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Advent Mark Rice

Due diligence critical to achieving investor confidence, survey shows


Asset management firms believe exhibiting better discipline and having a greater focus on due diligence are major drivers in regaining investor confidence, according to a survey by Advent Software. 

After the scandals and financial crisis on Wall Street in recent years, investors are refusing to be complacent. 

The survey, which polled 360 investment professionals, found that 82 per cent of directors of research report an increase in investor inquiries over the last 12 months, 48 per cent of the respondents believe that demonstrating exhaustive due diligence is the best way to improve investor confidence, and only 33 per cent believe better, more frequent, detailed reporting would boost confidence.
At the same time, firms are increasingly overloaded by managing the influx of information and research flowing into their offices. 

According to the results 68 per cent of respondents feel they are overloaded by the volume of information they deal with, 66 per cent of respondents spend more than an hour searching through their email inboxes daily, and 86 per cent of respondents require multiple systems to acquire research needed to support investment decisions.
Dushyant Shahrawat, Tower Group senior research director, says: “A robust due diligence process would be key to restoring investor confidence. After the recent financial meltdown, investment managers must adopt best practices laid out by the CFA Institute and regulators around research management, which includes having a demonstrable research process that withstands client and regulatory scrutiny. Tower Group believes such efforts may involve implementing research management systems that will boost investor confidence, create greater efficiency in research, and positively impact investment performance.”
“The results from this survey show that although the market may have rebounded, investors are demanding even more information to make sure that investment decisions come from sound research,” adds Mark Rice (pictured), general manager of Tamale at Advent. “Investment professionals are starting to understand that efficiently managing your research will be a key component of a firm’s competitive advantage.”

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