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Alpha Ignored? Rethinking Family Office Operations

There are many investment opportunities to gain Alpha. But Alpha can also be achieved by keeping a close eye on expenses – as Jack Bogle, the founder of the Vanguard Group and avid proponent of low-cost funds, has proven over the years.

The concept of gaining Alpha by improving efficiency was the focus of Alpha Ignored? Rethinking Family Office Operations and Technology, a presentation by Mike Slemmer, COO of FundCount, at Lido Consulting’s 14th Annual Family Office Investment Symposium in Santa Monica, CA.

The topic hit a familiar chord with the nearly 500 HNW and UHNW individuals, institutional investors, CPAs, lawyers and other delegates that attended the event. They know that inefficiency abounds in many family offices. At FundCount, we’ve also seen it firsthand. For example, one client came to us with 16 manual processes between investing and operating company flows that needed to be automated and rationalized.

Too many manual processes are the main culprit of inefficiency throughout the family office, such as:

  • Disparate spreadsheets make it difficult to aggregate information for a holistic view of wealth
  • Reliance on tools – Excel and QuickBooks — that aren’t made for the rigors of partnership and multi-entity accounting
  • No automated interfaces to custodians for data download
  • Lack of ‘presentation ready’ reports

FundCount partnered with Family Wealth Report to better understand the above challenges and the broader impact on family offices. In Efficiency in Accounting and Investment Analysis, a report based on a detailed survey of family offices globally, 83% of respondents said the biggest weakness of their current system was the prevalence of manual processes. This was followed by the continued need for Excel and QuickBooks (cited by 61% of respondents) and the inability to analyze and report on investments in one system was a close third and cited by 58% of respondents.

The big issue is that all this inefficiency adds up. In fact, the report estimated that nearly three-quarters of family offices waste a minimum of 10 hours per week on manual tasks. When considered on a monthly basis, that’s 40 hours wasted – or the equivalent of one entire work week!

Fortunately, there are software solutions like FundCount to help family offices as well as hedge funds, private equity firms, and fund administrators ensure that Operational Alpha isn’t ignored. By integrating portfolio, partnership and real-time general ledger accounting and analysis in one system, FundCount improves operational efficiency and delivers immediate, actionable intelligence to clients. Contact us to learn more.

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