How Spreadsheets Are Holding Fund Managers Back
August 8, 2023
Fund Manager Spreadsheets

Your kitchen faucet could stand an upgrade, unless, of course, it’s already touchless. Given the serious aid to hygiene and the water saving properties, once you add this tiny piece of tech into your life, you’ll not only cook with ease, you’ll find yourself expecting every kitchen faucet to turn on when you’re in front of it.  That’s how great tools and innovation work. Whether we like it or not, our lives are impacted by the latest and greatest tech tools, and our businesses should be too.

Staying ahead of the tech curve hasn’t been as important in the fund management world where endowments, institutional investors and family offices are also lagging in advancement. The world of alternative investors, though, is expanding.  If you want to expand your investor base to the roughly 120 trillion dollars currently managed by registered investment advisors, it would be wise to think through how to work best with High Net Worth investors and their trusted advisors. 

While there are quite a few considerations, one of the most important ones is how to scale your work for investors with less sophistication. HNW and Ultra-HNW (UHNW) investors crave access to information more than those who are familiar with the alternative universe. They expect interactions to be speedy, efficient, and seamless. Let’s walk through some of the ways you can create new networks of investors without creating a lot more hands-on work for your investor relations team.

 

Why Spreadsheet Aren’t Cutting It Anymore

Many businesses, and specifically fund management firms, are reliant on the use of spreadsheets for, well, basically everything. When Microsoft Excel came out in 1985, it was a revolutionary tool that allowed firms to collect their data all in one place and certainly beat ledger paper and pen. Excel, Google Sheets, and Numbers are valid tools that serve a role in most businesses for simple data entry and basic calculations; however, the need for real-time data has never been greater.

Top Three Challenges With Spreadsheets

Managing data in spreadsheets exclusively presents plenty of challenges for fund managers, limiting operation efficiency. Here are three of the most common issues fund managers deal with in spreadsheets:

Lack of Scale – From cap tables to investor profiles, expense tracking to distribution waterfalls the complexity of data sitting in your spreadsheets grows exponentially every time you add an investor. Over time, these spreadsheets and their interdependency can become unwieldy, making it challenging to handle large datasets efficiently. The lack of scalability can result in slower processing times, data errors, and an increased risk of error, hindering your ability to make timely decisions and respond swiftly to inquiries and requests.

Version control issues – Version control can quickly become a nightmare when dealing with multiple spreadsheets distributed across team members. As each person makes changes and updates to their respective copies, it becomes challenging to keep track of the latest and most accurate version of the data. Additionally, the formatting discrepancies that arise when team members open spreadsheets on different devices and operating systems can lead to data misalignment, errors, and confusion. The data may not display correctly, formulas might behave differently, and important details could be overlooked due to formatting inconsistencies.

Limited Data Analysis Capabilities: While spreadsheets offer basic data analysis tools, they fall short when dealing with complex data. Advanced analytics can be incredibly cumbersome to implement in spreadsheets. The lack of specialized tools and algorithms can hinder fund managers from gaining deeper insights into your portfolios’ performance and risk exposure.

On top of these three reasons, fund managers often end up spending hours buried in spreadsheets impacting their data security and automation options while creating even more siloed data.

 

Implementing Technology Solutions

While implementing new software into your firm can seem daunting at first, the payoff of choosing the right technology for your needs can provide a transformational outcome for you, your employees and your investors alike. Adopting a specialized fund management platform can lead to enhanced efficiency and effectiveness of your firm’s operations.

For Fund Managers – Streamline Processes

For you, the payoff lies in streamlining your workflows and eliminating time-consuming manual tasks. Software can automate data entry, calculations, and reporting processes, freeing up valuable time to focus on spending less time on investor relations and more time gathering new assets and deploying them well.

For Investor Relations Teams – Maximize Productivity

Your investor relations team can gain efficiency through simple digital data room sharing, online investor profiles that can be used to prepopulate subscription documents, streamlined KYC/AML checks, K1 delivery and ongoing reporting through an all-in-one client portal. 

The user-friendly interfaces and intuitive features of modern software simplify data management tasks, allowing investor relations teams to work more efficiently and collaboratively with their investors.

For Your Clients – Empower Investing

By leveraging a fully digital experience, fund managers can streamline and personalize interactions, providing tailored solutions that cater to investor needs and preferences. Access to their data and documents gives investors the information they need to share with their financial advisor or accountant. Seamless communication and collaboration fostered by technology strengthens the investor relationship, building trust and rapport. Implementing new technology into your firm not only enhances your back office operational efficiency but also creates an investor experience that distinguishes your firm from their other private investments.

 

Mammoth Technology is bridging the gap between investors, financial advisors, and fund managers through an intuitive, integrated platform branded to you. Mammoth is designed to help establish your private fund, onboard your investors, manage your cap table, facilitate tax and accounting services, and more. Mammoth’s Integrated Alternatives Platform enables you to focus on your investors.

 

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