Service providers looking to keep up with investors’ growing demands for faster reporting and more data transparency are focused on providing data with increased speed and maintaining quality standards. The challenges of meeting these needs are heightened by new SEC and IRS rules and cybersecurity risks, which bring an added level of complexity to servicing clients.
As investors demand faster reporting and more data transparency, service providers are focused on providing the data with increased speed while preserving reporting quality. Whereas clients used to be satisfied just receiving financial and investor statements as PDFs, they are increasingly asking for more detailed, customized reports.
Meeting new private equity requirements
In addition to growing reporting requests, there is significant growth in the private debt space as clients look for solutions to track their loan portfolios.
With its lack of a one-size-fits all solution for onboarding new investors and processing subscription documents, the private equity space’s tech solutions still need improvement. New and existing onboarding software still require integration using human touch for reconciliation and review, despite claims to be automatic thanks to robotic process automation (RPA).
The challenge of finding a solution is exacerbated by newly proposed SEC rules for private funds. These rules cover a wide range of topics including statements of performance and fees, mandatory fund audits, advisor-led secondaries, compliance program reviews and testing, and revisions to Form PF requirements, among others.
New IRS reporting requirements bring yet another new test. The partnership tax form K-3, which is meant to standardize international tax reporting, is a lengthy 15 pages and must be sent to almost all investors alongside the K-1 form. The industry is still working to implement this new requirement without burdening investors.
Clients need to look closely at how these industry changes will affect their services. At the end of the day, data is king, and clients need a reliable private fund administration partner.
Mitigating cyber security risks
Cybersecurity issues are another concern administrators must consider. Potential fraud risks and other issues including data breaches, bad actors, wire fraud, late funding, missing deals, and missing compliance and reporting deadlines are considerable.
Digital transformation accelerated during COVID, bringing greater risk of cyberattack along with it. Using a secure portal to deliver data and receive confidential information is one step investors and managers can take to mitigate risk. Setting up two-step authentication and reviewing policies and procedures to address threats are ways to ensure secure portals and protect client data.
UMB’s approach to balancing data speed and quality
UMB is attuned to client needs and has met the speed-quality challenges by standardizing our workflow and investing in our proprietary, customizable technology for alternative funds.
AltPro is our proprietary system for alternative fund administration, accounting and investor servicing. The platform helps our ability to accommodate client requests for data to be uploaded directly to their internal platforms for tracking investor, investment and general ledger parameters.
AltPro meets client demands for more access to fund information through safe online portals. The platform can consolidate all information that data managers need about investors, investments, and funds and makes it accessible from anywhere. AltPro allows UMB to provide custom-made reports at a moment’s notice.
Additionally, a feature of AltPro, Deal Room, supports security and confidentiality during the product launch phase. Investment managers can post relevant marketing and legal materials for prospective investors to view in secure setting. All materials are kept private until prospective investors have been accepted into the fund or deal. Deal Room has now played an instrumental role in over two dozen recent fund launches.
That combination of security and convenience is essential to meeting investment managers’ needs, both in Deal Room and across our entire system.
Learn more about how UMB can support your firm’s registered and alternative investment fund servicing needs, or contact us to be connected with a fund services team member.