needs to be gathered from multiple sources, which then needs to be structured and analyzed before it is delivered on to clients. Much of the reporting today requires considerable manual intervention, which adds significant time, and is more prone to inaccuracies. Asset owners are looking for direct digital access to data and documentation, online banking capabilities to manage investments and income, plus advanced analytical based portfolio management tools.

The complexities of reporting private capital assets also explains in part why this market segment is falling behind others in terms of client experience. For example, many managers have fund structures, investments and investors located across multiple jurisdictions, which makes standardized reporting a challenge.

As allocations into private capital continue to increase, we should expect that more scrutiny from regulators into the type, detail and frequency of reporting that end investors receive will inevitably follow.

Assets under management of private capital and other alternative asset classes are expected to total USD 14 trillion by 2023 as institutional investors continue to seek higher yields1











3. How can service providers facilitate this transition?

Fund managers are definitely looking to their service providers for solutions and support. In our role as depositary and fund administrator, providers have a significant amount of the required data that can help improve the underlying client experience. However, it’s not as simple as a plug and play scenario.

For data to be more impactful and insightful, we collaborate with fund managers to understand what is required, identify the appropriate data sources and look to package it in a way that meet the needs of the manager and their end clients. Based on our experience, our clients generally prefer to be the sole contact for their investors. So we want to ensure that data delivery is seamless and provided in formats that can be easily ingested, managed and interpreted.

4. Any final comments for private capital fund managers?

We recommend a consultative partnership between the fund manager and service provider to ensure transparency across digital platforms. Understanding investor reporting expectations, objectives and benefits to the end client is the key starting point. These criteria ultimately guide what type of data is required, where the data is coming from and the most appropriate distribution channel. It’s about providing an enhanced client experience and adding value with insights. We need to work towards developing approaches that provide more consistency across all asset classes.

 

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