Go to any industry event and someone will ask you how your firm is differentiating from the competition. There are many ways to Be Different, but here’s the very basic overview of how to become different:
- Step one is to figure out who you want to be your clients.
- Step two is to figure out what they think they want.
- Step three is to decide how you are going to deliver what they want, what they really need and stay profitable through the process of creating happy clients.
- Step four is all about optimization – take the process and make it as efficient as possible, while you deliver the same level of service to your clients.
This fourth step is often a doozy. It requires a lot of research, creativity and leadership. You’ll select software to purchase to automate specific tasks. You’ll build a few workflows and spreadsheets to meet the specific needs of your clients and team. You’ll also form key partnerships with trusted outside teams to make good on promises that your internal team doesn’t have the depth or breadth to deliver.
In a world where most investors can access publicly traded investments with ease, it makes sense for financial advisors to differentiate themselves by providing curated access to alternative investments to their clients. But the world of alternative investing is inherently unwieldy. There is no one place to go to find them, no one data feed to tap into for position information, no single source of truth anywhere. Instead, it’s a world of one-offs – from sub docs to valuations, distributions to tax information, the addition of alternative investment data has been labor intensive for advisors.
As most advisors adjust portfolios to include 10-25% in alts, working without the infrastructure that exists around public investment data, their back office can easily get bogged down chasing statements, valuations, capital call information, distribution data, tax documents and more. Figuring out how to scale this process requires serious attention.
Here are a couple of highlights of the various services that your advisory firm will need to have in place to be able to scale your back office alternative investment operations:
Alternative Investment Curation
One of the most important methods for staying at the center of your clients’ financial flywheel is to provide them with potential investment information proactively. Whether you are helping them prepare for college tuition, a retirement abroad or working toward an impact far beyond themselves, your clients want financial options to come from you. While alternative investments often pop onto your clients’ radar through an old college roommate or their slightly distant relative, it doesn’t have to be that way. You can be the one who helps them gain access to a curated selection of private investments.
Mammoth’s platform offers a user-friendly interface that allows you to browse and compare different investment options easily. You can add them to your firm’s fund catalog and recommend options to your clients during their annual review, as funds that align with their goals are added or any time the timing is right for you and your client. Streamline the process of recommending alternative investments by keeping everything in one place for easy access across your firm and client base.
Alternative Investment Organization
Some of your best clients, who are wise and savvy investors, struggle the most to keep their financial world neat and orderly. There are paper and digital documents they sometimes fill out incorrectly, quarterly statements that need to be collected and stored, distributions to account for, capital calls that need dollars available and so much more. These clients tend to have more dollars to invest and the sophistication they need doesn’t have to push them to a larger firm if you can find a way to push their various activities and one-offs into their broader portfolio. Finding operational scale from filling out sub docs to keeping valuations accurate is possible.
You don’t have to hire an alternative investment team in house to help your clients get organized around their alternative investments. Instead, you can partner with a team that can assist your firm in one of your most time-consuming operational tasks; maintaining manual alternative asset documents and data. Of course, we aren’t just doing manual entry. One of the main reasons it benefits you to partner with an outside provider is to mitigate the inevitable occurrence of human error.
By investing in the right technology solution, financial advisors have the ability to stay at the center of client financial decisions and add value through streamlining document processing workflows away from their clients and office staff. You can proactively mitigate risk by integrating previously siloed systems, reducing excessive handoffs, and preventing duplicative data entry. Although implementing a modern technology solution may pose its own set of challenges, a suite of fully integrated software solutions will significantly reduce the potential risk of human entry error and allow your firm to grow exponentially.