How to Effectively Onboard Investors: What to Know

Bringing a new investor into the fold is a major win for investment firms, but the work doesn’t stop there. If you want to earn their loyalty and keep them around, offering a positive investor experience is key.

This starts with offering an investor onboarding experience that welcomes new investors to your firm and walks them through the processes they must complete before they can finalize their investment.

To help you create an optimized investor onboarding process, we’ve put together a comprehensive guide to digital onboarding in the financial services industry. From collecting investor data to managing investor relations, here is everything you need to know about how to effectively onboard new investors.

What is investor onboarding?

Investor onboarding is a type of client onboarding that involves integrating new investors into an investment platform or fund. It can include things like collecting necessary information from them, setting up investor profiles, performing compliance checks, and setting up communication channels.

Fund administrators and asset managers who offer a structured onboarding process benefit from:

• Improved regulatory compliance: By ensuring thorough due diligence, a well-structured onboarding process reduces the risk of non-compliance with regulatory requirements.
• Better efficiency: A structured investor onboarding solution is great for simplifying time-consuming administrative tasks like data collection, making life easier for investors and wealth management firms alike.
• A more positive investor experience: A clear and organized onboarding process improves investor satisfaction and trust, helping your firm put its best foot forward with potential investors.
• Increased transparency: Thorough onboarding ensures that all parties are well-informed and on the same page, which further increases investor trust.

Why are investor onboarding processes often difficult?

The benefits of a well-structured onboarding process are clear, but creating one can present several challenges. If you want to create an optimized onboarding process for your firm’s investors, here are the top challenges you will have to overcome:

Complex regulatory requirements

What arguably complicates investor onboarding more than anything else is the complex regulatory requirements for investment firms. From anti-money laundering (AML) regulations to know-your-customer (KYC) regulations, there are a lot of standards that investment management firms are required to meet.

And meeting these standards means a lot of due diligence and data collection anytime you bring in a new investor. This complicates the onboarding process significantly and is one of the most important things for fund managers to streamline and automate.

Data collection and verification

Verifying the identity of new investors and collecting all necessary data from them can be a complex and time-consuming process without the right systems in place. And there are numerous types of data to collect and verify.

This includes identity information and documents for verifying this information (such as driver’s licenses and passports). It also includes accreditation/financial information, which requires you to collect documents like bank statements and tax returns. And many firms take it even further than this by choosing to collect additional information for filling out investor profiles.

But without an automated solution like WealthBlock, gathering all this data from new investors is a process that’s both intensive and prone to errors.

Manual processes

An investor onboarding setup that relies on a lot of manual processes slows down the onboarding process and can also open the door for human error. Often, firms perform tasks such as data entry, document verification, and compliance checks manually, which becomes increasingly more challenging as they grow and take in more and more investors.

Thankfully, you can automate most of the manual processes that investor onboarding entails with the right investor onboarding solution.

Lack of standardization

While it is a good idea to personalize the onboarding process for each investor (something we’ll talk about in the next section), you still want your onboarding process to be standardized and functionally the same for everyone.

With a standardized onboarding process, you can eliminate inconsistencies, improve efficiency, and ensure that you consistently meet all regulatory requirements.

6 steps to make the investor onboarding process more straightforward

If you want to overcome the challenges of investor onboarding and create a process that is optimized for accuracy and efficiency, here are six steps worth taking:

1. Improve documentation with an onboarding package

A comprehensive onboarding package helps improve documentation and makes the process more efficient. Key tools that your onboarding package should include are:

• Custom digital questionnaire builder: Allows you to create tailored questionnaires for gathering relevant information from investors.
• Compliance check integrations: Lets you automatically perform KYC, AML, and accreditation checks.
• E-signature document builder: Allows for single- or multi-signature electronic document signing.
• Onboarding flow builder: Lets you create step-by-step guides that walk investors through the onboarding process.
• Progress tracking and follow-up automation: Tracks investor progress and allows you to send automated follow-up reminders.

With a solution like WealthBlock that combines all of these tools into one platform, you can create a comprehensive onboarding package optimized for efficiency and thorough, error-free documentation.

2. Utilize technology and automation

Leveraging technology and automation can significantly streamline the onboarding process. With the right tools, you can fully automate manual onboarding tasks like data entry, document verification, and compliance checks.

This not only streamlines the onboarding process for both your firm and its investors but also minimizes the potential for errors.

3. Create clear instructions and timelines

Providing your investors with clear instructions and timelines prevents confusion and ensures that investors know what is expected of them. Be sure to provide detailed guidelines on what information and documents are needed along with a timeline of the onboarding process so that every investor knows what to expect before they even begin the onboarding process.

4. Personalize the experience for each investor

Seventy-one percent of customers expect personalization from the companies they do business with, and while investors are a special type of customer, the same principles apply. By tailoring your communications and the onboarding experience to match the needs and preferences of each investor, you can improve investor satisfaction and make them feel more valued as individuals.

Examples of onboarding personalization include things like customized onboarding packages, one-on-one support, and targeted follow-ups based on investor profiles.

5. Offer educational resources for investors to understand your business

You should always provide investors with plenty of educational resources so they can learn more about your business and feel confident in their investment decisions. Consider offering resources such as:

• Brochures and whitepapers: These documents can provide comprehensive information about your business, the market, and investment opportunities.
• Webinars and videos: Interactive sessions and visual content are great for engaging investors and breaking down complex topics.
• FAQs and knowledge bases: These resources can provide easily accessible answers to common questions along with detailed guides covering a wide range of topics.

6. Follow up and answer any remaining questions

It’s essential to follow up with investors after they have completed the onboarding process. These follow-up communications present an opportunity to gather feedback on their experience, address any questions they have, and provide additional support.

Following up with investors also deepens your relationship with investors. It makes them feel valued and helps build trust so they are more likely to follow through with their investment and remain loyal to your firm.

How WealthBlock can make investor onboarding more efficient

Manually onboarding new investors is a process with a lot of potential issues. But with a solution like WealthBlock, you can create a fully automated investor onboarding process that is much more accurate and efficient.

WealthBlock is an end-to-end investor onboarding platform that offers a variety of cutting-edge tools and functionalities, including:

• Automated workflows to reduce the time/effort required to onboard new investors
• A user-friendly, customizable interface to simplify the process
• Integration capabilities to minimize the need for manual data entry
• A streamlined document management system for easy upload, storage, and retrieval of important documents
• Status tracking features that provide visibility into where each investor is in the onboarding process

Thanks to all of these solutions, WealthBlock allows firms to create a highly scalable onboarding process. With manual onboarding, the challenges grow exponentially the more investors you bring in. But with WealthBlock, you can easily handle increasing volumes of investor data without ever compromising on performance or efficiency.

Transform your investor onboarding process with WealthBlock

By creating a system for investor onboarding that is standardized and automated, you can improve the investor experience while at the same time reducing your firm’s administrative burden. And with WealthBlock, automating investor onboarding has never been easier.

WealthBlock provides an all-in-one platform that includes all the tools and features investment firms need to create and manage investor onboarding workflows. It’s the perfect solution for growing firms that are looking to ditch the inefficiencies of manual onboarding and create a process that is much more streamlined.

To see for yourself how WealthBlock is transforming investor onboarding, be sure to sign up for a free demo today!