6 Must-Have Reports for Family Offices in a Financial Reporting Software

Providing the right financial reports to Ultra-high-net-worth (UHNW) families is a challenging task as it requires excellent data crunching capabilities, and deep-level understanding of complex investments and ownership structures. Moreover, one-size-fits-all strategy doesn’t work, considering different families have unique financial goals and investment preferences. With varying reporting needs, it is worth considering the following while evaluating a financial reporting software:   1. Who are the intended users and stakeholders of portfolio performance reports?  2. What data is most relevant to them?  3. What do they prefer — an overview of holdings or a drill-down analysis of their investment performance? Or Both?  4.  Do they want a basic risk summary or institutional-quality risk metrics to analyze their underlying investments?  5. Can the software protect sensitive family financial data?  6. Does the software provide mobile app integration to access financial reports anytime, anywhere?  

Family’s Financial Goals — why they matter most in selecting a financial reporting software 

The family’s financial comprehension, presentation preferences, and their short- and long-term goals can help decide the most appropriate financial reporting software. Also, acknowledging generational divides play an important role as older generations favor physical copies of performance reports, while the next generation of family principals prefer digital versions that can be customized on-the-go.  Whatever the reason, a financial reporting software must at bare minimum possess the ability to build configurable reports that provide actionable views of family wealth and enable granular analysis of specific asset classes to make informed decisions. A visually appealing reporting interface that presents data impactfully is a valuable bonus.  Recommend Read: Best Investment Management Software for Family Offices 

Top 6 financial reports that your financial reporting software must generate  

Countless types of financial reports can be created based on the diverse needs of families. However, here are the 6 most important reports that a Family Office Management Software must be able to generate:  1. Portfolio Performance — Evaluating returns with precision Performance reports allow UHNW families to get a snapshot of how their investments are performing over a particular time range (e.g. weekly, monthly, quarterly, yearly, etc.) and with respect to a benchmark of choice. Here are four essential performance reports you can expect from an advanced family office management software:  

•  Time-Weighted Returns (TWR): Helps evaluate portfolio performance over time without accounting for external cash flows, such as contributions and withdrawals. By excluding cash flows, it allows comparing the performance of different investment managers and strategies in an unbiased manner.
• Internal Rate of Return (IRR):  Also referred to as “money-weighted return”, it enables measuring the actual returns generated by an individual investor by considering the size and timing of all cash flows. It’s more suitable for evaluating the performance of illiquid assets where cash flows are irregular.
• Performance attribution: Allows families to determine which asset class (e.g. equities, bonds, real estate) is driving their portfolio returns. It helps to identify high-performing securities that have the potential to deliver above-market returns and adjust portfolios according to market trends.
• Peer and benchmark comparison: Enables families to identify whether their portfolio is under-performing, matching, or over-performing the selected benchmark. By identifying areas of weakness, families can adopt course-correction steps to optimize their portfolio.

  2. Financial statements — Updated reports on your financial health  One of the most fundamental functions of a financial reporting software is to provide a clear view of how much a family owns and owes. Traditional financial statements such as balance sheet, income statements, and cash flows allow family offices to chart the current and future profitability trends and determine the sustainability of the wealth of UHNW families. Family members require personalised information on their financial health, or that of a partnership entity, or any other legal entity.   3. Net worth — Combined value of all family assets UHNW families usually have numerous banking and custodial accounts, countless real estate properties worldwide, multiple private equity and hedge fund investments, and are involved in various investment partnerships.   Including their private assets such as yachts, art, collectibles, and jewellery would further highlight the diversity and complexity of their portfolio. An advanced financial reporting software provides a dashboard view of the family’s net worth, allowing them to judge their financial position regardless of where their assets lie.  4. Asset allocation — Tracking and reporting of assets worldwide A survey by Global property market insight reveals that more than 20% of their UHNW respondent’s investable wealth is held overseas. This shows the growing interest in wealthy families to buy assets outside their home country. Therefore, a software that can track and report the changing strategies and allocations to specific asset classes, geographies, and wealth managers becomes crucial.   An advanced financial reporting software produces actionable performance reports, such as actual allocation vs. target allocation, investment exposure, and allocation history that allow families to know how their investments are performing against a chosen investment strategy and benchmark, and across diverse geographies.   5. Holdings across portfolios — Deep-dive into investment analysis Families frequently enquire about their exposure to a particular stock across all investment accounts, the difference between the cost basis and the market value of their investments, and the cash flows their investments are expected to generate. Answering these questions requires a drilled-down analysis of a family’s holdings, making a family office management software with a built-in financial reporting module even more important.   Why? Because it consolidates investments across multiple custodians and bank accounts allowing detailed examination of the portfolio. It also provides a broad overview of the total value of an asset class, let’s say equity investments, and then progressively narrows the focus on performance by sector and further into individual stocks. Additionally, it supports visually rich reports that allow monitoring market trends, identifying irregularities, and specific areas of interest in an intuitive way. By capturing latest data feeds, it ensures that the drill-down analysis remains current and meaningful.  6. Risk analytics — Gaining transparency around riskier assets According to Ocorian’s 2024 Global Family Office Report, 69.3% of families anticipate their investment risk appetite will “increase slightly” over the next 12 months. When asked why, 46.8% were of the opinion that there is greater transparency around riskier asset classes.   This means more families are looking for position-level transparency that would allow them to understand the underlying risk in their portfolio and investment strategy. This requires an advanced financial reporting software that can consolidate all financial data into a single platform facilitating analysis across multiple asset classes, accounts, and advisors to assess the risks involved.   An initial exploration of a family office management software can begin by identifying options that come pre-installed with institutional-quality risk metrics such as Standard Deviation, R-squared, Drawdown, Correlation and Up/Down Capture. 

Asset Vantage — The family office management software you need 

Asset Vantage is a leading SaaS-based Family Office Software that provides a single source of truth for all asset classes, as it maps and reconciles bank transactions, and creates actionable performance reports. With AV’s advanced financial reporting features, family offices can:  1. Track asset allocation and portfolio performance across all asset classes, strategies, and entities with their underlying investments. 2. Create customized performance reports to evaluate time-weighted or cash-flow-based portfolio performance across asset classes and sectors. 3. Make informed decisions with performance reports filtered by asset class, sectors, geography, liquidity, and advisors. 4. Use portfolio performance reports to analyze the performance of third-party advisors. 5. Define user-defined entity groups within the family and generate customized reports. 6. Track illiquid assets using the commitment schedule, which includes committed, called, and returned capital, along with return metrics like 7. Reconcile receivables with cash-flow-based calendars for maturities, dividends, and rent. 8. Apply benchmarks to reports for comparative analysis. 9. View drill-down details for bond portfolios, including yields, amortization, ratings, issue date, coupon rate, and call dates. Want to explore how AV can anchor your family office operations? Contact us today! [maxbutton id=”17″ ]