Simply accumulating more data in a family office does not directly translate into better decision-making. Without the necessary tools and mechanisms in place to process this information, it might have the opposite effect. It's no secret that many family offices continue to use Excel for a number of essential activities, including managing their private market investments.
However, at a certain level, this simply becomes untenable. Private market investments are complex, dependent on a variety of various inputs, and when the data management workflow requires a lot of manual adjustments to work, it will be comparatively fragile.
To illustrate this, we look at three major issues that family offices often face while managing private market portfolios. Then we will demonstrate how best practices and specific tools can help you manage this data more effectively.
Inconsistent fund reporting
Private market investing requires dealing with a wide range of underlying assets that are difficult to integrate by nature. As a result, family office portfolio managers are required to execute their own consolidations for reporting and asset analysis, both of which are critical to long-term success. Furthermore, their clients and other stakeholders require clear and consistent reporting so that they can better comprehend where their assets are placed and how they are performing.
In an ideal case, these portfolio managers should have access to a dependable data repository capable of effectively organising and verifying incoming data. The repository should serve as a shared platform for the entire team, enabling reporting, analytics, and planning across several investments at any given time. It should support complicated data structures and have thorough reporting capabilities, which are critical for success. This degree of functionality is just not possible with Excel; instead, a specialised application is required to serve as the foundation for data-driven decision-making.
Multiple manual processes
When managing private market investments, speed and adaptability are critical. That may appear contradictory, especially since the individual assets are typically less liquid and focused towards the long term. Still, day-to-day portfolio management relies on more timely data than most people understand. Keeping information as up to date as feasible contributes to better decision-making.
This is strongly related to one of the most reliable markers of data processing flaws and poor data quality: the existence of manual interventions that result in human error. Today, adopting automation plays a critical role in improving data quality while freeing up time and resources to focus on higher-value jobs. However, many family offices fail to fully harness their potential.
Automating routine and minimum processes has a substantial impact on streamlining data administration at scale. It opens up previously untapped potential for in-depth study. It also improves the quality and consistency of the data imported and processed, as well as uncovering previously unidentified connections between different stages of the investment cycle.
Achieving this does not have to be a difficult task. Modern technology provides enhanced tools for data collecting, automation processing, and intricate quality assurance that do not require a business intelligence personnel to manually handle them. Adopting such technology allows family offices to simplify data management while keeping it up to date and relevant, which improves their decision-making effectiveness.
Excel makes collaboration difficult
Collaboration is the third most common challenge that family offices confront while managing private market portfolios. When using Excel, individuals have significantly limited ability to collaborate with others. Asynchronously sending separate versions opens up the possibility of errors, miscommunication, out-of-date files, and other issues.
That shouldn't be an issue in today's world.
Family office portfolio managers should utilise a platform that not only maintains the necessary data, but also allows numerous people to access the information at once. By utilising modern technology, partnership becomes a smooth process that harnesses the organization's latent expertise without compromising quality.