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Wary Investors Demanding CRM from Hedge Funds

Bernie Madoff and financiers of his ilk have changed the landscape for hedge fund managers forever.

Regardless of any individual fund's history or integrity, today's cautious investor is far more wary and controlled than in years past. In order to remain viable in today's difficult environment, hedge funds of all sizes need to be more transparent and show greater accountability to potential investors.

When investors demand increased transparency and reporting, funds must respond fully, but also in an efficient manner that does not drain financial or personnel resources. Customer relationship management (CRM) tools have been proven effective in other industries and are becoming increasingly popular ways for funds to deliver accurate information to investors in a reliable and comprehensive format.

CRM vendors designed their original solutions to support businesses seeking to easily track customer data. In recent years, these solution providers have developed hedge fund-specific CRMs to meet the intent of the original solutions while also addressing unique hedge fund workflows, serving both the fund and the investor.

Investor account management capabilities within CRM applications provide the transparency, reporting and accountability for which investors are clamoring. With these solutions, firms can easily track investor transactions, centralize subscription documents and monitor expected inflows and outflows, all within one comprehensive application. In addition to meeting the needs of customers, CRMs ease the burden on fund managers who no longer must sift through spreadsheets and multiple back-office systems to locate requested information.

Hedge fund-specific CRMs give funds the unique ability to manage all investor relations from a single location.

In short, a hedge fund CRM application supports investor relations and gives funds the ability to centralize all of their investor data, including contacts, documents and correspondence, while also allowing investors to access critical fund information at any time, including transaction history, account balance statements and other investment data.

CRM for Everyone

Post-Madoff, post-recession, funds of all sizes are finding they need to operate differently than they did even few years ago.

More than before, investors want details regarding funds' operational infrastructure and back-office management, including investor relations. An investment-focused CRM might be what sets a firm apart from competing funds that have not yet heeded this call. Hedge fund CRM applications are built specifically to support and work within a hedge fund workflow, integrating with fund administrators and other relevant parties, to reduce time spent on communicating with multiple parties.

Many firms, particularly smaller ones, erroneously believe CRM applications are beyond their reach. Funds of all sizes need efficient systems that can easily and completely manage investor relations. Whether a fund's investors number in the single or triple digits, a CRM is an essential tool for investment firms. Additionally, investors are choosier than ever, which means firms need to go above and beyond if they want to be successful.

Even the smallest fund has plans for growth, and hedge fund CRMs are designed to scale with a fund. These applications can support firms with five employees or 500 and can track relationships with thousands of investors. While generic CRMs are readily available to businesses of all kinds and can easily manage customer data, a hedge fund CRM leaves includes all the features and functionalities relevant to an investment firm.

Investor relationships are tightly connected to sales and marketing efforts, and a hedge fund-specific CRM application is built to address this need. These CRMs let funds manage their sales pipelines and create performance estimates, and also act as great marketing tools. Most applications come with mass e-mailing capabilities, which allow funds to rapidly and effortlessly communicate with current and potential investors, while also giving audiences the immediate information they require.

The best CRMs also offer an investor portal or extranet-a secure site where investors can log in to download specific reports made available by the fund. When investors can access relevant documents and reports at will, they are far more likely to feel confident in the openness and health of the fund.

Finally, integration is another key feature of any CRM. A CRM should make work easier for fund managers, not create more problems or require exorbitant employee time. CRMs generally come fully integrated with key applications, such as Microsoft Outlook, which lends to more flexibility and fewer resources spent on coordination between multiple applications.

Relying upon disorganized spreadsheets and documents to track investor relations, sales and marketing is not only inefficient and frustrating to employees. It is also undesirable to investors.

Investors place a high value on transparency and now demand easy access to information. Therefore, funds must embrace the technology that provides investors with the data they seek. Now that CRM is available with specific hedge fund functionality built in, firms of all sizes should consider adopting it.


Bob Guilbert is managing director at Eze Castle Integration, a provider of investment IT services and technology, Guilbert brings more than 20 years of experience. As managing director, Guilbert is responsible marketing, partnership and product development.