Family Offices: Reporting Software Review

In the realm of wealth management, family offices are entrusted with the complex task of overseeing diverse investment portfolios and financial affairs of wealthy families. As assets grow and investment strategies diversify, the need for accurate and comprehensive consolidated reporting becomes increasingly crucial. This blog post will delve into the significance of consolidated reporting for family offices, its benefits, and how three prominent family office software companies – Addepar, Eton Solutions, and Archway Technology – excel in providing innovative and efficient consolidated reporting services.

The Significance of Consolidated Reporting:

Consolidated reporting refers to the process of aggregating and analyzing data from multiple sources to provide a holistic view of an investor’s portfolio and financial performance. It encompasses a wide range of assets, including traditional investments like public markets and non-traditional assets such as real estate, private equity, art, collectibles, impact investments, and cryptocurrency. By presenting a comprehensive overview, consolidated reporting empowers wealthy investors to make better decisions, optimize portfolio performance, and align investments with their long-term goals.

Why Consolidated Reporting is Crucial for Family Offices:

1. Holistic Insights: With family offices handling an array of investments across different asset classes, consolidated reporting offers a unified view of all holdings, enabling comprehensive portfolio analysis and risk assessment.
2. Customized Reporting: Every family office has unique reporting requirements. Consolidated reporting solutions allow for tailored reporting templates, providing clients with the information they need in the format they prefer.
3. Enhanced Benchmarking: Family offices can set custom benchmarks and asset class definitions to evaluate portfolio performance against relevant metrics, offering deeper insights into investment success.
4. Scalability: As family office portfolios grow, the need for scalable reporting becomes paramount. Automated consolidated reporting solutions optimize resource allocation, freeing up time for higher value tasks.
5. Data Integrity and Accuracy: Advanced software systems minimize the risk of human error, ensuring the accuracy of financial data and boosting overall reporting quality.

Now, let’s explore how each of the three family office software companies excels in providing consolidated reporting services:

Addepar: Simplifying Wealth Management with Comprehensive Reporting

Addepar stands out as a cutting-edge family office software company that offers sophisticated data aggregation and consolidated reporting capabilities. By providing a centralized platform, Addepar enables seamless integration of data from various sources, encompassing both liquid and illiquid assets, real estate, private equity, and alternative investments.

Key Features of Addepar’s Consolidated Reporting:

• Holistic Insights: Family offices gain a complete overview of their investment holdings, including performance metrics, risk analysis, and liquidity profiles. This comprehensive view enables data-driven decision-making.
• Customizable Dashboards: Addepar provides each client with a personalized dashboard, tailoring reporting formats to their preferences and specific investment needs. Clients can access the information they require in real-time.
• Enhanced Benchmarking: The software supports custom benchmarks and asset class definitions, allowing family offices to benchmark their portfolios against relevant and meaningful metrics.
• Data Accuracy and Integrity: Addepar’s robust data management tools minimize the risk of human errors and ensure data accuracy, improving overall reporting quality.

Eton Solutions: Empowering Family Offices with Scalable Reporting

Eton Solutions is a leading family office software provider renowned for delivering scalable and efficient consolidated reporting services. Focused on meeting the unique needs of each family office, Eton Solutions offers a versatile platform that can accommodate diverse assets and data sources.

Key Features of Eton Solutions’ Consolidated Reporting:

• Seamless Data Integration: The software effortlessly consolidates data from various custodians, managers, and investment platforms, providing a unified view of investment holdings.
• Customization Options: Eton Solutions offers customizable report templates, allowing clients to tailor reports based on their preferences, investment strategies, and financial goals.
• Performance Analytics: Family offices can assess portfolio performance against personalized benchmarks and track investment progress over time.
• Cost Optimization: By streamlining data aggregation and reporting processes, Eton Solutions enables family offices to allocate more resources towards strategic decision-making and client service.

Archway Technology: Comprehensive Investment Reporting Service for Family Offices

Archway Technology is a trusted name in the family office software industry, renowned for its comprehensive investment reporting service. The platform is designed to address the challenges of consolidated reporting for complex portfolios with a wide range of assets.

Key Features of Archway Technology’s Consolidated Reporting:

• Asset Diversity Management: The platform effortlessly consolidates data from multiple sources, accommodating traditional and alternative assets, as well as non-standard account types.
• Customized Reporting: Family offices can access tailored reports based on their specific investment preferences, helping them make informed decisions aligned with their goals.
• Data Security and Privacy: Archway Technology prioritizes data security, providing robust cybersecurity protocols to protect sensitive investment information.
• Intergenerational Wealth Transfer: The platform’s portability and accessibility enable seamless data transfer for smooth intergenerational wealth management.

The Cost of Using Consolidated Reporting Software:

The cost of using consolidated reporting software typically involves two components: a fee based on assets under management (“AUM”) and a minimum fee, which may be equivalent to the cost of hiring a full-time employee.

1. AUM-Based Fee: The AUM-based fee is typically calculated as a percentage of the total assets managed by the family office. This fee structure is commonly expressed as basis points (bps), where 1 basis point is equal to 0.01%. For example, a fee of 1.5 bps on $100 million AUM would amount to $15,000. This fee is designed to scale with the size of the client’s portfolio, making it fair for larger clients with substantial AUM.
2. Minimum Fee: In addition to the AUM-based fee, many consolidated reporting software providers may also have a minimum fee requirement. This minimum fee can be comparable to the cost of hiring a full-time employee and is usually meant to cover the fixed costs of software maintenance, client support, and other operational expenses. The minimum fee ensures that even smaller clients with lower AUM can access the benefits of the software and receive adequate support if they work with a multi-family office. Because, when consolidated reporting software is purchased from a multi-family office, clients may gain the benefits of scale and share the minimum cost with all other clients working under the same umbrella. This makes consolidated reporting software much more accessible to a greater variety of clients with varying AUM.

Suited for Multi-Family Offices but Prohibitive for Individual Investors:

The cost structure described above is well-suited for multi-family offices that handle multiple high net worth clients with substantial AUM. For multi-family offices, the AUM-based fee provides a fair and scalable pricing model that aligns with the size and complexity of their diverse client portfolios. The minimum fee ensures that even smaller clients receive a high level of service and access to the consolidated reporting platform.

However, for individual investors or smaller family offices with lower AUM, the cost structure may be prohibitive. Individual investors may find it challenging to justify the cost of using consolidated reporting software, especially if their investment portfolio is relatively small. In such cases, the cost of the software may outweigh the benefits, leading some individual investors to opt for simpler and more cost-effective reporting solutions.

Expertise of Multi-Family Offices in Implementing Software Solutions:

Multi-family offices possess the expertise and resources to effectively implement consolidated reporting software solutions for their clients. Here’s how their expertise facilitates the process:

1. Data Integration: Multi-family offices are well-versed in handling diverse and complex data sources, including custodians, investment managers, and various alternative assets. They have the knowledge and experience to efficiently integrate data from multiple sources into the reporting system.
2. Customization: Multi-family offices understand the unique reporting needs of their clients and can customize the reporting templates accordingly. Their expertise allows them to tailor reports to meet individual client preferences and investment goals.
3. Client Access and Support: Multi-family offices can provide clients with seamless access to the consolidated reporting platform. They offer comprehensive support, guiding clients through the software and addressing any questions or concerns.
4. Error Correction: In the event of data errors or discrepancies, multi-family offices have the expertise to quickly identify and correct issues, ensuring the accuracy and reliability of the reporting.

By leveraging their expertise and resources, multi-family offices streamline the implementation process, making it easier for their clients to harness the benefits of consolidated reporting software. Clients can rely on the multi-family office’s knowledge and support to navigate the software, maximize its capabilities, and make more informed investment decisions.

How Can Our Family Office Help?

In the ever-evolving realm of wealth management, family offices play a critical role in overseeing the complex financial affairs of wealthy investors, their charitable foundations, and supporting intergeneration wealth transfer. As investment portfolios diversify and grow in scale, the need for accurate and comprehensive consolidated reporting becomes paramount. This blog post has emphasized the significance of consolidated reporting for family offices, highlighting its benefits in empowering wealthy investors to make informed decisions and align their investments with long-term goals.

For clients seeking expert assistance in implementing consolidated reporting software, Markdale Financial Management stands out as a reliable and capable partner. As a family office serving wealthy investors, our firm has a deep understanding of the unique challenges and requirements faced by wealthy investors. By leveraging our expertise and experience, our clients have seamlessly integrated consolidated reporting software into their family office’s operations, providing clients with a holistic view of their investment holdings and financial performance.

Markdale’s Approach

Our family office’s approach to consolidated reporting revolves around tailored solutions. Recognizing that each client has specific reporting needs and preferences, our firm ensures that the reporting dashboard that each user sees are customized accordingly. Through personalized dashboards, clients gain real-time access to the information they require, fostering data-driven decision-making and enhancing portfolio analysis.

Moreover, as family office portfolios expand and diversify, we recognize the importance of scalability. By optimizing resource allocation and streamlining data aggregation and reporting processes, we free up valuable time for higher value tasks, such as client service.

The cost structure employed by Markdale Financial Management is designed to cater to wealthy investors and their personalized portfolios. Our fee ensures a fair and scalable pricing model that aligns with the size and complexity of the portfolios we help manage. Simultaneously, our minimum fee caters to certain clients with AUM of less than $500 million, ensuring that they, too, can access the benefits of consolidated reporting software and receive top-notch support.

With our expertise in data integration, customization, client access, and error correction, our family office eases the implementation process for our clients. By seamlessly integrating data from various sources, we provide a unified view of investment holdings. Our knowledge of reporting needs allows us to tailor reports to individual client preferences and investment goals.

To find out more about how we can help you implement a consolidated reporting software to your investment portfolio, please click this link to contact us.