Why Wealth Advisors Need Tools for Managing Alternative Investments

The alternative investment sector has transformed over the past decade, but the tools wealth advisors use to manage these investments haven’t kept pace. Many advisors find themselves juggling spreadsheets, wrestling with disparate systems, and manually tracking critical data points – all while trying to deliver sophisticated investment solutions to their clients.

The Daily Reality at Wealth Management Firms

Walk into most wealth management offices and you will see the same story: skilled professionals spending hours on tasks that should be automated. Investment teams bounce between multiple platforms, maintaining separate logins and processes for each fund manager relationship. Research notes live in various formats across shared drives. Due diligence documentation sits in email threads.

Operational Hurdles in Alternative Investment Management

Data Management Challenges

The alternative investment space presents unique data management hurdles that complicate advisors’ work:

• Research Fragmentation: Information about alternative investments exists across numerous databases, platforms, and proprietary systems. This scattered approach forces advisors to piece together critical data from multiple sources.
• Integration Complexity: Combining information from various sources requires extensive standardisation efforts. This process demands significant time and introduces potential errors that can impact investment decisions.
• Timeliness Issues: Maintaining current, readily accessible data is essential for proper investment evaluation and client service. Yet many advisors struggle with outdated or difficult-to-access information when they need it most.

Manual Processes 

Finding and evaluating alternative investments remains heavily manual, creating significant inefficiencies:

• Document Overload: Investment teams spend excessive time reviewing and managing essential materials – from pitch decks and investment memos to legal documentation and subscription agreements. Without proper systems, this documentation becomes difficult to track and reference.
• Communication Burden: The process requires constant coordination between multiple parties – fund managers, custodians, and service providers. Each interaction typically involves multiple emails and calls, creating a communication maze that delays decisions and burdens teams.
• Search Inefficiency: Identifying suitable investment opportunities demands searching across numerous platforms, databases, and networks. This fragmented approach not only consumes valuable time but also risks missing relevant opportunities.

Research and Due Diligence: Building Better Processes

Comprehensive Due Diligence The thorough vetting of alternative investments demands significant resources and attention to detail:

• Investment Analysis: Teams must carefully evaluate complex risk profiles through financial modeling and stress testing. This technical work requires both expertise and considerable time investment.
• Manager Verification: Proper due diligence involves extensive background research on fund managers and their organisations. This includes verifying track records, references, and operational capabilities.
• Compliance Requirements: Meeting regulatory obligations requires precise documentation and reporting processes. Teams must maintain detailed records of their due diligence steps and findings.

Data-Driven Decision Making

Modern analytics capabilities can transform the research process:

• Performance Measurement: Real-time analytics tools enable more accurate and current performance assessment, helping teams make timely decisions.
• Comparative Analysis: Integrated analytics streamline the process of measuring opportunities against relevant benchmarks and peer groups.
• Forward-Looking Insights: Advanced modeling tools help teams forecast potential outcomes and better understand investment risks.

Streamlining Distribution and Client Servicing

Efficient Client Onboarding

Efficient Client Onboarding Alternative investment onboarding demands rigorous operational protocols:

• KYC Compliance Protocols: Systematised KYC processes reduce operational risk while accelerating investor qualification and verification procedures. Modern platforms can materially improve traditionally manual compliance workflows.
• Document Management Infrastructure: Digital infrastructure facilitates secure transmission and archival of subscription documents, side letters, and regulatory filings, enhancing operational efficiency across stakeholder touchpoints.
• Investor Education Framework: Comprehensive investment memoranda and structured educational materials support investor understanding of alternative investment characteristics, mechanics, and risk factors.

Subscription and Redemption Processes

The operational complexity of subscription and redemption workflows requires robust administrative infrastructure:

• Subscription Processing: Systematised subscription procedures ensure proper execution of documentation, funding verification, and AML/KYC requirements while minimising operational friction.
• Redemption Operations: Streamlined redemption protocols are essential for operational excellence and investor satisfaction. Standardised procedures help manage notice periods, documentation requirements, and settlement mechanics.
• Reporting Infrastructure: Automated reconciliation and reporting systems support accurate NAV calculations, performance attribution, and regulatory filings while maintaining audit trails and compliance documentation.

Conclusion

As alternative investments continue to play a crucial role in portfolio construction, wealth advisors must evolve their operational infrastructure to meet growing demands. The challenges outlined – from fragmented research processes and manual workflows to complex due diligence requirements and client servicing needs – require systematic solutions that can scale.

Modern technology platforms can address these operational pain points while providing the rigorous infrastructure necessary for alternative investment management. By implementing robust systems for data management, due diligence execution, and investment operations, advisors can focus their expertise on what matters most: delivering sophisticated investment solutions and superior client service.

The firms that successfully modernise their alternative investment operations will be better positioned to capture opportunities, maintain regulatory compliance, and meet the expanding needs of their clients. In today’s competitive wealth management environment, operational excellence is no longer optional – it’s a strategic imperative for growth and scalability.

Ready to Modernise Your Alternative Investment Operations?

FundFront provides comprehensive solutions for fund structuring, securitisation, and custom technology platforms that help wealth management firms streamline their alternative investment operations. 

Contact our team to explore how we can help build a more efficient, scalable alternative investment practice through tailored solutions that match your firm’s specific needs.

Email us at hello@fundfront.com or complete the contact form on our website here. 

Disclaimer

FundFront provides operational and technological solutions for fund structuring, securitisation and management. We do not provide legal, tax or financial advice. We recommend that you consult with professional legal or financial advisors to ensure compliance and appropriateness for your specific situation.