How dashboard technology can help family offices maximize their data

The great detective character Sherlock Holmes once said, “It is a capital mistake to theorize before one has data.” And so it goes with modern decision making, especially now that advanced technology has unlocked our ability to take the idea much further. It’s no longer prudent to make critical business decisions without leveraging valuable insights from integrated data that is real time, automated, cloned and analyzed.

For family offices, this should be no mystery. It is time to recognize the value of a customized, comprehensive, cloud-based platform that captures, displays and interprets data in ways that enable office employees, family members and advisors to dial in on the family enterprise’s strategic business decisions and functionality. A sophisticated family office dashboard can deliver those capabilities and support existing office staffers with technology that matches the complexity of operational tools, office components and investment structures.

Enter RSM’s proprietary platform, FamilySight®, which creates one ecosystem for all office advisors and stakeholders to access integrated, real-time data. This end-to-end solution allows families to focus on what’s important to them and leave it to technology to handle day-to-day processes such as the accounting, finance and back-end infrastructure in the quest for operational excellence.

FamilySight’s dynamic parts work together to help families make informed decisions at a moment’s notice. Here’s a closer look at four key functions of this next-generation technology solution and how it puts data to work for you.

Personal and philanthropic

You won’t find tax compliance traced in green highlights on many to-do lists. It’s a mundane exercise but also necessary because family members need to know what they’re paying in cash taxes. Fortunately, some of the manual tasks that weigh on family members or family office executives, such as data aggregation, can be automated. A quick cellphone picture of a tax form can collect and input numbers using advanced optical character recognition software, eliminating the need for paper processes. A dashboard featuring real-time data flowing into integrated tax software can provide the bottom-line tax figures that family members crave. The system pulls the relevant tax information from various dashboard segments to clarify the tax outlook and then displays it visually in a chart or graph that expedites strategic planning.

Business entities

While a dashboard’s tax compliance component is a vital output, advanced technology elevates other segments into true differentiators for a family office. New software integrated with those tax functions can clone data sets from complex partnerships, Schedule K-1 forms and tiered entities to unlock consultative and planning capabilities, a process that often overwhelms a common spreadsheet system. 

“The fear at times is: ‘If I start changing my dataset, will it have a big impact?’” says Michael Johnson, tax partner and family office technology leader at RSM US LLP. “Now, you can clone that dataset and make changes—for example, a transactional event or income change that would flow through the entire chain of partnerships and investors. You can see if you made one change here, how it would change the picture for all of my investors down the line.”

The scenario-planning component is how FamilySight helps a family strategize. The system can account for compliance in multiple states and foreign jurisdictions, which is critical for families with complex investment structures and individuals scattered geographically. A time variable enables a family to project how a change would affect family members and the whole family office years into the future. There’s so much to consider when answering important questions such as: Do I want to give away this stock? Should I sell my business? What year should I sell my business? How does that interact with tax legislation? To be able to pinpoint the right solutions by modifying options instantly and running multiple scenarios is very powerful.

Financial aggregation

Cloning data? Great. Cloning outdated, insecure or incorrect data? Not so great. Bad information leads to bad investments, bad tax advice and a lot of bad decisions in general, so data ingestion is the starting point. If you don’t have the back-end infrastructure set, it’s a downward spiral trying to catch up.

FamilySight features integrated investment management software that updates data securely in real time, which can be especially helpful for newly formed family offices with lean staff. A family office’s needs often correlate with the complexity of its investments and how the investment structure aligns with the family’s objectives. Investments can quickly become more complex. Suddenly, manually updating spreadsheets between monthly financial statements can hinder time-sensitive decisions about buying a property or making an investment. “If you’re not timely, you’ve missed the curve, or you don’t have the complete picture,” Johnson says. “Ultimately, that means you’re not thinking about everything you need to be thinking about.”

The complete picture for a family office often includes liquid and illiquid assets, alternative investments and passion assets like art or auto collections. A dashboard can pull in, distinguish and interpret data about those diverse types—including private equity funds, hedge funds and real estate—as the integrated investment management software provides it.

FamilySight can also pull performance and market data, aggregating it from multiple advisors. This capability enables users to instantly analyze and visualize portfolio data, taking into account complex portfolio structures, including family offices, multiple asset classes and multiple currency scenarios. Advanced software goes further still, pulling in transaction information, such as interest, dividends, fees and tax lots. That level of detail provides family offices with a full view of their financial information and the ramifications of potential changes.

Outsourced accounting

Family offices with relatively small staff often outsource accounting functions to free executives for tasks that create greater value for the office. FamilySight can facilitate that with automated processes for bookkeeping components such as paying bills and compiling financial statements.

Customizing those processes is imperative because every family office has a unique collection of needs enabling the system to evolve as the family office grows. Software applications that suit one family office might not fit another, and having the flexibility to integrate different systems should only help a family pursue its goals.