By Brad West, Chief Operating Officer at Alternative Investment Exchange (AIX)
The administrative issues that plague the alternative investment industry have long been discussed. Paper processes. Intensive manual intervention. Poor advisor experiences. High error rates. The list goes on.
Enter a slew of technology providers tasked with addressing these challenges. The logic would suggest that the problems should be solved. But are things materially better? Have the operational issues that hinder the alts industry been resolved?
As a technology provider that has been commissioned to resolve these issues, we routinely hear, “there are a lot of you out there.” With numerous choices in the market, it can feel exasperating for someone trying to choose a provider in a sea of marketing claims. Compounding that challenge, many who have already engaged with a technology provider have found the actual experience has not lived up to expectations. Demonstrations filled with promise have failed to deliver the expected business impact, with users simply exchanging one set of frustrations for another.
Beware of the difference between a convincing sales pitch and the ability of a solution to deliver a commercial impact in the real world. Marketing catchphrases like digital automation, straight-through processing, and transparency sound compelling. A controlled sales process can make things look easy as technology demonstrations predictably solve for a handful of pre-select variables. But the real world must account for more variables and complexity.
How often does a customer hear that their technology provider cannot support specific requirements that are critical to their business? Instead, they are expected to conform to what the technology provider can provide. And what about when things don’t go as planned (which they rarely ever do)? Are exceptions handled gracefully and in-stride? Or do things break down and require you start over? Or even worse, do you have to resort to the old way of doing things, bypassing the technology altogether?
As you evaluate technology providers to assess what is best for you, some of the questions that should be considered include:
- What commercial businesses are they in and what motivates their priorities in the way they partner with you? Are they a distribution firm? A fund manufacturer? An administrator? Or are they purely a technology company? Do any of their services compete with the business you are in? Are your motives, interests, and priorities aligned? Are there conflicting interests that need to be considered?
- Follow the money. How does the vendor make money? How are rates set and how do they get changed? With so much attention on fee compression, are you only paying for the services you want and are you getting fair value? Answering these questions will tell you what motivates a provider.
- Will they facilitate the way you do business, or are you expected to conform to their out-of-the-box capabilities?
- What does digital really mean? Does it mean passing along a PDF that is re-keyed by intermediaries or is data seamlessly transmitting between systems and businesses?
- How well do they handle exceptions? When something goes wrong, do you have to start over from scratch? What is the level or transparency and communication between parties when there are exceptions?
- What is the scope of services they provide? Does the tech start and stop with buying alts, or can it support post-trade capabilities such as monitoring, updating, transferring, or exiting a position?
- Does it sound too good to be true? If the answer to every question is “Yes,” does their definition of “Yes” match yours? Can they prove it to you?
How a technology provider answers these questions will provide a good indication as to whether they are the right partner for you. The truth is, you can have a partner that provides commercial neutrality with aligned interests, sensible and sustainable economics, technology that is personalized to your business, and the industry expertise to help you navigate through change. You just have to ask the right questions.
AIX exists to bring technology and alternatives together. Our customers want to personalize every aspect of their alts experience, connect each of their partners digitally and seamlessly, and need a technology partner that empowers their business strategy.
We build technology that works for alts because we know alts. Let us prove it to you.
For more information, please visit: www.aixplatform.com.
AIX is a sponsor of The DI Wire, and the article was published as part of their standard directory sponsorship package.