Data management

The Top 4 Data Challenges for Trustees in 2022

Data-challenges-for-fiduciaries_transparent

In recent years, the use of managed investments in trusts has grown significantly. This has put the onus on trustees to regularly review these investments and scrutinise their corresponding fund managers, alongside the management of private assets such as property, yachts, and collectibles.

Although asset management will always remain outsourced, trustees need to know, and be able to report on, the asset classes and geographic regions to which the trust is exposed, as well as the liquidity of the assets. This is particularly important if the trust makes capital distributions or pays out an income.

This generates vast data requirements, under which legacy systems start to strain. However, more advanced software is now enabling trustees to reduce reliance on burdensome spreadsheets and all but eliminate manual processes when it comes to data management and reporting. Dedicated trust reporting platforms can automatically source and process vast amounts of data and present it in customisable, visually compelling dashboards for faster and more effective portfolio monitoring.

But what are the underlying data challenges fuelling this technological shift?

1. Stepping up portfolio monitoring

A key driver of trustees getting to grips with data management is the need to have ready access to up-to-date portfolio performance data for effective investment monitoring. Most trustees review investment performance quarterly, but with volatile markets and an uncertain economic outlook, there is now an expectation that this will be carried out more frequently.

Once trustees have drafted investment policy statements (IPS), assessed client tolerance to risk and created target asset allocations, it also falls to them to monitor the data needed to stay within any agreed limits and investment scope.

If trustees receive portfolio data that is refreshed daily, this can feed an alerts system that ensures they are able to quickly identify and rectify any breached IPS limits, in addition to performing any portfolio rebalancing where necessary. Such an agile view can also enable trustees to better manage cash and liquidity in line with client preferences.

And it’s not just investment monitoring that data underpins. Recently, there has been much greater scrutiny on the fees trustees are charged by their investment managers. A system that is updated automatically on a daily basis gives trustees much greater visibility of outgoing fees, so they can make more informed decisions about manager selection against their performance.

2. Enhancing risk management processes

In line with increased monitoring of investments, trustees are beginning to take a much more proactive approach to risk management. However, the data that they receive from fund managers often does not provide them with an adequate understanding of a client’s aggregate exposure to risk. And with specialised risk personnel and sophisticated risk systems coming at a premium, trustees often lack the resources 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 developing risk capabilities, trustees are increasingly turning to software that enables them to monitor investment risk and exposures, in addition to measuring potential liquidity risk that could emerge under various economic scenarios.

3. Consolidating public and private asset data

Ultra-high-net-worth (UHNW) clients these days have incredibly diverse portfolios. Allocations to real estate and private equity have surged in popularity in recent years. And other alternative investments including hedge funds, cryptocurrency and passion assets such as art, vehicles and wine are growing. As performance and valuation data for almost all private assets is sourced from multiple systems, spreadsheets and statements, bringing this data together for portfolio monitoring and consolidated reporting is made even more difficult and time consuming.

Currently, most trustees have to source this data manually and consolidate it in spreadsheets. Having communicated with multiple relationship managers and logged into multiple banking portals to get all the necessary data, it is often no longer completely up to date by the time it is used for portfolio management decisions and reporting. Partnering with a provider that can handle all of these data pipelines alleviates much of the burden for trustees and allows them to focus on what matters.

4. Keeping client data safe

UHNW clients place a significant premium on their personal privacy, meaning trustees have a responsibility to not only protect their clients’ assets, but also to keep their confidential information safe. And given the vast amount of wealth trustees look after, they are an increasingly popular target for cyber-attacks.

To counteract the rising threat and ensure data is best protected from cyber-attack, trustees are entrusting their data to the cloud, instead of the server-based systems and hard copies of old. 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.

Unlocking The Power of Your Data

With up-to-date and consolidated data, trustees can make swift, informed investment decisions and significantly upgrade their risk management capabilities. They can also improve their investment monitoring processes, to facilitate more comprehensive periodic performance reviews. With the right trust reporting software, trustees can all but eliminate repetitive data management tasks, reclaiming time for value-add activities, such as relationship building and business development.

New call-to-action

Related Content

top_5_family_office_data_challenges_in_2022
26 Jul 2022 | Data management

Top 5 Family Office Data Challenges in 2022

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.

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!...

Related content

23 Sep 2022 | Buyers Guide

Choosing the Right Trust Reporting Software
In this guide, we'll help you identify the ideal platform for your trust.
Download guide arrow-read-more

22 Sep 2022 | Blog

Why technology is the future for trust investment monitoring
When it comes to investment monitoring, many trustees still rely on reports from investment consultants and the associated manual data consolidation and client reporting processes. Discover how technology is creating a better future.
Read blog arrow-read-more

6 Sep 2022 | Blog

The Top 4 Data Challenges for Trustees in 2022

Discover the underlying data challenges fuelling the adoption of technology by trustees.

Read blog arrow-read-more

18 Jul 2022 | Blog

How Sesame is Rewriting the Playbook for Trust Companies
Sesame isn’t just changing the game for trust companies; it’s rewriting the playbook. A complete redefinition of how fiduciaries create and deliver value, so they can create operational alpha and deliver exceptional client service for generations to come.
Read blog arrow-read-more

13 May 2022 | Blog

6 things you need to build investment reports that clients love

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 blog arrow-read-more

5 May 2022 | Infographic

Five benefits to digitalisation for private wealth managers
The latest technology offers the ability to go above and beyond simply fulfilling administrative and legal duties, enabling firms to enhance their value proposition with a complete transformation of the client experience.

Discover the 5 key benefits of automating trust administration.
View now arrow-read-more

26 Apr 2022 | Blog

The path to automated trust administration: how to overcome the data management challenge
As fiduciaries start their journey to fully automated trust administration, there are multiple complex data challenges they must overcome. Here’s how firms can go about solving them. 
Read blog arrow-read-more

12 Apr 2022 | Whitepaper

Trusts and Technology: Private Wealth Management in the Digital Age
The competitive landscape is changing quickly for fiduciaries. Clients now expect a rich flow of timely information at their fingertips, and industry consolidation continues apace.

Automating trust administration is the answer. But the way many fiduciaries manage their data and reporting processes today is hindering their attempts at full digital transformation.
Download now arrow-read-more

17 Mar 2022 | Blog

Sesame Data: A one-stop-shop for your custodial data
Sesame Data takes on the most intensive parts of the data management process, without the need for a costly server-based system, increasing the quality of your data, streamlining internal processes, and empowering your team to focus on the high-value client interactions that fuel growth.  
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