How Fund Management Technology Has Changed How GPs Report to LPs
With technology playing an increasingly larger part in fund management, quarterly reporting to LPs, advisory boards, and investment committees has grown more efficient and streamlined for those organizations who have embraced the change. As a result, LP expectations around reporting have changed and savvy fund managers are spending less time compiling reports.
Imagine you are an LP and you get a professional-looking quarterly report from one manager the day after the quarter ends and a hastily-compiled report from another manager 45 days later. You’re going to notice the difference and you’re going to make assumptions about how effective each manager is at managing your investment. Anymore, experienced investors see the professional and timely quarterly report as the norm rather than the exception and the appearance of a lag between quarter end and when an investor receives his quarterly report is even more apparent.
These fund managers who have embraced technology to produce more timely reports are also realizing that there is a huge time savings in clicking a button to produce quarterly reports rather than doing them manually. Anyone who is responsible for manually compiling quarterly reports knows how time consuming it is and no doubt there is a better use for a fund manager’s time. But even if the firm has admins producing reports, that model is difficult to scale if the firm intends to increase the number of investors they have participating in subsequent funds.
Ultimately, automating report generation through the use of new technology is not an inexpensive solution and it’s up to each organization to determine if it’s worth the investment. Generally, we’ve found that adopting technology is a mindset that some fund managers have and some just don’t, but for those who do embrace technology, we feel there is a massive value proposition in time savings through automating report generation.