How mature is your fund obligation management?

July 6, 2022

Immature obligation management programs create unnecessary risk for private fund managers. Lacking proactive fund obligation management processes can lead to noncompliance, breach of contract claims, damages, regulatory fines, and reputational damage.

Unfortunately, many asset managers don’t have fund obligation management programs as sophisticated as they and their investors are. They may not have adopted the technology and processes necessary to build a mature, proactive compliance program despite their industry expertise.

At the same time, side letters are becoming more common and complex, and firms face heightened regulatory scrutiny. Both factors increase the importance of having effective methods to ensure contractual compliance.

A quote from a company using AI to create a mature collateralized fund obligation management workflow for increased efficiency that says "Leading firms in the private markets are implementing tech-enabled obligation management programs to address contractual and regulatory risks."


The improved processes save time and money and, more importantly, strengthen investors’ trust in the firm.

Insight from Ontra is a unique solution that solves fund managers’ biggest challenges. It helps firms store, organize, search, and comply with their commitments to investors. Contact us to schedule a custom demo.

Measuring the maturity of a firm’s fund obligation management

It benefits asset managers to review the solutions and processes they use to track and comply with fund obligations. They may have an immature and reactive obligation management program with significant room for improvement.

Signs of an immature fund obligation management program

  • Using manual and repetitive processes
  • Relying heavily on spreadsheets and compendia
  • Lacking defined workflows
  • Lacking assigned tasks and accountability
  • Sending outside counsel ad hoc questions and requests
  • Spending considerable amounts of money on outside counsel
  • Lacking real-time visibility into fund obligations and compliance
  • Reviewing fund obligation compliance irregularly

Immature fund obligation management is reactive. It requires someone to raise a question or concern before determining whether the firm is complying with a specific obligation. As a result, commitments to investors might fall under the radar, eventually damaging the firm’s relationship with investors.

Signs of an evolving fund obligation management program

Many asset managers have realized the risks of immature processes and attempted to move beyond them.

Some firms have implemented legal technology, even going so far as to invest in custom software. Generic software often has limited success. It isn’t well-suited to asset managers’ responsibilities. Custom software might be an improvement but costs considerable time and money.

Along with technology, the firm might attempt to define contractual compliance workflows, including assigning tasks to specific individuals. These can be difficult to sustain without the right software.

Some firms rely on an internal or external subject matter expert to manage the firm’s obligations. While a dedicated stakeholder may improve compliance, they create a single point of failure. If the SME left the asset management firm or law firm, the asset manager would have to rebuild.

Despite these attempts at improvement, asset managers continue to rely on outside counsel, driving up costs. Ultimately, their compliance programs improve but remain inefficient, time-consuming, and reactive.

Signs of a mature fund obligation management program

Leading asset management firms have discovered adopting industry-specific technology, such as Insight from Ontra, is the key to effectively managing fund obligations and creating an efficient workflow. Stakeholders can assign obligation-related tasks, hold each other accountable, and benefit from an automatic audit trail. They can take advantage of real-time status updates, notifications, and alerts to ensure they never miss a commitment to their investors.

An industry-specific solution also acts as a central repository of fund documentation. Stakeholders have easy access to the underlying documents, eliminating a single point of failure or the need for one SME. Now, self-help is possible. Stakeholders can answer their own questions or turn to their in-house counsel.

Ultimately, technology and optimized workflows reduce manual and repetitive tasks. This saves internal stakeholders’ time and reduces how much they rely on outside counsel. Stakeholders don’t have to wait months for a compendium or rely on spreadsheets, both of which increase the risk of human error. Sending fewer tasks and questions to outside counsel also saves the firm money.

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