A Complete Solution for Private Wealth Management

A potential client, “Private Wealth Managers, LLC,” needed an investment data management solution that could handle the diverse investments of the family, provide analysis of new and existing investments, and efficiently provide meaningful reports across the breadth of the family.

Background

Private Wealth Managers (PWM) manages the diverse assets of the Smith family.

The Smith family has three living generations and $2.5 billion in assets.

Family wealth originated with the Smith brothers — generation 1, now deceased — who built and sold one business and subsequently built and retained a controlling interest in another.

The three offspring of the Smith brothers— generation 2— are a close-knit family who individually and collectively control the bulk of the family wealth. They are in their sixties and seventies.

The five adult grandchildren of the Smith brothers — generation 3 — are in their forties and fifties and have ten children — generation 4 — who range in age from seven to twenty-seven.

Problem

PWM is responsible for managing and reporting on the Smith family’s investment portfolio and needs to provide consolidated reporting on the family’s alternative assets. In addition, PWM is responsible for a partnership accounting structure composed of:

• Trusts (40-plus)
• Individuals/income beneficiaries (25-plus)
• An operating business S corporation (1)
• Family limited partnerships (4)
• A private foundation (1)

Solution

The Data Agent Data Mart supports a broad set of family office business rules that allowed the client to create the data structure required by the diverse assets of the Smith family.

Data Agent’s Data Mart Supports:

• A hierarchical structure of partnerships and investment vehicles
• Multiple types of client accounts and relationships: household, beneficiary, taxable, nontaxable, custodian
• Flexible classification of general ledger entries and partnership accounting positions
• Assets and liabilities
• Historical and real-time investment data such as positions, lots, custody holdings, and transactions
• Dynamic IRR calculation for any investment or client accounting entity
• Multiple cost basis, multiple investment basis, multiple base currencies, etc.

Problem

The family office currently gathers investment and financial data from different sources, including banks, brokers, investment managers, and online pricing services. Data is compiled using spreadsheets before being entered into QuickBooks, and the family office portfolio management system. The family office CFO likes the flexibility of spreadsheets and the check-writing capabilities of QuickBooks but has outgrown the spreadsheet and QuickBooks-based portfolio management system.

Solution

The Data Agent solution for family offices provides a set of data integration services right out of the box, CRM systems (Microsoft CRM, Pertrac CMS), accounting systems (InvestTran, Advent), custodians (Northern Trust, Fidelity, Merrill, Goldman Sachs, Morgan Stanley), and data vendors (Bloomberg, Markit Partners, Reuters). The built-in data adapters shorten the time to value for private wealth management firms by allowing them to quickly gain access to all required data elements of the family office.

Problem

PWM needs to calculate Tom Smith’s allocation of net income for the 1998 FLP. It needs to link the value of his 6 percent limited partnership interest in the 1998 FLP to a consolidated report of his portfolio holdings.

Solution

Data Mart accepts transactions and position data from partnership accounting systems. Using Data Analytics, accounting data can be linked with CRM data, making it possible to report Tom’s portfolio holdings.

Problem

PWM needs to maintain and report commitment information for alternative investments.

Solution

Data Mart maintains multiple accounting basis: reported, actual, hypothetical, etc. Reported commitment will be imported into a reported transaction basis. Data Mart will apply the reported commitment to the account’s reported market value and will generate reported internal rates of return.

Using the advanced visualization capabilities of Microsoft Cube technology, it’s easy to create multidimensional views of data. PWM can use the advanced visualization capabilities of PW-Suite to easily view all investments related to Tom Smith.

Problem

PWM requires an executive information system to make reports available to executives and family members.

Solution

Using Data Analytics, PWM can quickly generate reports using different data dimensions. Reports can be integrated as a package to be printed or to be integrated with a Web portal.

The following table shows the family holdings across time periods by industry sector.

Conclusion

Data Agent’s PW-Suite provides a complete solution tailored to the specific needs of the private wealth manager. PW-Suite is built on industry-standard technology, allowing for ease of installation and cost-effective ownership, and delivering the best-in-class time-to-value model.