Today’s family offices have hundreds of software products and platforms available to them to manage wealth, aggregate data, analyze portfolios, share data, track assets, ensure regulatory compliance and provide detailed reports. Better still, many of those products and services are built and operated right here in Canada where they serve global customers.
Yet choosing family office software isn’t a decision an organization typically makes lightly—or alone. Think about buying a new car without reading the latest consumer reviews and imagine that the success and future of your enterprise may depend on making the right decision.
James Dunne, family office advisor with Markdale Financial Management in Toronto, often advises clients on the type of software solution that would best meet their needs.
“Unlike traditional investment tools, family office software integrates a wide array of asset types, including private equity, real estate and family-owned businesses, into a unified reporting framework,” he says. “It also offers advanced features for customized reporting, performance benchmarking and data integration, addressing the unique needs of family offices.”
It’s no wonder family offices find themselves with an array of unaligned reporting systems, he says. Their portfolios often grew organically, and may now include a range of reporting systems for anything from stocks and private equity to personal real estate holdings, often complicated by the use of trusts and holding companies.
Here are six questions Dunne suggests family offices should ask before investing a cent in any software platform.
- Can the software provide a consolidated view of all your assets? If not, how much work needs to be done on your end to make this happen?
- Do you need the bells and whistles? Some software offers impressive tools that your portfolio may not need. Dunne advises clients to create a list of features that matter most to them before evaluating software products.
- How much will it cost? Dunne says some software will likely equal the salary of a full-time employee for a typical family office. Will the price include all available software features, or will you need to “power up” with additional functionality? Is there a flat monthly fee, or will subscription costs be tied to the number of users or assets under management?
- Will your organization be able to operate the software with existing staff members? Or will new hires or consultants be necessary to extract value from the platform? Determine your level of expertise and internal capacity to manage the software.
- Do existing retail software packages meet your needs and integrate with your existing systems? Or will a customized solution be necessary to reflect the complexities of your portfolio?
- What level of data security is in place? And who owns the user’s data?
“Prioritizing consolidated reporting in a software solution will streamline decision-making,” Dunne says. “Making the right choice will provide a holistic view of the family’s wealth that can enable informed decision-making and even support the smooth transfer of wealth across generations.”
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