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ADISA Focus on Alternatives Part 1: Inefficiencies and High Error Rates in Alternative Investment Processes

Post on: January 17, 2020 | Ryan Gunn | 0

Last year at the ADISA Annual Conference, WealthForge CEO Bill Robbins joined Damon Elder, Publisher at TheDIWire.com for a conversation on Fintech and electronic processing for alternative investments. In this, the first of a three part series, they discuss the systematic inefficiencies and high error rates in the alternative investment process.

Watch the video interview or view some quick takeaways below.

Part 1 - Inefficiencies and Errors

 

Inefficiencies in the Current Subscription Process

Most alternative investments still use a completely paper-based check-and-app process that mutual funds stopped using back in the 1980s. Overnighting paper subscription packages to multiple parties drives up costs and extends cycle-time - around 3 weeks on average for private placement subscriptions submitted correctly the first time with current processes. Compare this with the standard of how you can invest in a mutual fund today, within a few minutes online.


High NIGO Error Rates

NIGO (not-in-good-order) errors are the result of mistakes in subscription documents that need to be fixed before the subscription can be completed. Anywhere from 40-60 percent of alternative investment subscriptions are filled out and submitted incorrectly the first time. This causes investors frustration and wastes time and money for advisors and sponsors. But new technology tools can reduce NIGO error rates to 5% or less.*

WATCH NEXT - Part 2: Straight Through Processing Solutions for Alternative Investments

*Internal estimates based on years of experience processing DST investments. 

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About author

Ryan Gunn

Ryan leads content creation at WealthForge. He earned his bachelors from Virginia Tech and MBA from the College of William & Mary. His writings on fintech, alternative investments, and advisory best practices have been featured in Real Assets Advisor, Alternative Investments Quarterly, Equities, and other industry publications.
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