Simply accumulating more data within a family office doesn’t directly translate to improved decision-making. Without the appropriate tools and systems in place to process this information can actually have the opposite effect.
It’s no secret that many family offices still rely on Excel for many core functions, including handling their private market investments. But at a certain scale, this just becomes untenable. Private market investments are complex, relying on a wide range of different inputs, and when the data management workflow involves a lot of manual adjustments to make things work, it’s going to be somewhat fragile.
To illustrate this, we discuss three main challenges that family offices typically face when managing private market portfolios. Then, we’ll demonstrate how best practices and specialised software can streamline and enhance the management of this data.
Challenge 1: Inconsistent fund reporting
Private market investing involves dealing with a wide variety of underlying assets that are not easy to consolidate by nature. Therefore, family office portfolio managers are forced to perform their own consolidations for reporting and analysing their assets, activities that are crucial for long-term success. Furthermore, their clients and other stakeholders need clear and consistent reports to more understand where their funds are being invested and how they are performing.
In an ideal scenario, these portfolio managers should have access to a reliable data repository that can effectively organise and verify incoming data. The repository should serve as a shared platform for the entire team, allowing for reporting, analytics, and planning across various investments at any given time. It should support complex data structures and provide comprehensive reporting capabilities essential for success. This level of functionality is simply not feasible with Excel and instead requires a specialised tool to serve as the foundation for data-driven decision-making.
Challenge 2 – Too many manual processes
When managing private market investments, speed and agility are paramount. That may seem counterintuitive, especially since the individual investments themselves are usually less liquid and geared towards the long term. Still, day-to-day portfolio management actually relies on timely data more than most realise. Being able to keep information as up-to-date as possible directly leads to better decision-making.
This is closely linked to one of the most consistent indicators of data processing inaccuracies and sub-optimal data quality: the presence of manual interventions, which lead to human error. Today, embracing automation plays a huge role in enhancing data quality and freeing up time and resources to focus on higher-value tasks. However, many family offices fail to fully leverage this potential.
Automating routine and minimal tasks has a significant effect in streamlining data management at scale. It creates new opportunities for in-depth analysis that were not available before. It also enhances the quality and consistency of the data ingested and processed, while also identifying previously overlooked connections between different parts of the investment workflow.
Achieving this needn’t be a demanding process. Modern technology offers advanced features for data collection, automatic processing, and intricate quality assurance without requiring a business intelligence team to handle it manually. By adopting such technology, family offices can simplify their data management, keeping it up-to-date and relevant, which naturally enhances their effectiveness in decision-making.
Challenge 3 – Excel makes collaboration difficult
The third most common challenge faced by family offices managing private market portfolios is collaboration. When working with Excel, they are severely limited in their ability to collaborate with others. Sending different versions around asynchronously creates room for errors, miscommunication, out-of-date files, and more. That should not be an issue in today’s age.
Family office portfolio managers should use a platform that not only stores the necessary data but also allows multiple people to gain access to the relevant information at the same time. By tapping into modern technology, collaboration becomes a seamless process that leverages the untapped knowledge within the organisation without compromising on quality.
Additionally, smart collaboration is crucial for good corporate governance and risk management. It helps to enforce and maintain regulatory and internal standards across the board, without slowing down the team. Therefore the chosen platform used should be robust, comprehensive, and scalable to manage the complexity of private market investment portfolios and facilitate effective contributions from everyone. This makes things simpler and more efficient.
Conclusion
Family office portfolio managers who can simplify their private markets data management to effectively address these three key challenges can significantly enhance their capabilities. It can enable them to devote their time and effort to the areas that truly count, reassured by the knowledge that the underlying data they rely on is precise, up-to-date, and comprehensive.
About Apliqo
Apliqo possesses unmatched analytical capabilities for gaining deep insights into LP fund portfolios. Going beyond what Excel and standard Portfolio Management Systems can achieve, Apliqo uses advanced projection models to anticipate future developments. Apliqo offers a ready-to-use turnkey solution.
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