Family office approach
Family office approach
Podcast
21.9.2022
Family offices use asset controlling to manage and monitor their strategic investment strategy and assets. It is therefore primarily about control and transparency. Why, for example, has the Quandt family been commissioning experts to structure and visualize their wealth for decades? The answer is obvious: with the increasing complexity of wealth, be it due to family complexity, the integration of investment structures or simply the number and broad diversification of investments or via shareholdings, bank accounts and securities accounts or emotional-financial assets such as vintage cars or art, wealthy individuals often lose track of their overall assets. They lack a central location, a kind of "one-stop store", where all these assets - as well as any liabilities - come together and where they can view their capital development at a glance.
Asset controlling serves as an instrument for transparency across all asset classes and valuables, their returns, risk characteristics and costs incurred. This allows the preservation and/or growth of wealth to be monitored. The development is then monitored by experts who analyze and manage the performance development on the basis of synergies, experience and benchmarks compared to other wealth. This administrative simplification and relief allows the asset owner to sit back and relax, knowing that their wealth is in good hands.
In addition, comprehensive asset controlling provides important information on risk management, liquidity management and tax compliance and supports the fulfillment of important reporting obligations.
While asset reporting was traditionally provided once a quarter, or at best once a month, in the form of a printed folder or PDF, digital provision can provide a regular insight into asset development. Digital controlling is a means to an end. One advantage is obvious: compared to a backward-looking view and the associated decisions based on historical values, modern asset controlling provides information online "near real time", whereby assets with ongoing valuation are presented on a daily basis and illiquid investments (e.g. private equity funds or real estate) are included with a time-delayed approach. This development is being accelerated by an increasing number of specialized database providers with ongoing valuations using the comparative value method, for example for residential properties, watches or classic cars.
From a family office perspective, the aim of digital controlling is to better monitor the predefined strategic asset allocation (SAA) - i.e. the long-term objective of wealth. Especially in times when many asset classes have to be revalued and the resulting liquidity flows change, a clear view of the long-term goals must be maintained. The advantage of an up-to-date valuation is therefore obvious. Not only can the status quo of wealth be shown with all relevant performance, risk and exposure data. The regular comparison of actual and target data also reveals deviations in portfolio performance. If the approved parameters of the SAA do not match the actual performance of wealth , changes to the investment technique can be recommended by the family officers. This is then not a question of gut feeling, but of an objective basis that is generated with the help of asset controlling. The investment of assets is thus protected to a certain extent from emotional (mis)decisions such as the famous cyclical trading.
Furthermore, reallocations or new investments can be coordinated ex ante with the current portfolio.
There are some providers that cover reporting or accounting topics, for example, but are only focused on the liquid world. As a family office that ascribes great relevance to the alternative investments sector, we would therefore lack dedicated functions for illiquid assets. For example, total asset reporting is essential for liquidity management (including open call commitments) and risk measurement. The QPLIX software can be used to efficiently manage not only liquid and illiquid assets, but also highly complex portfolios across a wide range of asset classes and for asset holder structures of varying complexity.
To put it simply, QPLIX is a kind of core banking system for us as a family office, in which all these functionalities are bundled in one place and where everything is set up neatly in terms of accounting and tax law. Ultimately, our clients benefit from a holistic overview of their entire portfolio - from securities and private equity funds to real estate, direct investments, collectibles and crypto investments.
This so-called "single source of truth" for various client asset data makes asset control much simpler and more secure - and will be indispensable for wealth management . Family offices that want to remain relevant in the future must meet the requirements of the younger generation of clients, particularly with regard to digital solutions and services.
Family office approach
21.9.2022
Olaf Bley-Steglich
Family offices were successful with traditional methods for decades because the older generation of clients was satisfied with analog office management. The digital transformation has changed things. The newer generation demands transparency and digitalization. Everything is now online. Their wealth and their investments must also be managed and monitored online.
Family offices use asset controlling to manage and monitor their strategic investment strategy and assets. It is therefore primarily about control and transparency. Why, for example, has the Quandt family been commissioning experts to structure and visualize their wealth for decades? The answer is obvious: with the increasing complexity of wealth, be it due to family complexity, the integration of investment structures or simply the number and broad diversification of investments or via shareholdings, bank accounts and securities accounts or emotional-financial assets such as vintage cars or art, wealthy individuals often lose track of their overall assets. They lack a central location, a kind of "one-stop store", where all these assets - as well as any liabilities - come together and where they can view their capital development at a glance.
Asset controlling serves as an instrument for transparency across all asset classes and valuables, their returns, risk characteristics and costs incurred. This allows the preservation and/or growth of wealth to be monitored. The development is then monitored by experts who analyze and manage the performance development on the basis of synergies, experience and benchmarks compared to other wealth. This administrative simplification and relief allows the asset owner to sit back and relax, knowing that their wealth is in good hands.
In addition, comprehensive asset controlling provides important information on risk management, liquidity management and tax compliance and supports the fulfillment of important reporting obligations.
While asset reporting was traditionally provided once a quarter, or at best once a month, in the form of a printed folder or PDF, digital provision can provide a regular insight into asset development. Digital controlling is a means to an end. One advantage is obvious: compared to a backward-looking view and the associated decisions based on historical values, modern asset controlling provides information online "near real time", whereby assets with ongoing valuation are presented on a daily basis and illiquid investments (e.g. private equity funds or real estate) are included with a time-delayed approach. This development is being accelerated by an increasing number of specialized database providers with ongoing valuations using the comparative value method, for example for residential properties, watches or classic cars.
From a family office perspective, the aim of digital controlling is to better monitor the predefined strategic asset allocation (SAA) - i.e. the long-term objective of wealth. Especially in times when many asset classes have to be revalued and the resulting liquidity flows change, a clear view of the long-term goals must be maintained. The advantage of an up-to-date valuation is therefore obvious. Not only can the status quo of wealth be shown with all relevant performance, risk and exposure data. The regular comparison of actual and target data also reveals deviations in portfolio performance. If the approved parameters of the SAA do not match the actual performance of wealth , changes to the investment technique can be recommended by the family officers. This is then not a question of gut feeling, but of an objective basis that is generated with the help of asset controlling. The investment of assets is thus protected to a certain extent from emotional (mis)decisions such as the famous cyclical trading.
Furthermore, reallocations or new investments can be coordinated ex ante with the current portfolio.
There are some providers that cover reporting or accounting topics, for example, but are only focused on the liquid world. As a family office that ascribes great relevance to the alternative investments sector, we would therefore lack dedicated functions for illiquid assets. For example, total asset reporting is essential for liquidity management (including open call commitments) and risk measurement. The QPLIX software can be used to efficiently manage not only liquid and illiquid assets, but also highly complex portfolios across a wide range of asset classes and for asset holder structures of varying complexity.
To put it simply, QPLIX is a kind of core banking system for us as a family office, in which all these functionalities are bundled in one place and where everything is set up neatly in terms of accounting and tax law. Ultimately, our clients benefit from a holistic overview of their entire portfolio - from securities and private equity funds to real estate, direct investments, collectibles and crypto investments.
This so-called "single source of truth" for various client asset data makes asset control much simpler and more secure - and will be indispensable for wealth management . Family offices that want to remain relevant in the future must meet the requirements of the younger generation of clients, particularly with regard to digital solutions and services.
About the author
Olaf Bley-Steglich
Olaf Bley-Steglich has been responsible for asset controlling at FINVIA since July 2020.
In various positions in the private banking and family office segment, he previously advised on complex asset situations with a focus on securities allocation, finance and succession strategies as well as structuring solutions.
In 2014, the business lawyer moved to a single family office, for which he set up the reporting and controlling department as well as the administration of investment vehicles.
