4 Signs It’s Time to Automate Your Private Markets Data Management

In life and work, whether we take on more responsibility, expand upon work already done, or pivot in a new direction, we are faced with tradeoffs. We can continue to execute on our plans on our own or with the resources currently available or enlist additional resources to support us. There are costs involved with both approaches. By pushing ahead with existing resources, we may be saving budget, but sacrificing quality of work. By hiring additional resources, we may be achieving our goals faster, but may sacrifice scalability. 

As firms continue to increase their exposure to and investment in private markets, we are seeing this tradeoff occur in real-time for many of our clients. Managing the data associated with private markets becomes unsustainable with current resources, and firms opt to hire additional staff to support the growth and/or begin to automate these operational workflows. 

The objective is to recognize the signs that it may be time to automate your private markets data management before the work becomes unsustainable. 

This blog outlines four signs to look for and address when considering deploying technology to automate your private markets data workflows. 

1. Too Much Time Spent Checking and Rechecking Work 

To ease the burden of manually aggregating private markets data across all balances, transactions, and other investment data, firms typically hire a fund administrator. While the administrator should be streamlining processes for the firm, we often see firms experience the opposite impact. Firms manage multiple data sources for this information with multiple administrators, do not trust the data received and must reconcile their work time and time again.

These reconciliation processes typically present themselves in highly-detailed data point-by-data point reviews, always done manually. This results in wasted time and resources and creates an inability to scale.

While every firm has its own comfort level with administrator oversight and this data reconciliation process, there is an opportunity to deploy automated technology to outsource the low-value work and integrate the high-value data results.

The aim is to reduce the manual headaches of this process so the focus can be solely on the high-value work and processes for the firm.

2. Reporting Delays are Expected

At each quarter-end, firms often feel a sense of dread. Firms face many unknowns when it comes to the health of their private markets data and their ability to provide clients with accurate and timely reports that meet their expectations.

Operational teams are tasked with compiling private markets data from multiple systems and validating it for use. Additionally, the process of actually receiving investment documents from various sources can take weeks and months. Because of this document receipt lag and the manual nature of the work, we see firms spending almost a whole quarter preparing the previous quarters’ reports.

If your firm is frequently delayed in its quarterly reporting for these reasons, it may be time to explore automation.

The aim is to be able to expedite quarterly reporting with more accuracy and confidence.

3. Team Headcount Isn’t Yielding Scale

As firms look to increase exposure to the private markets, the operational aspects of this additional exposure can be too much for the existing team to shoulder. Existing teams must manage due diligence, additional documents such as PCAPs and notices, validate more investment and investor balances and transactions, and all of the ancillary systems needed to manage all of this data.

Some firms opt to increase team headcount to support this growth, but this is not sustainable. Other firms may not be able to hire additional resources and miss out on the opportunity to diversify their portfolios with private markets investments. In most cases, firms have deployed private equity systems to ease the burden of this work, but vital gaps still remain when it comes to data validation, reconciliation and more manual tasks.

The aim is to be able to increase exposure to the private markets without increasing headcount and scale the effort with confidence in data quality and completeness.

4. Auditing Data is Impossible

Auditing private markets data will always be vital, but how you manage it internally can make a big difference in your ability to scale. When auditing information received from multiple sources, different team members may take different approaches to validate the information. Oftentimes, we see firms execute on this task without any formalized processes or ownership. This can lead to changes made to the data that are not documented or explained.

While this means to an end approach can be effective, it is not sustainable. Without an audit trail or documented rationale for the changes made, the firm may experience confusion or delays in providing exceptional client service.

The aim is to bring transparency to every data change made so that you can use the data with more conviction in reporting and deeper analysis.

Next Steps

When considering shifting your private markets data management work from mostly manual to highly automated, we recommend obtaining buy-in internally. Having an executive sponsor is vital to engaging in this digitally transformative work. The goal of automation in this context is to establish strong data infrastructure at your firm. This strong infrastructure can help you reduce manual data entry and reconciliation tasks, expedite reporting, and improve data transparency. And, we’re here to help you through this entire process.

We are solely focused on improving private markets data quality and streamlining data connectivity. Exchangelodge software powers data workflows by integrating existing systems and cleansing all data for accuracy and completeness with its sophisticated business rules engine. By implementing Exchangelodge’s configurable platform, leading GP, LP and service provider clients improve data conviction and execute on their business goals with scale and precision.

Explore how Exchangelodge expedites your journey to automation and scalability. Request a demo.


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