Modern technology supports family offices in decision-making, thus increasing transparency and data security. In conjunction with this, the service level for clients can be raised and adapted to current expectations. The next generation of heirs increasingly expects digital information to be accessible at any time via web browsers or mobile devices, such as tablets and smartphones. This includes the provision of reports in printed and digitalized form. This requires appropriate data management and system architecture. Any digital transition should also consider automation and optimization of existing technology as an intrinsic part of the project analysis and roll-out.
Important features for the target solution
The requirements of a family office system go beyond those of a traditional portfolio management system. This applies specifically to managing ownership structures and the administration of non-bankable investments. In addition to comprehensive wealth structuring, tax, compliance, and succession planning considerations must also be addressed.
Comprehensive consolidation features are needed to reflect complex scenarios and create the basis for evaluation at all structural levels. The reporting should fully integrate the corporate design of the family office and cover all assets, including private equity and real estate, but also encompass other kinds of illiquid assets such as vintage cars, works of art, yachts, racehorses, etc.
All portfolio-based analytics must be corollary covering all the key figures for profit and loss (P&L), performance (both time-weighted returns (TWR) and money-weighted returns (MWR), risk indicators (e.g., tracking errors, value at risk, expected shortfall) and specifically the key performance indicators (KPIs) relevant for private equity and real estate investments.
The solution needs to cover basic document management tasks so that documents can be stored and assigned to different entities as required. In addition, it must also be prepared for future generations of digital natives who expect access to their statements and wealth analytics everywhere and anytime via their mobile devices.
High-end reporting
Reports with a high degree of flexibility and attractive graphics and photographic representations are required. Future-proofing the solution for the next generation demands giving access via web browsers and mobile devices to said reports.
Therefore, when choosing a platform, it is imperative to consider access for principals to be prepared for their needs. Consequently, the reporting engine needs to be flexible enough to reproduce the corporate design of the family office entirely.
How to successfully introduce new technology
Digitization requires a multi-stage process that begins with the precise identification of requirements. Technology can support the achievement of goals if its introduction is well-planned. It is essential to clearly define what will be improved with the new system and how the required data can be provided or clarify whether the vendor can provide custodian and market data in an adequate form. Every solution depends on the quality of the data.
A plan for implementing new technology should at least cover the following steps: identification of needs, project launch, request for proposal, vendor selection, implementation, testing, and roll-out.
A successful digitization project needs to have clearly defined aims from the start. This will ensure that time, effort, and money is not wasted on a solution that does not deliver what is required.
It is also important to be aware of the resources needed. A project requires people’s time; thus, members of staff who need to be involved in the digitization project will require time blocked in their calendars away from their daily tasks.
Technology only?
It is currently impossible to automate everything, despite the significant advances in modern technology. Therefore, service components play a central role in a holistic offering. In addition to state-of-the-art technology, modern family office platforms also include comprehensive services that cover all necessary back and mid-office tasks. This relieves the management of additional workloads and enables a greater focus on family wealth management.
Etops platform
The Etops family office platform offers the perfect balance between technology and comprehensive services, supporting single and multi-family offices.
The platform-as-a-service concept makes implementation easier than ever. State-of-the-art interface technology imports the data, the experienced operations team cleans and refines the data, modern data management allows consolidations on all levels, and the PMS engine provides all the required analytics with flexible output formats. Standard reports and bespoke reports are readily available with associated digitalized accesses.
Etops brings family office data to life - on-screen, mobile apps, interactive dashboards, and high-end reporting.
This article is from The Wealth Mosaic’s GFO WealthTech Landscape Report 2022. Access the full report here.
