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Reinventing the Investor Experience

Institutional investors’ reporting and transparency needs are often thwarted by antiquated and cumbersome data-sharing processes. That is about to change in a big way.

As investment strategies become more sophisticated and complex, institutional investors have increasingly greater expectations for holistic clarity and transparency into all of the moving parts of their portfolios. Expectations and reality, however, don’t always align, and many investors often find themselves saddled with outdated and sometimes antiquated asset manager reporting processes and platforms. In short, faced with having to interact with a patchwork of reporting systems, investors encounter major roadblocks to the best possible customer experience – and, in some cases, even to executing custom or hybrid investment strategies.

Nearly any investor would agree that what’s needed is a one-stop platform that provides that holistic view of a portfolio along with all of the relevant supporting data, rather than a slow-moving blizzard of incomplete or irrelevant information. A portal to achieve this goal is being developed by the Alternative Fund and Omnium Business Services business at Northern Trust, which Peter Sanchez  heads.

northern trust's sanchez

Overcoming an inefficient, slow, and mistake-ridden standard

“The investor experience today is being driven by three things,” says Sanchez. “First, it’s outmoded, and as such, it’s slow. The communication flow between the administrator and manager is email-based, and investing or withdrawing funds is a very manual and paper-oriented process.”

The second driver of the modern investor experience is, not surprisingly, data. There are vast amounts of data available, but as part of the investor experience data isn’t about volume – it’s about having the right data at the right time, and having it presented in the most usable, efficient, and insightful fashion. Cloud storage of data opens up new doors for how it can be incorporated into the output received by investors, and the new investor portal being created by Northern Trust will take advantage of that.

A third factor in the investor experience is the potential for more sophisticated, nuanced, and insightful alignment of asset managers’ capabilities with institutional investors’ expectations. The automation of the marketplace is helping to change all three drivers of the investor experience.

“In the past, it has been a cumbersome process,” says Sanchez. “Email is slow and inefficient. The manual nature of it leads to errors by administrators and managers. There are limitations on investors being able to see their statements from a particular firm or on a particular fund in a holistic way – instead, they are getting individual statements which are often inconsistent between funds and firms.

“Today, we see trends in terms of data availability and presentation that are manifesting themselves in data dashboards, cloud storage, and better use of application programming interfaces (APIs), which are all really significant improvements in the marketplace.”

Normalizing the data

One goal of the new investor portal being created by Northern Trust is to normalize accounting data. At the moment, general partners (GPs) and managers typically use portfolio accounting and management systems, which are a storehouse of data, but do not necessarily make it easy for investors to see that data. Investors, on the other hand, typically have a portal where they access their statements or view their investment activity, and those portals are usually aligned to the capabilities of the underlying transfer agency system.

“An investor’s current data experience is different depending on the underlying accounting engine for the particular portal that they interact with,” says Sanchez. “In the portal we’re creating, we have numerous underlying investor accounting systems, and data from all these systems will be normalized into one complete and more efficient set. It’s agnostic in regard to the underlying investor accounting system and data source – in the future the dataset could potentially even include side pockets, waterfall calculations, carry calculations, and so on. The portal is really the end deliverable from a presentation perspective. GPs and managers might want to increase or enhance the data they share with clients – maybe it’s data on performance and fees, exposures or compliance, or the status of deliverables from the administrators. Those are all currently sourced from different systems. Our portal will have the different data requirements, templates, and setups to handle all the various calculations and complexities that exist in the private capital and managed fund marketplace, and present them in a consistent way.”

Meeting demands for flexibility

Along with higher expectations regarding the transparency and presentation of data, investors are also looking to asset managers to provide greater flexibility in how they accommodate their specific investment needs, including complexity of capital structures, such as funds of one, and what Sanchez refers to as “hybrid” investing. For example, an investor may be willing to invest in a particular fund, but would like more leverage on the relative value component of the fund’s strategy. Or, perhaps, greater concentration on a particular sub-strategy compared to others.  

“In those scenarios, a manager creates a fund of one or a managed account to accommodate the investor’s specific requests,” says Sanchez. “It’s a better experience for the client from an investment perspective, but they are also going to expect to see performance reporting on their particular investment strategy. There’s still an expectation of transparency, and if you’re going to accommodate the investor with a custom strategy, they are going to want to see performance reported at their individual investment level, not at the overall fund level.”

The investor portal emerging from Northern Trust will be capable of handling such scenarios. Moreover, it’s a solution for all involved, investors and their asset management partners.

“With consistent data and information, investors won’t have to collate data, or call or email multiple people either at the administrator or the manager to get what they need,” says Sanchez. “There will be significant efficiencies in the investment process, too. It will be more electronic in terms of subscriptions and redemptions. The portal will also help minimize the operational risk by streamlining email communication. Investors and managers will interface with the portal itself to access reports, statements, and data. That’s all combined with up-to-date workflow transparency.”

“Think of our investor portal as an ecosystem,” says Sanchez. “It comprises investors, managers, and the administrator, providing well-organized data and the right transparency to service their specific needs under one roof.”

Learn more about how you can improve the investor experience.

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This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit

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