If endless news reports and increased investor anxiety weren’t enough proof, a glance at the CBOE Volatility Index confirms the uncertain nature of global markets in 2022. This type of market requires a different response from advisors, not least because most clients pay closer attention to equity investments when prices are falling. It’s one of many reasons why both advisors and their clients fare better if they can easily digest the performance of the full portfolio. 

For a firm aiming to follow multi-family office best practices, such a holistic picture includes a family’s entire suite of investments, i.e., both liquid and illiquid assets across geographic and custodial boundaries. This allows all parties to fully comprehend the risks and opportunities of a volatile market. And yet, many family offices and high-net-worth advisors are still doing Excel gymnastics to cobble together a panoramic view across asset classes, custodians, and alternative investments. At Masttro, we’ve noticed that even those with a patchwork tech stack struggle to make comparisons between different assets. Conversely, family offices that adopt WealthTech software are much more able to maneuver the challenges and benefits of rocky times. Not least because it allows for…

… Greater visibility into performance

High-net-worth individuals and families generally have diverse portfolios, parts of which may thrive during downturns. So while a client may be down 40% on liquid investments, their real estate holdings may be through the roof. Yet it’s human nature to focus on losses. And that’s more likely to happen when clients are scrolling back and forth between separate slides on stocks and buildings. Leading-edge family office software easily allows clients and advisors to see the full performance picture, especially if the platform offers real-time reporting and automated presentations. In an instant, advisors and clients can easily understand how the collective returns of, say, asset classes A, B, and C are working together and focus on both the losses and the gains. 

…Better communication between different teams and advisors

High-net-worth individuals rely on their single- and multi-family offices to act as trusted playmakers but it’s harder for advisors to score when they can’t easily compare the performance of investments across classes and custodians. The best WealthTech platforms aggregate all the data into a single report so that the family office can easily see what’s happening in each silo. This, in turn, allows the family office to have smarter conversations with the different investment teams and guide clients through investment-related decisions.

… Data-driven decisions based on actionable insights

As behavioral economics teaches us, it’s human nature to act rashly when stocks are diving and inflation is rising, even though individual investors generally do a terrible job of timing the market. Here again, a more complete view of performance empowers advisors to counteract those individualclient impulses by clearly and quickly showing which assets are providing protection, which are down but excel historically, and which are worth liquidating. Before committing to any WealthTech product, it’s crucial to determine if it allows users to slice and dice data, so that family office financial reporting can be tailored around, say, alternative investments, or to frame liquid vs. illiquid assets. 

Economic uncertainty is challenging for both family offices and their clients, but it can be less so with tools that offer valuable context and a complete picture. By incorporating the best private wealth management software, family offices can better provide the clarity and insights that clients expect during both smooth sailing and choppy seas.