In my last two blog posts, The Future of WealthTech and What Is a Family Office, I explored two topics in wealth management. In this post, I bring both topics together to discuss one of the most critical challenges: how to manage and integrate the many silos of financial data that represent the overall wealth of a typical family office.
If you’ve read What Is a Family Office, you’ll understand the financial journey many people undertake as they accumulate wealth. For example, when you engage with a wealth management firm, one of the first questions they’ll ask is where your assets are held. They’ll build a profile detailing how these assets are allocated across different asset classes and family members. Ideally, they’ll want transaction-level details, including when the assets were acquired and for how much. This helps them provide accurate XIRR calculations, generate asset allocation reports, assess capital gains, and produce other essential financial statements.
The real challenge arises when some of your financial data resides on a firm’s proprietary platform or a third-party service. Consider a scenario where you trade equities through a stock broker with their own reporting platform. You’re locked into that platform—limited to tracking only the assets held with that particular broker. But what happens if you decide to end the relationship? Or if the advisor you trust moves to a different firm? In most cases, they’ll delete your data once you’re no longer a client. This leaves you with two options:
- Close the account and forgo access to any further reports.
- Download all the data and hope your new wealth manager can import it into their system—assuming that’s even possible.
Either way, switching between wealth management firms becomes a complicated and frustrating process.
Recently, someone sent me an article titled, Why Do So Many Family Offices Use Excel? It gave me a good laugh, as I’ve seen even some of the largest family offices rely heavily on Excel over the years. But I also winced, knowing how quickly Excel can become unwieldy. The main reason many still use Excel is that it allows them to keep their data in-house. They often use it to cross-check performance reports from external fund managers or validate investment statements.
Years ago, I met a family office that depended on Excel and often complained about accounting for corporate actions like bonus share issues or de-mergers—such as those involving Reliance Industries. While these actions are typically celebrated, his team found it time-consuming and prone to errors when entering the details into Excel. The introduction of the grandfathering rule for equity shares, effective January 31, 2018, made things even more complicated, turning Excel into a serious headache for them.
If Excel isn’t the best solution, what should you use? This is where the future of WealthTech becomes relevant. Taking control of your financial data starts with keeping your data in your hands. Using a platform like MProfit gives you full ownership of your data and allows you to onboard new advisors effortlessly. You can grant them limited or full access to your portfolio, allowing them to provide advisory services without the hassle of manual data transfers.
Ultimately, it’s all about control: Your Money, Your Data.
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