Last week DiligenceVault invited around 25 asset managers and allocators to discuss ways we can enhance communication and information exchange between asset managers and allocators, aiming to strengthen their relationships through diligence. Our team discussed the benefits of digital due diligence requests, highlighting features such as conditional flag setting for manager responses, data and content management consistency for both parties, internal and external collaboration, and enhanced reporting through PowerBI.
Here Are The Top Five Takeaways:
1. Increased Data Requests & Regulatory Scrutiny
Participants noted a significant rise in data requests, reflecting heightened regulatory scrutiny. One allocator shared that they use DiligenceVault’s flagging system to identify SEC inquiries, and drive follow-up conversations with asset managers. This indicates a growing need for robust data management and flagging tools to spark investigation.
2. Utilization & Benefits Of Autofill Functionality
DiligenceVault’s autofill feature garnered significant interest, particularly from asset managers with small teams. Participants highlighted that
- Having the ability to autofill previous responses simplifies the process for asset managers for same questionnaires across multiple time periods
- Having the ability to reuse answers using response intelligence across different questionnaires from different allocators is also helpful in creating first drafts
Autofill is a key mechanism enhancing efficiency and accuracy in completing questionnaires, and ultimately reducing turnaround time.
3. Challenges With Deadlines & Coordination
Both allocators and asset managers emphasized the critical nature of deadlines. For asset allocators there are downstream deadlines that they need to meet – particularly around board reporting, client reporting, IC meetings, and audits.
For asset managers, the completion and review of data requests often involve multiple teams from product specialist, compliance, legal, sustainability, highlighting the importance of streamlined processes, clear communication, and tools that facilitate review workflows and timely data submission.
4. Focus On ESG, DEI, Cybersecurity, & Cash Controls
Discussions revealed a sustained focus on environmental, social, and governance (ESG) criteria and diversity, equity, and inclusion (DEI) mandates, as well as cybersecurity and cash controls. Allocators are increasingly asking detailed questions about these areas, reflecting broader industry trends and investor concerns.
5. Desire For Enhanced Reporting & Feedback Sharing
Asset managers expressed a strong desire for enhanced feedback from allocators regarding investment and manager selection decisions. Improved communication and transparency between allocators and asset managers emerged as a recurring theme, highlighting the demand for reporting and feedback mechanisms. These insights suggest a need for continued collaborative best practices beyond DDQs and ad-hoc reporting.
In summary, the roundtable emphasized the evolving landscape of data management and regulatory compliance in the asset management industry. The insights shared underscore the importance of adopting advanced tools like DiligenceVault to navigate challenges effectively, enhance operational efficiency, and foster stronger, more meaningful relationships between the two parties throughout the diligence process.
