By Michael Neuman, Andy Phillips, Adam Pinkert, and Bob Goldbaum
Can you believe that 2017 has dawned? It’s time to make some New Year’s Resolutions. Below are the 10 New Year’s Resolutions we believe every alternative investment firm should be making in 2017 – think of them as the alt equivalent of losing weight, eating healthier, and getting organized.
Resolution #1: Generate Structured Data.
Unstructured data is the equivalent of having a pile of sand and trying to build a house from it. It just isn’t possible; no matter how much sand you have, you can’t use it. Structured data can be likened to concrete blocks: the sand has been transformed into a usable, useful building material. Set up your systems to generate structured data, and you will have the raw material you need to fulfill Resolution #2.
Resolution #2: Create Actionable Insights.
Alt firms are awash in data, but how many can create actionable insights from that data? Data (even structured data) on its own is nothing more than a static pile of information. Data coupled with analysis is immeasurably more: it delivers insights to guide your investment, marketing, and business strategies. So use the structured data that you generate to build a resilient and agile business.
Resolution #3: Improve Operational Efficiency.
Efficiency is a matter of continuous improvement; as the new year begins, take a good look at your current operations to pinpoint areas to target. For example, your data analysis (Resolution #2) may show that one of your back office operations is bogged down with a complicated workflow that could be streamlined. Or, you may look at your third-party vendors and discover that one of them has additional service options you were not aware of that could benefit your operations.
Resolution #4: Activate a Capital Retention Plan.
As an alternative investment firm, you want sticky capital to help ensure stable revenue streams. But what are you doing to create stickier capital? What strategies do you have in place to prevent outflows of investor capital? Pursuing new investors is necessary for business growth, but it is not sufficient – you need new capital and you need to retain current capital to succeed.
Resolution #5: Engage in Investor Housekeeping.
Many of your clients are partnering with you for the long-term. But after years or decades of investing, the paperwork they originally completed might be out of date. Do some practical housekeeping by reviewing third-party authorizations and entitlements with your investors to be sure that the authorizations for all their funds are current and complete.
Resolution #6: Build Two-Way Vendor Relationships.
When you work with a third-party provider, it is natural and appropriate to view the relationship in terms of, “What can this provider do for me?” But there is the flip side to be considered as well: “What can I do for this provider?” Engaging in two-way communication can build a business-vendor relationship with enhanced benefits to both parties. For example, suppose you discover a certain weakness in your system. Sharing that information with your security vendor gives the vendor the opportunity to be responsive and strengthen their offerings and, consequently, enhance your security profile.
Resolution #7: Train Staff Constantly.
With cyber threats growing in their sophistication, keeping your staff aware and alert to potential risks is vital. Rather than treating security training as a “check the box” type of activity, create a strategy that will provide regular and ongoing training for your employees (including your top executives). This doesn’t have to be complicated: regular memos, practical examples, friendly reminders, security videos, etc. can all play a role in keeping awareness – and compliance – high.
Resolution #8: Identify Your Top Three Challenges.
The new year will contain tremendous opportunities – but it will also confront you with challenges. Now, while the slate is clean, take the time to identify the top three challenges, issues, or risks that you could potentially face in the upcoming twelve months. Then, develop proactive strategies to deal with them. For example, how would you address a disruptive market event? Do you have sufficient plans in place to mitigate key man risk? Are your investor relations where you want them to be, or do you need to make your investor servicing more robust?
Resolution #9: Maintain a Culture of Compliance.
Policies and procedures are your friends. Compliance protocols mitigate risks and assure your investors that you are rigorously protecting their assets. But remember: culture is established from the top and works its way down. If you want to maintain a culture of compliance, be sure that all your executives and leaders are champions of compliance, demonstrating adherence to corporate policies and procedures in every action, every day.
Resolution #10: Don’t Wait.
Finally, don’t wait. If you see an IT need, address it now. Put simply, “Ask early; ask often.” If you wait, your IT budget will become progressively depleted and the opportunities to fix problems will become fewer. So if you need to shore up security: don’t wait. Do it now. If you need to improve data management: don’t wait. Do it now. If you need to streamline back office operations: don’t wait. Do it now. Don’t wait for something to go wrong or to become an emergency. Do it now.
There, you have your New Year’s Resolutions. Now it’s time to take action and execute them…here’s to your success in 2017!