Advent Software

A Best Practice Guide

to Family Office Technology
Building the Operational Framework
to Support Your Firm’s Growth

By Advent Software

Innovative ■ Responsive ■ Reliable

 Table of Contents Introduction:
The Changing Wealth Management Landscape . . . . . . . . . . 3

Automation: The Key to Unlocking

Competitive Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cost Cutting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Upside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Managing Risk to Manage Wealth . . . . . . . . . . . . . . . . . . . . . 6

Trading Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Operational Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risk Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Analysing Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Attribution Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Separating Alpha and Beta . . . . . . . . . . . . . . . . . . . . . . . .10
Performing the Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . .10

The Value of Communication . . . . . . . . . . . . . . . . . . . . . . . . .11

Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . .11
High Touch Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Data: Building a Foundation for Efficiency . . . . . . . . . . . . . .13

Consolidation and Reconciliation . . . . . . . . . . . . . . . . . . . .13
Automation Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Conclusion: Realising Latent Synergies . . . . . . . . . . . . . . . . .15

This communication is provided by Advent Software, Inc. for informational

purposes only and should not be construed as, and does not constitute, legal
advice on any matter whatsoever discussed herein.

2 www.advent.com
Family offices are a growing force in the international investment Introduction:
community. The number of ultra high net worth families around The Changing Wealth
the world has proliferated as the wealthy in developed countries Management Landscape
accumulated assets during the recent boom years, while rapid
growth in the emerging economies of Asia, the Middle East,
and Latin America has created—and will continue to create—a
whole new swathe of family fortunes. And as more families come
to appreciate the range of wealth management services that a
family office can provide, demand for such structures is expected
to grow.
This trend was highlighted by research and consulting firm
Celent in a recent report entitled The European Family Office
Market: Where is the Opportunity? It noted that the European
high net worth market made up nearly 27 percent of the region’s
total wealth, and had been growing at a rate of 8 percent in the
last two to three years. Yet the family office market remained
underrepresented in Europe, having only achieved an average
penetration rate of 18 percent of ultra-wealthy individuals. Given
these factors, the report concluded, the family office market was
poised for rapid expansion.
What is more, the current market turmoil means there is even “This white paper highlights the
more attraction for high net worth families in establishing a sin- efficiencies and client service
gle family office, or in joining forces with a multi-family office. For improvements that family offices
rather than being held hostage to the fluctuating fortunes of tra- can reap from a robust and reliable
ditional financial service providers and their investment policies, IT backbone.”
with a family office they can exercise greater control over how
they invest and manage their wealth in a way that meets their
specific long-term objectives.
But while the sector as a whole looks set to flourish, if indi-
vidual organisations are to live up to the high expectations of
their client families they must offer exceptional levels of service.
And to provide that it is increasingly important that family offices
have a sophisticated technology infrastructure in place—an area
where, for the most part, the industry has been lagging to date.
This white paper highlights the efficiencies and client service
improvements that family offices can reap from a robust and reli-
able IT backbone, and how it can support them with the capabil-
ities they need to best meet the challenges ahead.

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 Automation:
The Key to Unlocking
Competitive Advantage
“Introducing automation is an
obvious way to minimise the cost
and risk of errors produced by
human intervention in a family
office’s front, middle, and back
office operations.”
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Once the preserve of bulge-bracket investment banks and asset
management behemoths, sophisticated front-to-back technol-
ogy platforms are now within reach of all investment manage-
ment firms, regardless of size, structure, or clientele. And for
family offices—which need to juggle multiple strategies to meet
the investment mandates of their clients, and do so within a
framework of exceptional service standards—such technology
capabilities offer a host of advantages.
Cost Cutting
Introducing automation is an obvious way to minimise the cost
and risk of errors produced by human intervention in a family
office’s front, middle, and back office operations.
But leveraging best-of-breed systems to automate important
functions only creates islands of efficiency improvement. Rather,
automation must be accompanied by seamless integration
between the different phases of the transaction processing chain,
from portfolio modelling through trade order management, port-
folio management, accounting, performance analytics, reporting,
and client relationship management.
For instance, a crucial part of a family office’s operational
framework is its general ledger system. But the absence of a
seamless link between the portfolio management and general
ledger platforms means trade data will have to be keyed in man-
ually. As a result, there is enormous potential for erroneous
entries to be made, with all the resulting downstream accounting
problems, not to mention the laborious human effort involved.
Similar inefficiencies and risks arise wherever manual inter-
vention in the processing chain occurs—in investor accounting
and servicing, position reconciliation with managers and custo-
dian banks, performance measurement, or client reporting.
Risk Management
Controlling operational costs, not least in the current economic
climate, is one attraction of moving toward a straight-through
processing (STP) environment. Likewise, minimising exposure to
operational risk—where losses arise from employee mistakes,
malicious or criminal activity, systems failures or natural disasters
—is a key area where stable, robust, and functionally rich systems
will help.
Compliance monitoring too is becoming an evermore promi-
nent theme within the financial services industry. Constantly
evolving regulations across multiple jurisdictions, a panoply of
client requirements, and internal investment policies and restric-
tions make fulfilling your firm’s compliance duties an increasingly
complex task.
And the price to pay for compliance breaches comes not
only in the shape of fines or penalties from supervisory bodies.
For in addition there is the less tangible, but potentially costlier
and longer lasting, issue of reputation risk. Here, the whiff of
unwitting or intentional lack of control or mismanagement can
impact a family office’s ability to attract new assets from existing
clients, and may even lead to their withdrawal.
But again the implementation of robust operational
processes that comes from having automated trading compli-
ance and portfolio monitoring capabilities will enable firms to
better control their compliance environment. And in this way
they can help safeguard themselves against the reputation risk
threat.

The Upside

While automation has an invaluable role to play in enabling fam-

ily offices to control costs and downside risks, there are several
positive benefits to be had too.
Crucially, client reporting and servicing become much easier
and can be executed to higher standards when processes are
automated.
Having an integrated systems environment provides users with
the ability to capture and collate portfolio data and feed it into
reporting engines, from which they can generate information-
rich reports that are customised to the individual preferences of
different family members. What is more, because the process is
automated the reports can be sent to clients much sooner after
each period end.
Incorporating a client relationship management (CRM) system “Client reporting and servicing
within this environment will enable a family office to track and per- become much easier and can be
sonalise its communications with clients, making the firm more executed to higher standards when
responsive to and proactive in meeting its clients’ requirements. processes are automated.”
Meanwhile, having the ability to quickly and accurately gen-
erate management reports that give an aggregated view of client
holdings and positions means staffers can monitor asset class
and currency exposure, calculate and analyse performance, and
make better informed asset allocation decisions—no small
benefit in light of the market volatility we are experiencing at
present.
In addition, having effective compliance checks and controls
that are systematised, testable, and provable will ensure organi-
sations keep on the right side of regulators and can help enhance
the firm’s reputation with its clients and in the wider industry.
Leveraging an end-to-end, cutting-edge technology infra-
structure provides family offices with the opportunity to reduce
their operating costs and risks, and free up their employees to
focus on more value-added functions such as asset allocation and
manager research, idea generation, customer liaison, and sales
and marketing.
We’ll go into these functions in more detail in the rest of this
white paper.

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 Managing Risk Risk management may not be the most glamorous of functions.
to Manage Wealth But as the recent market turmoil, wave of corporate bankruptcies
and counterparty defaults, and the Madoff scandal have under-
lined, it is one of the most important.

Trading Risks

In these extraordinary times—where every type of asset class has

demonstrated extreme volatility—the risks surrounding any form
of investment activity have become not only more pronounced,
but more diverse too.
■ Given the succession of stock market falls, slew of actual or
potential company bankruptcies, and continued uncer-
“In these extraordinary times the tainty for the global economy, market and credit risk have
risks surrounding any form of become evermore present sources of danger.
investment activity have become
■ Increasingly liquidity risk has come to the fore too, thanks
not only more pronounced, but
to managers’ attempts in recent years to seek out sources
more diverse too.”
of alpha through, for example, exposure to esoteric and
illiquid derivative instruments.
■ Illiquidity is also a concern where firms have exposure to
less actively traded emerging and frontier markets, which
bring with them heightened country and political risks
as well.
■ In addition, cross-border investments in many cases come
with currency risks, as sterling’s fluctuating fortunes have
highlighted.
■ Counterparty risk, fuelled by the demise of Bear Stearns
and Lehman Brothers, is another hot topic. For one, the
breadth of these firms’ trading relationships resulted in a
flood of defaulted trades. Ironically those shocking events
also raised profound fears about the efficacy of the enor-
mous credit derivatives market, which had ballooned in
the first place as a way to offset the credit risk threat.

In addition, the collapse of Bear Stearns and Lehman cre-

ated untold problems for those hedge funds that had col-
lateral tied up with the firms’ prime brokerage arms. The
upshot is a heightened focus by hedge funds and other
types of investment managers on assessing and monitor-
ing the balance sheet strength of their counterparties.
■ As for the Madoff scandal, it has served to underscore the
risk for investors of unwittingly becoming embroiled in
fraudulent schemes, or indeed any other type of mali-
cious activity, and the importance of rigorous due dili-
gence procedures.

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Operational Risk

So much for the various trading-related risks today’s investor

faces. No less important for family offices, however, is the need
to contend with the operational risks that exist in their internal
environments.
■ Operational risk, as defined by the Basel II Accord, is “the
risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events,”
and can be caused by systems failures, employee mis-
takes, criminal activity, or natural disasters. For example,
the widespread use of complex trading strategies and
instrument types means there is significant potential for
errors to creep in wherever manual intervention or unreli-
able systems are involved. “The widespread use of complex
■ Meanwhile, legal risk—which Basel II includes under the trading strategies and instrument
banner of operational risk—is the threat of fines or penal- types means there is significant
ties from supervisory actions. And firms’ compliance potential for errors to creep in
responsibilities are becoming more onerous and complex wherever manual intervention or
all the time. unreliable systems are involved.”
It is imperative, therefore, that family offices have proper
control over the various forms of investment and operational risks
they encounter.
But if the findings of the Merrill Lynch/Campden Research
European Single Family Office Survey 2009 are representative of
the industry as a whole, it would seem this is not the case. For
while many of the SFOs questioned indicated they have become
more risk averse in their investment strategies, 74 percent said
the actual way they handle risk has not changed. Instead it
appears that most have yet to significantly enhance their risk
management systems, a large number of which continue to run
off Excel spreadsheets. However, upgrading risk management
procedures was cited in the survey as one of the primary areas of
focus for the coming 12 months.
Naturally the risk control requirements will depend to a cer-
tain degree on each firm’s trading strategies, but some best prac-
tice guidelines include:
■ The ability to report on firm-wide positions across asset
classes, so as to have an up-to-date view of the firm’s total
risk position, rather than it being segregated by asset silos.
■ Obtaining accurate valuations for illiquid securities and
portfolios.
■ Monitoring counterparty risk.
■ Getting accurate and timely data from counterparties for
reconciliation purposes.

The tasks are significant, and to meet them requires a robust

and sophisticated technology framework.

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“Achieving a more sustainable
balance of wealth preservation
mixed with alpha-generating returns
will be a key feature of successful
family offices in the period ahead.”
8 www.advent.com
Core to that is a portfolio management or accounting plat-
form that supports the gamut of financial instruments, and
includes cross-asset class risk tracking and reporting, plus the
ability to track exposure by name or issuer across asset classes.
The platform should also allow for the breakdown of sources of
risk in a portfolio by factors such as style, sector, interest rate,
country, and currency.
In addition, a risk system should allow for accurate monitor-
ing of manager thresholds and fund concentration limits to avoid
overexposure to particular positions, industries, economic sec-
tors, or geographies. In this way it can guard against style drift
and remain in compliance with any strictures laid down by the
firm and the family investors. And those limits should be easily
configurable to accommodate any future changes in strategy.
Meanwhile, an automated and integrated front-to-back sys-
tems environment will help minimise operational risks by remov-
ing manual intervention and the errors that result from inaccurate
data entry, misinterpreted information, and the like. Similarly,
automated systems with robust security controls can safeguard a
firm from internal or external malicious activities.
Risk Returns
Aside from such cost advantages, an advanced risk management
platform may also help improve investment returns. For instance,
the Merrill Lynch/Campden Research survey noted that the SFOs
featured have adopted a more defensive stance by reducing
their exposure to equities and alternatives. Yet in three years’
time they predicted portfolios would once again look much as
they have in the past, with the equity ratio rebounding and the
cash weighting falling.
However, achieving a more sustainable balance of wealth
preservation mixed with alpha-generating returns will be a key
feature of successful family offices in the period ahead. And to do
that will require a combination of investment innovation, diversi-
fication, flexibility, and prudence, rather than a pure return to old
models.
Which is where a sophisticated risk management system will
be an invaluable aid, since it provides family offices with the tools
and confidence to seek out better risk-adjusted returns across a
wider spectrum of investment possibilities, whether that be by
country, currency, asset class, or trading strategy.
For all that, it’s worth pointing out that while such an IT infra-
structure is essential, for a risk management environment to be
truly effective it must also be supported by rigorous internal
processes and procedures and well-trained personnel.
Since family offices serve a limited number of clients, their defi- Analysing Performance
nition of success will be clearly enumerated in the mandates they
receive: to meet, and preferably exceed, the wealth preservation
and accumulation goals of the family members they serve.
Success, therefore, depends on the investment performance
the family office is able to achieve. But more than that, for the fam-
ily office to show it is adding value for its clients it must demon-
strate that its investment performance was achieved by skill and
design, rather than by luck or the whims of the marketplace. And
it is here that performance attribution becomes critical.
As such, attribution has a dual role:
■ It provides the family office with a breakdown of where
their returns have come from and their role in achieving
them, information they can communicate to their clients
and so (hopefully) demonstrate their worth. “For the family office to show it is
adding value for its clients it must
■ It provides the family office’s portfolio and risk managers
demonstrate that its investment
with insight into which investment decisions are providing
the desired results and which are not, feedback the firm performance was achieved by skill
can use internally to guide managers in the investment and design, rather than by luck or
choices they make going forward and thus better equip the whims of the marketplace.”
them to fulfil their duties.

Attribution Models

As with all forms of analysis though, what you measure and the
way you do it plays a large role in determining outcome. And
since attribution can take various forms and be calculated in dif-
ferent ways, there is an element of analyst’s discretion that will
affect the results obtained. (A more extensive discussion of this
topic can be found in Advent’s white paper Performance Attribu-
tion: A Powerful Tool for Identifying the Sources of Investment
Performance.)
One common tool though is absolute attribution, which
examines the total return of the portfolio and what contributed
to it. This is often used by managers to highlight their most and
least successful investments.
Another common measure is relative attribution. This focuses
on the excess return, i.e. assessing the difference between the
actual portfolio return achieved and the benchmark or index
return against which the manager’s performance is being com-
pared. Its goal is to achieve an understanding of the contribution
made by actively managing the portfolio.
The impact of active management can then be considered
according to the role of two main elements:
■ Asset allocation—the degree to which a manager spreads
a portfolio’s assets between equities, bonds, real estate,
cash, etc.
■ Stock selection—where the analysis will reveal, for exam-
ple, the return earned by the manager’s choice of equities
compared to the overall equity benchmark.

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“Getting the requisite degree of
insight into portfolio performance in
order to make better investment
decisions requires sophisticated
analytical tools.”
10
And depending on the attribution model used, the analysis
may also produce a third component, called interaction, which
accounts for that portion of the return that cannot be attributed
purely to asset allocation or stock selection.
Separating Alpha and Beta
More than merely assessing the total or excess return achieved,
however, meaningful performance analytics must incorporate the
investments’ risk profile, which means being able to account for,
and separate, both the alpha and beta.
Beta measures the sensitivity—and thus the risk—of an asset
or portfolio in terms of its correlated volatility relative to the over-
all market, for instance the S&P 500. A security with a beta of 1.5
therefore would be expected to move 1.5 times the market’s
excess return.
Alpha represents the excess return achieved over what can
be expected given the beta. As such, it measures the risk-
adjusted performance.
So while a high alpha is good, if it also comes with a high
beta then the risk involved may be greater than the family office’s
clients are willing to tolerate. Therefore the two must be consid-
ered together for the performance of a portfolio to be appropri-
ately controlled.
Performing the Analysis
Getting the requisite degree of insight into portfolio perform-
ance in order to make better investment decisions requires
sophisticated analytical tools.
For example, accurate performance attribution requires a
system capable of identifying the sources of portfolio perform-
ance relative to a benchmark or model portfolio, evaluating the
impact of weighting and security selection decisions, and having
the ability to drill down from sector to individual security.
Meanwhile, calculating performance contribution involves
pinpointing the drivers of performance by quantifying which sec-
tors, industries, or securities had the greatest or least impact, and
ranking them accordingly.
A performance analytics engine should also be able to
analyse a portfolio’s risk, volatility, and risk-adjusted return based
on historical performance with ex-post risk statistics.
In addition, it is important that the analytics engine be built
into or seamlessly integrated with the family office’s portfolio
management platform. In this way it eliminates reconciliation
problems with third-party providers, ensuring the firm’s attribu-
tion numbers match its performance numbers.
It’s also worth pointing out that accurate attribution and con-
tribution reporting depend on obtaining good constituent data
from the different benchmarks that are being used as the points
of comparison. And to do that means having a provider that can
supply the necessary data.
Investment performance that meets the financial targets of the The Value of
family members is the ultimate measure of a family office’s suc- Communication
cess. Nevertheless, effective and frequent communication with
clients is also an essential part of the organisation’s charter, espe-
cially when markets are volatile.
For one, clearly communicating to clients how their assets are
allocated and the returns their portfolio is achieving demonstrates
that the family office is doing its job and earning its fees.
But more than that, by giving family members comprehen-
sive but digestible information on their financial position they will
be better equipped to work with the family office in formulating
a financial roadmap, and ensuring both parties are in agreement
on the direction they are going.

Reporting Requirements

Client families will want up-to-date records of their total wealth,

with a breakdown of the holdings, transactions conducted, and
returns achieved by asset type, as well as the ability to monitor
income and expenditures. For the family office confronted with
gathering details on a complex array of financial and physical
assets being handled by a range of managers, it can be
challenging to meet the disparate financial goals of various family
members.
Effective client communication places certain demands on
the family office. For starters it will need to obtain an aggregate
“By giving family members compre-
view of the client’s holdings and positions, wherever they happen hensive but digestible information
to be, so that it has complete and accurate account information on their financial position they will
at hand. It must also subject the portfolios to rigorous perform- be better equipped to work with
ance analytics. the family office in formulating a
Armed with this information, the family office needs to create financial roadmap.”
detailed but intelligible reports that it can send to its clients. And
because it is likely to be serving multiple generations and mem-
bers of a family—with varying financial status, investing literacy,
and technological sophistication—the firm should be able to cus-
tomise those reports according to each client’s specific needs
and preferences where required.
Likewise, the family office will want to test the portfolios
against different scenarios, such as changes in interest rates or
market movements, and assess the impact of alterations to their
investment strategy on the financial goals of their clients. That
information can again be reported back to the family to enable
both parties to regularly appraise their current position and
future course.
In addition to keeping its clients informed, the family office
should be able to generate reports for relevant interested par-
ties, such as the family’s tax accountants and lawyers.

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 High Touch Services

Client communication is not only about periodic feedback in the

shape of monthly, quarterly, and annual performance reports.
Great service also means ensuring there is a personal touch, hav-
ing alerts set up as reminders to contact a family member when
previously agreed, being responsive to any ad hoc demands, and
being proactive in discussing investment opportunities or chal-
lenges on the horizon.
Achieving this level of service is nearly impossible unless a
family office has an appropriate technology framework in place.
That includes:
■ Tight integration between the family office’s portfolio man-
agement/accounting system and its reporting engine, to
ensure an automatic feed of data from one to the other.

“A cutting edge technology
infrastructure frees family offices
to concentrate on maximising
investment performance and
client-facing activities.”
■ A robust and flexible reporting engine able to handle all
asset types, including the gamut of securities instruments
as well as physical items such as houses, yachts, and art-
work. It should also be configurable so as to quickly and
easily generate standard or individualised reports accord-
ing to clients’ demands.
■ The above capabilities should be linked to a client rela-
tionship management (CRM) system so staff can provide
reports and other information of interest to clients when
they want it and in a personalised way.

With this type of infrastructure, the reporting process can be

completed much faster at period end, since it won’t require
employees to compile and input data from multiple sources, run
and print the individual reports, collate the packages, and send
them to the relevant people.
Automation also guards against inaccuracies creeping in from
manual intervention, is more cost efficient, and frees up significant
operational time, allowing staff to focus on other higher value
activities. In addition, because they are not tied up on mundane
administrative tasks, employees are likely to be more productive,
more motivated, and more inclined to remain with the firm.
Most importantly, client satisfaction will be higher with this
faster, more accurate, and more customised reporting process.
A cutting edge technology infrastructure frees family offices
to concentrate on maximising investment performance and
client-facing activities, while having the scalability to grow their
business in a cost-constrained way—and providing the exem-
plary client service that is the hallmark of today’s family office.

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While superior client service is a particular feature of the family Data: Building a
office, providing consistently high levels of performance and Foundation for Efficiency
communication depends on having the right raw data to work
with from the start. As the saying goes: Garbage in, garbage out.

Consolidation and Reconciliation

Data aggregation is a critical part of a family office’s operational

tasks. But given the complexity of many families’ wealth holdings,
and the multiplicity of trading-related relationships they may
have, bringing all the requisite information together in an accu-
rate and efficient manner presents a sizable operational burden.
Portfolio sophistication will be one part of the issue. In an
effort to diversify risk and returns to achieve an optimal mix of
wealth preservation and accumulation, a family’s investments will
often span an array of domestic and international asset types. As
a result, their holdings may be spread between a number of dif-
ferent custodians, brokers, and banking institutions.
The challenge for the family office is to obtain the informa-
tion detailing the daily transactions and account positions of its
client’s holdings at the different custodian banks, and to recon-
cile that data with what is held on their internal systems, to
ensure their records are accurate and current. When discrepan-
cies arise, they must then be checked and resolved.
Furnished with the reconciled account information from the
various custodians, the family office needs to draw the data
together to get a consolidated, big picture view of the client’s “Given the complexity of many
portfolio. Armed with this, the family office will be in a position to:
families’ wealth holdings, and the
■ Monitor asset class, currency, and investment strategy multiplicity of trading-related
exposures. relationships they may have, bring-
■ Assess risk management policies. ing all the requisite information
together in an accurate and
■ Calculate performance.
efficient manner presents a sizable
■ Make better informed asset allocation decisions. operational burden.”
However, where a family office outsources chunks of the port-
folio to separate investment managers there is an extra layer of
complexity. In such situations it will have to do the account
aggregation across multiple managers, and the various custodi-
ans they use, in order to obtain the necessary overview of its
positions. Only then can it see, for example, the client’s consoli-
dated exposure across multiple counterparties, or assess under-
lying exposures to different sectors or investment strategies in
cases where it is using funds of funds.
While data aggregation can be onerous enough for a single
family office, for multi-family offices the task becomes even more
challenging, since they will face a greatly expanded universe of
assets, investment managers, and custodian banks and brokers
from which to extract, reconcile, and consolidate the transaction
and account information in order to monitor and control the port-
folios under its charge.

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“By automating reconciliation the
family office will be better
positioned to accommodate growth
in the business and maintain its
standards of customer care without
a corresponding increase in
overhead.”
14
Automation Advantages
Given the sheer volume of data involved and the potential for
costly errors to result wherever there is manual involvement in the
chain, family offices require a framework for enhancing the effi-
ciency of their data consolidation and reconciliation activities. To
this end they will need:
■ The ability to collect relevant data from the custodian
sources concerned.
■ A rules-based reconciliation engine that can be configured
according to matching criteria defined by the user, to
enable the electronic matching of transactions based on
their specific parameters.
■ A filtering capability so that any reconciliation discrepan-
cies are routed out for quick manual resolution where nec-
essary, and for staff to be able to easily amend client files
if required.
With this type of automated reconciliation workflow—one
that eliminates manual data input and the work involved in
checking and fixing the errors that result—a family office will be
able to:
■ Maintain accurate cash and securities balances.
■ Reduce settlement and other operational risks.
■ Ensure compliant trading.
■ Produce more accurate client statements much faster.
■ Free up staffing resources to concentrate on client-facing
activities that add greater value to both family and firm.
Moreover, by automating another part of the operational
process the family office is breaking down the correlation
between its headcount and the quality of client service it can pro-
vide, as well as the assets under management it is able to sup-
port. As such, it will be better positioned to accommodate
growth in the business and maintain its standards of customer
care without a corresponding increase in overhead.
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Throughout the financial services industry, technology is becom- Conclusion: Realising
ing an evermore integral part of the organisational framework. As Latent Synergies
we have highlighted in this white paper, it is through the use of
sophisticated systems that firms are proving best able to seek out
returns in this increasingly globalised, complex, and rapid fire
investment environment—and do so in a risk and cost controlled
manner.
But while cutting edge IT capabilities are indispensable, how
the systems architecture is structured is equally important.
Improvements are possible by implementing a specific solution
to fix a particular problem, whether that happens to be a new “The greatest gains will come from
trade order management system, a more robust risk engine, or a having a reliable and functionally
better reporting tool. But addressing an issue in isolation will only rich platform that encompasses
produce limited results. the full breadth and extent of the
Rather, the greatest gains will come from having a reliable
trading lifecycle.”
and functionally rich platform that encompasses the full breadth
and extent of the trading lifecycle, integrating the various front
and back office functions in a virtuous loop of data integrity and
operational efficiency. And it is through this type of comprehen-
sive framework that a family office’s latent synergies can be fully
realised.

www.advent.com 15
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