How to Optimize Your DDQ Process: 3 Simple Steps to Get You Started

Ezgi Kilic
Ezgi Kilic

Asset managers, brace yourselves. 😅 Chances are you will receive a historically high number of DDQ requests in 2023.

According to PwC’s report on 2023 Deals Outlook, unstable economics has led to an onslaught of changes in the finance world over the past few years (with M&A reaching historical highs in 2021 and 2022, respectively). These investments will likely come with additional scrutiny—meaning requirements will intensify to make sound business decisions.

“Due diligence used to focus on investment-related factors only. Now we see that operational due diligence is emerging such as questions on cybersecurity policies, sustainability, ESG, diversity and inclusion. And as allocators require more and more layers of information, DDQs are not only increasing in number but also getting more complex.”
Rob Sanders
Rob Sanders
Co-founder & CEO

Due diligence protocol changes have been significantly increasing—as have time constraints for these requests. If you’re feeling the pressure of mounting demands, keep reading for three steps you can take to optimize your DDQ process:

  1. Create an up-to-date, centralized repository
  2. Establish a standardized set of questions
  3. Respond faster by answering DDQs automatically

1. Create a Collaborative Central Repository of Up-to-Date Information

Working in Excel spreadsheets, searching multiple documents, and scanning old due diligence questionnaires is not a scalable approach to meet the demands of the modern DDQs.

“In order to scale, you need to establish a single source of truth for how you talk about your products and services. And that content needs to be easily accessible and searchable for everyone.” states Zak Hemraj, Co-founder and CEO of Loopio.

As more data becomes available in the market, digital transformation will play a pivotal role in the DDQ process for asset management companies. In other words, if you want to stay ahead of the competition, you should build a central repository full of your team’s best questionnaire answers to anticipate the needs of investors—and keep due diligence information up-to-date.

Asset management companies like Pictet and Swiss Life have gone one step further, using DDQ software to store due diligence information in a collaborative platform, so it’s easy to find and update across your whole organization.

5 Best Practices for Managing Your DDQ Central Repository 📚

1. Build a scalable structure: Organize your central repository into relevant categories and subcategories to ensure your DDQ information is easy for any team member to locate and update.

2. Capture net-new answers: Save information for new questions that arise from DDQs in your centralized repository. You never know when you’ll need to answer a question again for another client.

3. Scrub client-specific information: Use placeholders when adding answers to your repository for reuse. This practice eliminates the possibility of another client’s name slipping into a future DDQ response.

4. Schedule periodic review cycles: Since company information changes over time, set up automated reminders in your DDQ process to update answers for accuracy and consistency.

5. Remove unused answers: Keep your central repository lean by using reporting tools in DDQ software to weed out duplicate responses or answers you haven’t touched in the last year.

2. Establish a Standard Set of Questions to Optimize the DDQ Process

“Today, there are more investment allocators that need a more robust process to meet their own regulatory response and to be able to protect customers and there is an increasing number of fines in the industry related to how information is communicated,” says Rob.

As due diligence questionnaires draw more scrutiny, standardization will become a top requirement to optimize the DDQ process. Asset managers will have to thoughtfully build content, scale their market research, and keep answers up to date so their DDQ responses stay compliant and consistent, with clear audit trails and approvals.

Not sure how to get started? Door has identified a standard set of questions you can prepare in the DDQ process to share proprietary information universally (and securely).

3. Automate DDQ Responses By Repurposing Past Answers

Manually copying and pasting due diligence information takes time away from customizing answers, which is really the key to impressing clients and investors.

That’s why many teams adopt DDQ software, like Loopio, which can automatically answer upwards of 60% of repetitive questionnaires—like this example from Investment Management firm, Research Affiliates.

Automation accelerates the time to first draft for any type of questionnaire, which significantly speeds up your turnaround time. Not to mention, makes it easier for subject matter experts (SMEs) to contribute.

As Zak says, “Content review processes need to be streamlined so that there’s visibility into tasks, clear timelines, and a central place to do the work. Subject matter experts are often very senior employees, and we need to maximize their time, and limit their distractions.”

Loopio’s 2023 Response Trends Report proves his point: The top challenges for response teams are:

  1. Collaborating with subject matter experts
  2. Finding accurate, up-to-date information
  3. Having bandwidth to respond to every request

Psst…automation helps solve all of the above too. 

How to Respond to DDQs Faster, With the Help of Automation ⚙️

1. Auto-fill questionnaires: Save time by using due diligence tools to populate answers from your centralized repository into the correct format so that it’s ready to export.

2. Answer net-new questions: Take the first pass on new answers you haven’t stored in your centralized repository yet. This legwork will delight SMEs because they won’t have to write from scratch.

3. Customize answers for the client: Collaborate on best-in-class answers by enlisting the right subject matter experts to fill in the blanks, fact-check, or provide their winning perspective.

4. Assign answers to compliance: Obtain that final stamp of approval by assigning answers to compliance right in your response management platform, where they can leave comments directly.

🏅Leverage Digital Transformation, Improve the DDQ Process, and Stay Ahead of the Curve

The spike in DDQ requests in 2023 is unprecedented and staying ahead of the competition is becoming more important as questionnaires become more complex. By leveraging the right tools, you can centralize information, standardize processes, and automate repetitive tasks.

The results? Your team will get time back to complete more questionnaires (accurately and consistently), tackle other urgent tasks, and help your organization thrive.

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