Citco’s Complexity Corner: Five ways managers can enhance the experience for end investors in private markets

20 November 2023 - Increasingly fierce competition for capital among Private Markets investment managers means that, in recent years, the end investor experience throughout the investor lifecycle has become a differentiating factor.

In addition, the broadening of the investor base in Private Markets has tested the scalability of existing processes, and deploying appropriate technology to help maintain the investor experience is now a key component of any solution.

The importance of this experience in the current environment should not be underestimated. Making things as simple as possible for end investors using intuitive technology is no longer a “nice to have”, but a mainstay that saves time and resources for all parties.

The Citco group of companies (Citco) has recently enhanced its own online service, CitcoConnect™, to help improve the onboarding phase of the relationship between the investor and the investment manager, as part of its drive to enhance the user experience.

Below we look at five ways investment managers - working with their asset servicer partners - can offer an enhanced investor experience:

1. Consistency and trust – Ensuring that processes are uniform, easily understood and that interactions are knowledgeable fosters trust and confidence. There are tools to help with this, including the use of intuitive smart form wizards with real time data validation and mandatory question controls, all of which ensure post application communication is minimized.
2. Transparency – Providing a consistent approach to reporting ensures that investors can easily understand the requirements and the status of the process, in particular when dealing across multiple jurisdictions. CitcoConnect now provides fund managers with unprecedented access to granular data room activity, including document-level and individual user usage. This feature empowers fund managers to tailor their engagement with users based on their specific product interests. As the number of investors entering Private Markets increases, managers must also keep a firm grasp on their ability to deliver to a greater number of end investors. Working with an experienced asset servicer that has helped many clients to grow over the long term - using a combination of know-how and technology - is crucial for any manager that wants to scale up while maintaining a seamless investor experience.
3. Compliance – Technology platforms like CitcoConnect can support a uniform and intuitive KYC process, giving investors scope to complete the KYC journey prior to the completion of the commitment documents. They also offer document requirement notifications, and document upload capabilities. As part of this, investment managers should partner with a service provider that can facilitate the identity procedure in a straightforward manner. The CitcoVerify app, powered by identity verification business ID-Pal, is a safe and simple way for investors to verify their identity online within minutes and avoid the requirement for certification that exists across a number of jurisdictions.
4. Simplify investor interactions – Investors may choose to invest in multiple funds across jurisdictions via the same investment manager or across multiple managers. In such circumstances, a uniform experience makes it easier for them to navigate different offerings from the same investment manager without encountering a steep learning curve for each one. Technology can also again play a role here: CitcoConnect has a data pre-population function providing users with the option to pre-fill their form with previously provided data. Forms can also be completed on a single platform by utilizing electronic signature functionality, avoiding the need to print and physically sign the documents.
5. Security – As with all financial services interactions, security is paramount, and investment managers will want to work with platforms that contain top tier security via multilayer authorizations and e-signatures. As new documents are published or notifications posted to the investor, the CitcoConnect platform also sends a secure link directly to them, while there is also a single sign-on function via our CitcoOne™ portal, meaning the process can be seamless and secure from the client’s webpage to Citco.

The investor subscription and capital raising process in Private Markets has evolved significantly in the last decade, but there is much more to come as Private Markets continue to attract more capital.

Further innovations to enhance the investor experience are constantly in development as asset servicers like Citco look to empower fund managers to expedite the onboarding process for new investors, and streamline operations for existing investors.