Nearly half of respondents (47%) manually manage the data and documents related to alternative investing in-house. “In many cases, when an advisor makes an allocation to an alternative, they’re signing up for a labor intensive, manual process,” says Loughrey. Advisors typically must retrieve the data from PDFs supplied by the alternative investment and upload it manually into a wealth management reporting tool for analysis before relaying information to clients and making informed investment decisions on their asset allocation.
Despite the relative burden of manual alternative data management, nearly half of respondents report having manual processes. Only a third (37%) use technology platforms, while one in five (21%) turn to third-party service providers. That said, most respondents (58%) who currently rely on manual processes anticipate switching to an automated technology platform or outsourcing the work to a service provider.
The move away from a manual process was a matter of scale, says Kolker. “As your firm grows, you can add more analysts to handle manual data entry and audits, but you quickly run into problems of high staff turnovers and training new hires to make sure you have enough staff. You are also making a commitment to infrastructure that makes it hard to change to new tools,” he says. “We knew that as we continued to grow, we needed a solution that could deliver scale and automation so we could become increasingly efficient.”