Consolidated Reporting for Family Offices: Empowering Wealthy Investors

Family offices, serving high net-worth families and individuals, have long grappled with the challenge of reporting assets and investments in a cohesive and efficient manner. As financial landscapes grow more complex and diverse, the need for a comprehensive approach to reporting becomes increasingly evident. Enter consolidated reporting. In this post, we’ll explore how family offices leverage consolidated reporting to streamline their operations and provide wealth insights to their clients.

What is Consolidated Reporting?

Consolidated reporting provides a comprehensive view of an individual’s or family’s entire financial picture. It aggregates data from various sources – be it stocks, real estate, and private businesses – into one unified report. Instead of parsing through separate reports from multiple asset managers, advisors, or custodians, investors can glean insights from a single document that compares apples to apples.

In the old days, Excel was the trusted tool for this purpose. But with the increasing complexity of portfolios and the sheer volume of data, specialized tools have emerged to offer more efficient solutions than Excel spreadsheets alone.

Let’s look at three ways that consolidated reporting will improve your wealth management process:

1.      Track Your ACBs

Adjusted Cost Base (ACB) is a vital metric for any investor. It represents the original value of an asset, adjusted for stock splits, dividends, and capital distributions. Tracking the ACB is essential for calculating capital gains or losses upon selling the asset and for determining how an investment has performed relative to its benchmark.

With consolidated reporting, family offices can maintain an accurate and updated record of ACBs for all assets across portfolios. This not only aids in tax planning and compliance but also ensures that investment decisions are based on accurate data.

On one hand, some investors use Excel to track ACBs. But, if you’re tracking ACBs in Excel, you must ensure that you’re capturing all data accurately. This can be challenging when multiple trades (buys and sells) are being made over several years. Also, manually entering data into Excel is prone to error and not as reliable as a true accounting record.

On the other hand, bookkeeping software like Quickbooks Online can capture ACBs too, but the reports that can be generated are rather limited for the purposes of investment management and are better suited to tax reporting requirements for operating businesses, not investment portfolios.

Click Here to read our post on the best consolidated reporting software for tracking ACBs.

2.      Data is Ready for Generational Wealth Transfer

One of the most pressing challenges for wealthy families is transferring wealth to future generations. Having the right data is critical for this purpose. Imagine you are set to inherit a fortune, but you don’t have access to a consolidated list of your investments, their location, and their value. Getting up to speed takes time that could be better spend on decision making. A good consolidated reporting system solves this potential problem.

Custom dashboards from your consolidated reporting system are pivotal in this regard. These consolidated reporting dashboards present data in a user-friendly manner, making it easy for both the current and next generation to understand their financial standings. By consolidating all pertinent information into one visual space, family offices can make informed decisions about asset allocation, trusts, wills, and other mechanisms of wealth transfer.

3.      Compare the Performance of All Assets (On Your Own Terms)

For wealthy investors, it’s not just about having a diverse portfolio but also understanding how each asset performs in relation to the others and their appropriate benchmarks. Consolidated reporting tools allow family offices to compare the performance of all assets side by side.

Whether it’s real estate versus equities or traditional investments versus alternative ones. A good consolidated reporting system provides the granularity needed to measure returns for all investments on the family’s terms. This means that investors should be able to customize how they wish to view their data, set their benchmarks, and determine what ‘good performance’ means for them.

Consolidated Reporting: Our Family Office

The evolving landscape of wealth management calls for innovative solutions that streamline and enhance the process of consolidated reporting. Markdale Financial Management, with its software tools and expertise, presents an effective solution to the common reporting challenges faced by wealthy investors. By offering a precise method to track Adjusted Cost Base (ACB), we can eliminate the hassle and error-prone process of managing this essential metric via Excel or traditional bookkeeping software.

Moreover, our family office prepares our clients for smooth generational wealth transfers with user-friendly consolidated reporting dashboards. Lastly, Markdale provides the means to compare the performance of all assets on customized terms, empowering families to make well-informed decisions about their diverse portfolios. Wealthy investors can efficiently manage their wealth and prepare for the complexities of the financial future by leaving Excel behind and adopting Markdale’s advanced consolidated reporting services.