How is data being used in the wealth management sector today and what benefits are you seeing? Also, what improvements do you expect to see in the future in wealth management if data is more efficiently and effectively utilized?

On one hand, how data is used in wealth management hasn’t changed at all. Data is the beating heart of the industry. Multimillion-dollar decisions are made based on the insight data provides.

What has changed – or at least what I see beginning to change – is how wealth managers think about data. Data itself is just table stakes; it can only become a business enabler if it is accurate, aggregated and accessible. Speed is critical. The ability to quickly access data and generate real-time reports is what provides the competitive advantage, enabling firms to deliver a higher level of customer service. But this is where the challenge lies.

Wealth managers are tasked with aggregating data from a growing number of online and traditional sources, all with different systems and processes. Not only must data be correct from the start, but firms must implement proper controls so that data integrity does not erode as information moves from download to aggregation and reporting. And this needs to work across assets that are increasingly global and complex.

All these factors make marrying up data from disparate siloed sources and across numerous investment types and structures one of the most difficult challenges wealth managers face.

As the rich get richer, which they are, the problem can only be expected to multiply. In fact, during the pandemic alone, U.S. billionaires added US$1.2 trillion to their net worth and 56 millionaires were elevated to billionaire status.

This growing wealth adds to the sheer volume of data that wealth managers must process – and process quickly – as the newer generation of investors expect instant gratification and 24/7 access to information. Manual processes are impractical and incapable of meeting these needs. Spreadsheets are error-prone, bringing the quality of data into question. And extracting meaningful value from data is only possible if the data is accurate and can be amalgamated to provide a holistic view across all investment activities and holdings.

A lack of standardization across systems complicates the merging of data. Greater standardization would help wealth managers eliminate the manual manipulation needed to reformat or normalize data for integration with other systems. Plus, it would improve data quality, as nothing compromises quality more than manual processes.

Technology is pivotal to optimize the use of data and move the industry forward. Technological advancements both within and outside the industry will drive change. Blockchain is one example of an external factor that is bringing standardization, efficiency, security, transparency, and other benefits to the financial community. While it is only in its nascent stage of consideration among wealth managers, blockchain, and the distributed ledger technology upon which is based, may very well be the biggest external factor impacting the future of investing.

As wealth managers move away from spreadsheets and implement purpose-built accounting software, they will be able to better mine data to extract and deliver true value.

Firms that use data more efficiently and effectively can expect to see three key improvements:

• Holistic view of wealth – data that is accurate and aggregated offers full transparency into investment activity for that single source of truth.
• Faster reporting – instant access to consolidated information gives firms a leg up on delivering reports more quickly and enables more timely, informed investment decisions.
• Better client service – The ability to deliver reports more quickly is a tangible benefit that could provide a significant competitive advantage.

The future of wealth management rests on data, which needs technology to extract business intelligence and quickly put it in the hands of decision makers. Technology not only enhances the value of data, but it can mitigate risk, improve transparency and deliver greater operational efficiency.

Figure 1: Master-Feeder Report

Source: FundCount

What solution(s) does your business offer to the wealth management sector that focus on data? How do they work and how do they help wealth managers?

Data drives business decisions. If data is inaccurate, incomplete, inaccessible or not timely, business can suffer. One of the biggest challenges wealth managers face is bringing together data from disparate systems onto a unified platform for a “single source of investment truth.”

Wealth managers consistently lament how time-consuming it is to gather data, how difficult it is to manage numerous entity structures and how over-reliant they are on spreadsheets and other manual processes. These issues exacerbate the ability to provide timely, consolidated reports to clients.

Looking at a typical family office’s IT infrastructure, for example, often exposes a hodgepodge of different systems that are used to manage a wide variety of data sources. Many of these systems are "generalist", meaning they were not developed to address the specific accounting and reporting needs of wealth managers. They lack the functionality to consolidate ledgers for nested entities or properly account for real estate or other investments. As a result, wealth managers wind up spending an inordinate amount of time devising complex workarounds, gathering data for spreadsheets, checking accuracy, reconciling information and compiling reports.

Figure 2: FundCount Fund Summary

Source: FundCount

FundCount offers a truly unified wealth management software solution. All portfolio and partnership accounting, including a real-time general ledger and reporting, are embedded on a single platform. As a result, FundCount provides clients with immediate, actionable intelligence, enhanced efficiency and reduced operational risk.

More importantly, FundCount enables wealth managers to address reporting, which is a critical aspect of accounting. Accurate reporting is only possible if data is gathered and organized properly. That requires the general ledger to be baked into the portfolio and partnership accounting and reporting solution. If not, generating reports that are accurate and timely is nearly impossible.

With FundCount, the general ledger is the foundation of all accounting and also serves as the data warehouse. There are no separate silos; the general ledger is intrinsically linked to everything in the system and easily accessible. All activity passes through the general ledger, which updates and reconciles automatically in real time.

In addition to eliminating functional-system silos, FundCount offers automated workflow, reconciliation, accounts payable, cash management and compliance tools that further maximize efficiency. Integrations with popular industry apps and APIs allow complex functions (e.g., waterfalls) to instantly become part of FundCount’s accounting and analytics, providing a truly comprehensive accounting solution.

With one data source and data all in one place, FundCount not only provides a consolidated financial picture, but also offers drill-down functionality to view ownership and run reports by individual entity, asset, investment, geography and other parameters.

This ‘look-through’ capability provides for complete transparency and granularity into the component parts of the nested entity structure. It enables wealth managers to view the underlying information for instant insight into performance, holdings, net worth and other investment details. FundCount also enables wealth managers to run up-to-date allocation schedules, including all related details such as side pockets.

Reporting is a critical element of any accounting system, yet quickly developing reports that are professional, informative, and client-specific is challenging with most systems. FundCount’s ease of creating and customizing reports is unparalleled. What takes hours or days with most systems can be done on-demand in minutes with FundCount.

Data visualization brings complex concepts to life, providing deeper insight for decision making. The ability to instantly create and run reports provides wealth managers with enormous efficiency gains and also enables them to deliver a higher level of service to their clients.

FundCount’s unified solution with accounting, general ledger and reporting on a single platform offers the accuracy, data accessibility and timely information wealth managers need to achieve that ever-important single source of truth.