Revolutionizing Investment Management Due Diligence: The Future of Vendor Oversight

11th July 2024

Introduction: The Need for Modernization in Due Diligence

For decades, US investment managers have relied on a combination of manual processes and extensive use of Excel spreadsheets to conduct initial and ongoing due diligence on outsourced activities. Despite regulatory pressures and evolving market practices that demand more sophisticated systems, many managers continue to handle due diligence manually. It’s time to address the proverbial elephant in the room: Do investment managers need to evolve or modernize their due diligence processes now?

What’s Changing in Due Diligence?

SEC’s Proposed Rules on Outsourced Activities

In 2022, the SEC proposed rules on overseeing outsourced activities and importantly focused on “Covered Functions”. This highlighted areas where the SEC believes expanded oversight is needed for vendors.  These Covered Functions encompass the core activities that managers typically outsource. The proposed rules suggest a comprehensive overhaul of the current due diligence framework, pushing managers towards a more structured approach. Although the rules have not been finalized, the momentum and regulatory signals suggest they will be enacted soon, mandating robust, auditable, documented, and reportable procedures for all aspects of vendors’ services.

Europe’s Advanced Regulatory Standards

European regulators have long established stringent due diligence requirements. US managers, especially those with European operations, are familiar with these rigorous standards. While the US does not always mirror Europe’s regulatory environment, there’s a growing trend toward adopting similar vendor due diligence practices. Enhanced oversight is universally recognized for mitigating risk, and this shift is gaining traction in the US market.

The Future: More Oversight and Comprehensive Due Diligence

Combining the US regulatory movement with European standards, the future of due diligence is clear: increased oversight, more structured processes, and a comprehensive due diligence framework are essential. Investment managers must adapt to these changes to stay compliant and minimize risks effectively.

Embracing Modern Solutions: Zeidler Due Diligence Tool

Introducing Zeidler Due Diligence (ZDD)

Zeidler Due Diligence (ZDD) —a game-changer for investment managers. Our innovative, web-based platform transforms the entire due diligence process, allowing managers to streamline and centralize vendor due diligence management.

Key Features of ZDD:

  • Comprehensive Questionnaire Management: ZDD enables managers to upload and manage all types of due diligence questionnaires in one place, facilitating seamless vendor responses.
  • Customization and Automation: The tool offers extensive customization of questionnaires and automates routine tasks, including vendor reviews, follow-ups, and monitoring. This automation reduces manual work and enhances efficiency.
  • Advanced Reporting and Monitoring: ZDD supports a wide range of reporting features, such as response rates, risk ratings, and specific areas of concern. Reports can be generated instantly, aiding fund boards, audits, and general reviews.

Why Choose ZDD?

ZDD is more than just a due diligence tool; it is a one-stop solution for managing all vendor due diligence processes. It ensures compliance with upcoming SEC rules as well as European rules including CP86 and CSSF Circular 18/698  and ultimately prepares investment managers to future-proof their operations.

Conclusion: Future-Proof Your Due Diligence with Zeidler Due Diligence (ZDD)

As regulatory expectations tighten and the demand for robust due diligence increases, Zeidler Due Diligence (ZDD) emerges as the essential tool for investment managers. ZDD simplifies due diligence processes, enhances compliance, and provides the structured framework needed to meet future challenges.

Don’t wait until new regulations catch up with you—embrace ZDD today to stay ahead in the evolving landscape of investment management.

Book a Demo

Ready to revolutionize your due diligence process? Book a demo of ZDD now and see how it can transform your compliance and oversight procedures.

Need Assistance? We’re Here to Help

If you have any questions or require support, the Zeidler’s Due Diligence, Legal, and Regulatory Team are here to assist. Our global team of professionals stays current on the latest legal, regulatory, and compliance changes affecting the asset management industry. For additional information or assistance, please get in touch with us.


Scott G. Parkin