Trying to make sense of a sea of data spread across multiple spreadsheets and systems and systems can be frustrating and makes gaining meaningful portfolio performance insights a serious challenge. Starting each morning with a tedious process of gathering, verifying, and reconciling information from disparate sources, only to end up with inconsistencies and errors is enough to make even the most resilient of analysts long for holiday break.

According to a 2019 survey by Deloitte, over 70% of financial professionals still rely heavily on spreadsheets for critical business processes, despite the availability of more advanced tools. Excel alone though is simply not up to the task that today’s sheer volume and complexity of data demands. Just as a for instance, the same Deloitte survey found that 88% of spreadsheets contain at least one error.

Key Takeaway:

  • Financial professionals grapple with the complexities of managing extensive data across various systems, often resorting to error-prone spreadsheets.
  • The article underscores three vital factors crucial for obtaining better portfolio performance insights: real-time data, data accuracy, and effective data visualization.
  • Power BI is one tool that enhances data visualization so that more meaningful insights can be gained from the data.

Reliance on spreadsheets and disconnected systems often results in data silos, inaccuracies, and manual errors, making it nearly impossible to obtain a holistic and accurate view of portfolio performance. These issues impede timely decision-making and elevate operational risks, as managers struggle to consolidate and analyze data from various sources effectively.

Ensuring data accuracy and timeliness is critical. Implementing robust data management practices, including automated data feeds, rigorous validation processes, and real-time monitoring systems, is essential. Today, portfolio management software and integrated platforms are available that can significantly enhance data accuracy, streamline reporting, and improve transparency. Transitioning from manual, spreadsheet-based systems to sophisticated, automated solutions gives better performance tracking and more informed investment decisions, ultimately improving operational efficiency and investment outcomes.

Key Factors That Lead to Better Portfolio Performance Insights

To overcome these challenges and enhance portfolio performance insights, three main factors must be considered: real-time data, data accuracy, and data visualization.

Real-Time Data

Waiting until the end of the quarter before all accounts are reconciled and statements are all prepared simply isn’t realistic when quick decisions need to be made. Fortunately, modern innovations in accounting systems mean it’s no longer necessary for money managers to engage in guesswork. A unified general ledger and continuous accounting make real time reporting a reality.

  1. Unified General Ledger: Traditionally, companies maintained separate ledgers for different aspects of their financial operations, such as accounts payable, accounts receivable, and general ledger. A unified general ledger consolidates all these disparate ledgers into a single, centralized system. This consolidation streamlines the financial reporting process, reduces errors that can occur when data is transferred between systems, and provides a comprehensive view of the organization’s financial health.
  2. Continuous Accounting: Traditional accounting practices often involve periodic batch processing of financial transactions, leading to delays in data availability and potentially outdated information. Continuous accounting, on the other hand, involves the automation of financial processes and the use of real-time data integration to provide a more up-to-date view of the company’s financial position. By automating routine tasks and leveraging technology such as artificial intelligence and machine learning, continuous accounting enables companies to process transactions as they occur, rather than waiting for end-of-period batch processing.

By consolidating financial data into a single ledger and automating accounting processes, transactions can be processed more quickly, reducing the time it takes to update financial records. Automation also reduces the risk of errors associated with manual data entry and processing, ensuring that financial information is more accurate and reliable. With real-time access to financial data, decision-makers can make more informed decisions based on the most up-to-date information available.

Continuous monitoring of financial transactions facilitates compliance with regulatory requirements by identifying issues as they arise, rather than waiting for periodic audits. Real-time integration with other business systems, such as ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems, allows for a more holistic view of the organization’s operations and performance, further enhancing efficiency and transparency.

Ensuring Data Accuracy

Ensuring seamless integration and aggregation of data from multiple sources, such as banks, custodians, and brokers, minimizes manual data entry and reduces the risk of errors. Automated systems that utilize standard protocols and APIs play a crucial role in maintaining data integrity during this process. Establishing and maintaining data standards across the organization further eliminates discrepancies and errors that arise from differing formats and inconsistent data entry practices. Advanced technologies, including artificial intelligence (AI) and machine learning, significantly enhance data quality by identifying and correcting errors more efficiently than manual methods.

Implementing robust data governance frameworks ensures data consistency, reliability, traceability, and security through established protocols for data validation, audit trails, and compliance with regulatory standards. Regularly monitoring and validating data through continuous accounting practices helps to identify and rectify discrepancies in real time.

Turning Data into Insights

What good is timely, accurate data if you can’t make sense of it? The amount of information a family office or a fund has to juggle can be crushing to even the most super human of managers.

Effective data visualization transforms complex data sets into clear and actionable insights. Employing advanced analytics, such as predictive models and machine learning, enables deeper performance analysis and forecasting. Performance attribution tools break down portfolio performance into contributing factors like asset allocation and security selection, helping managers understand what drives returns. Implementing risk analysis and management tools allows for the effective monitoring, analysis, and mitigation of portfolio risks. Benchmarking against relevant indices assesses relative performance, while diversification analysis evaluates the degree of diversification to manage concentration risks and ensure balanced exposure. Reviewing historical performance helps identify trends, patterns, and areas for improvement, providing a comprehensive view of the portfolio’s performance over time.

Enhancing Data Visualization with Power BI

Microsoft Power BI is a cloud-based business intelligence platform that takes all those analytics, benchmark info and other tools and puts it into a format that allows users to visualize and analyze their data in an intuitive and interactive way. Unlike traditional reporting platforms, Power BI is a Mobile-First open platform that allows users to customize existing dashboards and reports, or even create their own from scratch.

Power BI, which is now available for download by FundCount clients, offers the following benefits:

  • Interactive Dashboards: Power BI allows users to create interactive dashboards that provide real-time insights. These dashboards can be customized with various visual elements such as charts, graphs, and maps, which users can interact with to drill down into specific data points.
  • Visuals: Power BI offers a wide range of visualizations, including bar charts, line charts, pie charts, scatter plots, and heat maps. This variety enables users to select the most appropriate visual representation for their data, enhancing comprehension and analysis.
  • Data Integration: Power BI can integrate data from multiple sources, including Excel, SQL databases, cloud services, and APIs. This capability allows users to consolidate and visualize data from different platforms within a single dashboard, providing a comprehensive view of their data landscape.
  • Custom Visualizations: Users can create custom visualizations tailored to their specific needs or import custom visuals from the Power BI marketplace. This flexibility ensures that the visualizations meet the unique requirements of the business.
  • Real-time Data: Power BI supports real-time data streaming, enabling users to visualize and analyze live data. This feature is particularly useful for monitoring key performance indicators (KPIs) and making timely decisions based on the most current information available.
  • Mobile Access: Power BI provides mobile app access, allowing users to view and interact with their dashboards and reports on smartphones and tablets. This mobility ensures that users can access important data visualizations anytime, anywhere.
  • Advanced Analytics: Power BI integrates with advanced analytics tools such as R and Python, enabling users to incorporate complex statistical analyses and predictive models into their visualizations. This integration enhances the depth and richness of the insights derived from the data.
  • Natural Language Queries: Power BI includes a Q&A feature that allows users to ask questions in natural language and receive answers in the form of visualizations. This feature simplifies the process of exploring data and finding insights, making it accessible even to non-technical users.
  • Collaboration and Sharing: Power BI facilitates collaboration by allowing users to share dashboards and reports with colleagues. Users can publish their reports to the Power BI service, embed them in websites or SharePoint, and set up automated email delivery of reports, promoting a collaborative data-driven culture.

Effective data visualization transforms complex data sets into clear and actionable insights

Portfolio Performance Insights that Deliver

Achieving accurate and timely portfolio performance insights requires a multifaceted approach that integrates real-time data updates, ensures data accuracy, and leverages advanced data visualization tools. The transition from manual, spreadsheet-based systems to sophisticated, automated solutions can significantly enhance data accuracy, streamline reporting, and improve transparency.

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