FactRight is pleased to announce the promotion of Kathryn Stephany to General Counsel. In her expanded role, Kate will oversee FactRight's legal, IT, and HR departments while leading and supporting FactRight's operational due diligence engagements.
“Kate’s promotion furthers FactRight’s mission of providing credible perspective and advice on alternative investments for wealth managers. Kate has been instrumental in providing legal and regulatory insight and guidance to our clients while enhancing the quality of our due diligence reviews,” commented Gail Schneck, FactRight’s CEO.
Jessica Ryan, FactRight’s Marketing Coordinator, recently caught up with Kate to get her perspective on trends she’s seeing in the alternative investment space and how sponsor due diligence reviews have evolved over the last year. Check it out!
Jessica: First, congratulations on becoming FactRight's general counsel.
Kate: Thank you. It's a thrilling opportunity. I enjoy the energy we have at FactRight, and I see exciting times ahead.
Jessica: Your primary role at FactRight is and has been leading sponsor report reviews. How have those reviews evolved this year?
Kate: The most significant change to our process has been conducting virtual onsite meetings via video calls due to COVID. In my opinion, those are here to stay even after things get back to normal. We've found the sessions to be very productive and, because no travel is involved, speeding up the time needed for our reviews. A downside to virtual meetings is not making an in-person connection with sponsor management teams. However, we're planning to meet as many sponsors as possible at our conferences in March and September 2021. (Shameless Plug: We look forward to seeing you in Scottsdale on March 22 and 23 for our Spring 2021 Conference!)
Jessica: Speaking of COVID, what trends have you seen with sponsors in 2020?
Kate: Since mid-March, we've seen a much greater focus by sponsors on technology and remote workers. This is directly related to COVID. Sponsors are investing in more effective procedures, policies, and cybersecurity features and training. Interestingly, and I'm not sure if this is related to COVID or not, we're seeing many new sponsors entering the space. This is always exciting because we love the energy new sponsors bring to the market. I look forward to seeing how sponsors continue to evolve when reviewing them a year down the road to update their report.
Jessica: Which areas of due diligence focus do you see becoming important in the future?
Kate: I think the industry is going to focus on fundamentals. Without a strong foundation, a sponsor will not survive. I think the industry is going to focus on transparency. Transparency in financial controls and reporting, previous investment programs' prior performance and the underlying investments, and owner/executive experience.
Jessica: How do, or should, broker-dealers and registered investment advisors use sponsor reports?
Kate: BDs and RIAs are under obligations to know and understand the sponsors of alternative investments as part of ongoing suitability analysis. Alts are long-term investments, and 2020 has shown everyone that the future is not predictable. Knowing a sponsor's financial strength and operational style is imperative to analyze how likely a sponsor will weather different economic cycles, how well a sponsor may work with you and your client during difficult times, and if the sponsor will be in the industry supporting its investment programs years from now.
Jessica: Thanks for your professional perspective on what you’re seeing in the alternative space! Personally, how has 2020 been for you?
Kate: Overall, and I feel selfish saying this, but 2020 has been very happy. My husband and I welcomed our first child at the end of August. I didn't know I could be this happy and this busy at the same time.
Kate joined FactRight in 2013 as an analyst initially focused on private placement and operational due diligence reviews. Before FactRight, Kate performed banking regulatory due diligence and was a practicing attorney. Kate holds a bachelor's degree in finance from the University of Illinois Urbana-Champaign and a Juris Doctorate from Mitchell Hamline College of Law. If you’re looking for more information on FactRight’s sponsor report process or reports please reach out to Kate at Kate@FactRight.com.