BACKGROUND – THE PROBLEM
Ongoing distributor due diligence, whilst a long-established requirement in Luxembourg and Switzerland, is now broadening in application across Europe, due to regulatory pressure, e.g. under 4AMLD & MiFID II.
However, there is no single standard for such questionnaires – they are bilateral between each fund manager and distributor. That means distributors receive literally hundreds of slightly different questionnaires in different formats (Word, Excel etc.) each year. To complete these, distributors need input from across their organisations. The risk of a questionnaire getting ‘stuck’ on someone’s desk is high.
Response rates (and times) are inevitably poor, and fund managers spend a disproportionate amount of time chasing responses, meaning responses can be out-of-date. The pain doesn’t stop there – manual responses require time-consuming manual review. A European fund manager calculated that it took them on average two full person-days per distributor to perform a due diligence questionnaire review. Multiply that with the number of distributors you have, and you get an idea how much this costs your ﬁrm.
What is the solution? Distributors need streamlined, automated processes which make it easy and quick for them to complete questionnaires. That would free up fund managers from the administrative overhead of
chasing responses. This is where we come in.
WHAT FUND MANAGERS NEED
We need to understand what is the problem fund companies need to solve
We need a flexible solution that works for all fund companies, ultimately at a global level
We need a solution that distributors will be prepared to adopt
We need a solution that distributors can easily use, so that we get timely responses
We need a solution that can be deployed at the end of H1 2018
We need auditable, extractable records
We need a solution that saves time, allowing us to use our resources more effectively
Our proposition, 3D, is based around a core question set encompassing all the major industry standard questionnaires which are being constantly updated, whilst allowing ﬁrm-speciﬁc questions as needed. Distributors answer the questionnaire once, eliminating inefficiencies in the current bilateral process.
Our coverage is broad: not just ongoing due diligence, but also new distributor and corporate client onboarding. Uniquely, we include new MiFID II oversight of product governance and target market.
This means using 3D delivers the following beneﬁts to Asset Managers:
- Pragmatic MiFID II oversight – signiﬁcantly reducing your data needs, helping you to ‘problem-focus’ your target market oversight and product governance work
- Speed of response – we lower distributors’ barriers to completing the questionnaire
- 3D shoulders the administrative burden – you provide the list of your distributors, 3D prompts them to complete the questionnaire and follows up on pending responses
Speeding up the review process – workﬂow allocates the review process to the relevant experts in your ﬁrm. From year two onwards, you only need to review distributor answers that have changed
- Flexible risk assessment – we highlight areas of risk from responses based on our expertise, but you set the tolerances and can choose your own risk criteria
- Flexible reporting – comprehensive modular reporting functionality, allowing you to create exactly the report you need
Distributor Due Diligence: A team of seasoned industry practitioners, not remote consultants or IT developers
15 years asset management experience (8 years in-house) Led multi-£m projects on system integration, CRM, investment platform reviews Recently led Product and Fund Distribution teams at Ruﬀer
Over 30 years in-house asset management experience Designed original MiFID II target market framework adopted by EFAMA Running EU-wide industry working group on MiFID II implementation (FIDWG)
Any further questions?
If there was anything we couldn’t answer today, please let us know and we will come back to you.
Arrange a meeting?
If you are interested in our solution, we would love to hear from you to arrange a follow-up meeting.
Distributor Due Diligence Ltd
285 Kennington Road, London SE11 6BY
Registered in England & Wales, company number 11243284