Data management

Top 5 Family Office Data Challenges in 2022

Top data challenges for family offices

In recent years, a key driver of family office investment in technology has been the need to have immediate access to near real-time performance data, to uncover operational efficiencies and provide consolidated reporting to families.

Whilst legacy systems strained under the pressure, more advanced software has enabled family offices to reduce reliance on enormous spreadsheets and all but eliminate manual processes when it comes to data management and reporting. These platforms can automatically source and process vast amounts of data and present it in customisable, visually compelling dashboards.

But what are the underlying data challenges that have fuelled this technological leap forward?

1. A complete view of wealth

One of the questions family offices most often have to answer is, ‘How much am I worth?’. It sounds like a simple request, but when wealth is spread across a vast array of public and private assets, in multiple geographic regions, the answer is not so easy to find. Especially when data is stored and processed manually, meaning the answer often lies across multiple systems, spreadsheets and statements, with varying degrees of data freshness.

With modern UHNW families now expecting a complete view of wealth based on near-real-time data, the ability to swiftly and confidently answer the question rests on family offices’ ability to manage data efficiently. And families don’t want to just see this data once, they want to see a continuous illustration of how total wealth has grown over the years. This puts the onus on family offices to consolidate and track performance data over time and display it in a powerful visual. As one of Landytech’s clients and CEO of a family office put it, "that is the line every family wants to see - so powerful."

Historical AuM

2. Incorporating private asset data

UHNW families these days have incredibly diverse portfolios, and in the pursuit of higher risk-adjusted returns, that diversification is ever increasing. Allocations to private equity, direct investments, and real estate have grown significantly in recent years. And other alternative investments such as cryptocurrency and passion assets, such as art, vehicles and wine have started coming into play. Since the data for private equity, real estate and collectibles is not sourced from a custodial platform, data consolidation has been made even more difficult and time consuming.

It is up to family offices to source this data manually and consolidate it in spreadsheets. And having dealt with multiple relationship managers and navigated complex banking portals to get it, it’s very likely this data is longer completely up to date by the time it is used for portfolio analysis and reporting.

3. Keeping a sharp eye on the portfolio

Once family offices have drafted investment policy statements, assessed family tolerance to risk and created target asset allocations, it also falls to them to source and distil the data needed to stay within any agreed limits and investment scope.

Data that is refreshed daily to feed a built-in alerts system can ensure that family offices are able to quickly identify and rectify any breached limits, in addition to performing portfolio rebalancing where necessary. Such an up-to-date view can also enable family offices to better manage cash and liquidity in line with family preferences.

And it’s not just performance monitoring that data is valuable for. In recent years, there has been much greater scrutiny on the fees family offices are charged by portfolio managers. Having refreshed data can ensure that family offices have much greater visibility of outgoing fees, so they can make more informed decisions about manager selection against their performance.

4. Managing Risk

Many family offices are beginning to take a much more proactive approach to investment risk management. However, the data that they receive from portfolio managers often does not provide them with an adequate understanding of a family’s total exposure to risk. And with specialised risk personnel and sophisticated risk systems coming at a premium, family offices often lack the capabilities and operational capacity to perform comprehensive risk analysis and monitor risk across all asset classes.

Recognising the importance of data and robust risk analysis to their risk capability, family offices are increasingly employing third-party providers  so that current investment risk and exposures can be monitored, in addition to measuring potential liquidity risk that could emerge under various economic scenarios.

5. Data Security

UHNW families place a premium on personal privacy, meaning family offices have a responsibility to not only protect their clients’ assets, but also all their confidential information. And given the amount of wealth family offices look after, they are an increasingly popular target for cyber attackers.

Family offices are turning towards hosting data on the cloud instead of server-based systems and hard copy documents, to ensure that all data is secure and best protected from a cyber-attack. Cloud-based software solutions employ security measures beyond the affordability of most businesses. Sophisticated detection systems, strong authentication, and encryption techniques to protect user data are standard.

Taking command of data

With readily accessible and timely data, family offices can make swift, informed investment decisions and upgrade their risk management capabilities. They can also significantly improve their reporting efficiency, both for periodic performance reporting and the ability to respond quickly to ad hoc requests. With the right software, family offices can all but eliminate repetitive data management tasks, reclaiming time for value-add activities, such as portfolio analysis and business development.

New call-to-action

Related Content

the_path_to_automated_trust_administration:_how_to_overcome_the_data_management_challenge 
26 Apr 2022 | Data management

The path to automated trust administration: how to overcome the data management challenge 

Data-driven digital solutions have become table stakes for fiduciaries. They are no longer a far-off, future project to which firms should aspire. Clients’ digital service expectations are evolving now, and fiduciaries need to deliver.  However, the...

sesame_data:_a_one-stop-shop_for_your_custodial_data_ 
18 Mar 2022 | Data management

Sesame Data: A one-stop-shop for your custodial data  

With the unrelenting effort that sourcing and standardising custodial data from multiple sources requires, a rest might seem like the last thing on your mind when conducting reporting. But it should be. No, we don’t mean lying down and taking a nap!...

5_reasons_you_need_a_wealth_management_api
1 Mar 2022 | Data management

5 reasons you need a wealth management API

The investment management industry is one of the most data-intensive in the world. Yet with manual processes still commonplace, accessing and leveraging this vast data for efficient and robust front, middle, and back-office workflows is still not...

Related content

8 Aug 2022 | Infographic

Top 5 Regulatory Reporting Challenges for Asset Managers in 2022
Asset managers have faced nothing short of a regulatory onslaught in recent years. With demands set to only increase, explore the top 5 challenges firms face when it comes to regulatory reporting.
Download now arrow-read-more

3 Aug 2022 | Blog

The Top 10 Asset Management Trends in 2022
In this blog, we look at the top 10 trends shaping the asset management industry in 2022 and their implications. 
Read blog arrow-read-more

28 Jul 2022 | Blog

Quarterly Regulatory Round-up: Q3 2022
In this regulatory round-up, we break down the key regulatory updates and their practical implications for EU and UK-based asset managers in the coming months.
Read blog arrow-read-more

27 Jul 2022 | Checklist

Client Reporting for Asset Managers

For emerging managers, exceptional reporting can go a long way to creating loyal clients and greater client retention. Identify where you could make efficiencies and upgrade your reporting with this checklist.

Download now arrow-read-more

4 Jul 2022 | Blog

The asset manager’s how-to guide to ESG reporting
Asset managers must demonstrate that their fund disclosures and reporting approach meets parameters which are strictly linked to ESG reporting criteria. But reporting is not an easy landscape to navigate when it comes to ESG.

Today, most asset managers have several options to demonstrate the transparency and accountability of their ESG funds. But how these are implemented for reporting depends on the ESG strategy in place, and the jurisdiction in which the asset manager is operating.
Read blog arrow-read-more

1 Jun 2022 | Blog

How Sesame Revolutionises Reporting for Asset Managers
As investor service expectations evolve in their pursuit of clearer insights, new risk metrics and visually compelling reports, asset managers need the on-demand flexibility to keep up.  Find out how Sesame revolutionising reporting for asset managers. 
Read blog arrow-read-more

31 May 2022 | Blog

The Ultimate Guide to Offshore Trust Jurisdictions
When deciding which jurisdiction is the most suitable for an offshore trust, there are several factors to consider. In this blog we explore the top locations to set up an offshore trust.
Read blog arrow-read-more

26 May 2022 | Blog

4 top trends driving the ESG reporting agenda in 2022
Inflows into ESG funds have increased exponentially in recent years, but what is shaping the ESG agenda for asset managers?
Read blog arrow-read-more

13 May 2022 | Blog

6 things you need to build investment reports that clients love

Investors now expect on-demand, granular reporting, and legacy processes are straining under the pressure.

Through conversations with asset and private wealth managers our Client Operations Director, Kathleen Henrick, has identified six key requirements for creating investment reports that clients love.

Read on to find out what they are

Read blog arrow-read-more

6 May 2022 | Blog

SFDR Article 6, 8 and 9 products explained. What do the classifications mean?
In this article we dissect what is meant by SFDR Articles 6,8 & 9 and the implications for asset managers.
Read blog arrow-read-more

4 May 2022 | Guide

10 things to avoid when choosing an investment reporting provider

Selecting a digital solution for data consolidation and investment reporting is a big decision, one many asset and private wealth managers cannot afford to get wrong. It can be hard to know where to start when assessing a provider, and there are many pitfalls.

Discover the 10 key things to avoid when choosing an investment reporting solution.

Download now arrow-read-more

19 Apr 2022 | Blog

Why investment reporting needs to change

Across the investment management spectrum, the need for a radically different approach to investment reporting has never been greater.  

In this shifting landscape, implementing a data-driven, agile approach to investment reporting can help asset and wealth managers get back ahead of the game. 

Read blog arrow-read-more

15 Apr 2022 | Webinar

Risk management: What do allocators expect?
Watch as our expert panel discuss the best practices in risk management and what asset managers need to ensure they can attract institutional capital, at a time of increased market volatility and increasing allocator expectations.
Watch now arrow-read-more

29 Mar 2022 | Blog

The best practices in investment risk management you need to follow in 2022

For risk management, the ability to demonstrate extensive expertise alongside a deep understanding of the investment side of the business is crucial. But what best practices do firms need to follow to achieve an institutional-level standard of risk management? 

Read blog arrow-read-more

23 Mar 2022 | Whitepaper

Risk management: What do allocators expect?

An in-depth guide to risk management featuring insights from asset management and due diligence professionals.

 

Download now arrow-read-more

10 Mar 2022 | Blog

Portfolio analytics: Why cloud solutions are the future
The need to manage large volumes of data and perform complex calculations at speed have left many firms’ legacy systems and outdated technology struggling to keep up.  It’s time to take to the cloud. 
Read blog arrow-read-more

1 Mar 2022 | Blog

5 reasons you need a wealth management API

As fast, sophisticated data management becomes business critical, what are the benefits data APIs can offer your organisation?

Read blog arrow-read-more

15 Feb 2022 | Blog

Cloud-based investment management software: 5 reasons you can’t afford anything else  

In a world of rising client, regulator and staff expectations, portfolio and risk management capabilities quickly become outdated. Cloud-based platforms offer the solution.

Read blog arrow-read-more

11 Jan 2022 | Blog

The cost of meeting allocators' risk management expectations for asset managers

Implementing a fit-for-purpose risk management and reporting function is expensive. But for asset managers, the cost of sub-standard risk capabilities is even higher.

Read blog arrow-read-more

16 Dec 2021 | Case Study

Landytech Helps Hedge Fund Achieve Substantial Cost Savings

After a recommendation from a market peer, a UK-based multi-strategy hedge fund approached Landytech for a managed solution that would provide expert risk management support, as establishing and maintaining this function inhouse would come at significant cost. Read the full case study here.

Read case study arrow-read-more

15 Dec 2021 | Blog

The 5 must-have capabilities for managing the risk function in-house

So you know you need a robust, institutional-grade risk management capability to attract investor allocations and meet clients’ ongoing demands. But what does a fit-for-purpose risk management and reporting function entail in practice?

Read blog arrow-read-more

7 Dec 2021 | Blog

4 things asset managers should look for in a risk management provider

Faced with demanding investor and regulatory expectations, asset managers are increasingly turning to third-party risk management providers.

Read blog arrow-read-more

24 Nov 2021 | Case Study

Equity Manager Transforms Risk Management and Institutional Client Reporting Process with Sesame

Skerryvore Asset Management needed a sophisticated risk management and data analysis platform to meet the exacting due diligence requirements of institutional investors and so help grow its business. Read the full case study here.

Read case study arrow-read-more

18 Nov 2021 | Whitepaper

The True Cost of Risk for Asset Managers

Comprehensive risk management capabilities are an integral and growing ingredient in asset manager success. Since the 2008 financial crisis, the value a strong risk management infrastructure and team bring has moved to the fore. Download our whitepaper examining the true cost of risk for asset managers.

Download now arrow-read-more