Knowledge Center

A Simple Guide to Family Office Software Pricing

What You Should Know About Common Costs Associated with Family Office Fintech

How much does your solution cost?

This is typically one of the first questions we get asked by family offices and investment advisors evaluating family office accounting and reporting solutions.

 


When it comes down to it, pricing can be one of the most influential factors in choosing a family office fintech solution. And while most technology vendors wish that value alone dictated buying decisions, we’d be naïve to believe that budget constraints don’t play a role when it comes to selecting a technology solution.

But technology costs can be tricky. There’s certainly no industry standard and, in many cases, family office software providers may price their solution differently depending on what combination of technology and services you choose from their menu of offerings.

To help you prepare for family office software pricing discussions, we put together a crash course of sorts in family office software pricing. To do this, we identified several pricing structures that are common amongst family office fintech and service providers. Our goal is to help you understand the basic premise of each pricing model so that you can better anticipate costs based on your unique family office structure.

 


Types of Pricing Models

Flat Rate

One of the simplest pricing models is a flat rate fee. In this structure, the solution is sold at a predetermined price and offers a fixed set of features. Using a flat rate fee, the software provider does not take into account any additional information or detail about your family office like the number of users, entity count, investment types or add-on functionality. This type of pricing structure is typically employed by off-the-shelf software, meaning there’s limited room for customizations. In short, what you see is what you get.

Per User

Largely self-explanatory, a per user fee is dependent on the number of users that will receive login credentials for the technology platform. This pricing structure is simple and enables your family office or advisory firm to control costs since you ultimately dictate how many users need access to the solution. This pricing structure is often incorporated into the tiered pricing structure described below.

Feature-based

Feature-based pricing allows firms to pick and choose pieces of software functionality to create a unique suite of capabilities. In this model, you have greater control over costs by only paying for what you need while retaining the ability to scale the product by adding additional functionality as your team’s bandwidth grows.

Per Account

Most family offices need to collect vast amounts of financial information – from portfolio transactions, cash movements and account balances to alternative investment activity and valuations. The per account pricing structure charges based on the number of accounts or portfolios within your investment profile. This fee is particularly common across data aggregation and reconciliation services, and can fluctuate depending on the type of asset and whether data is retrieved automatically or manually. Similar to a per user fee, the per account fee typically fits into a tiered, or escalator, fee structure.

Per Transaction

Although a per transaction fee is a less common pricing model for family office software providers, it will occasionally enter the equation with transaction-based services. For instance, if you leverage ancillary services like cash management processing, bill payment or trade execution, you may see it as a line item in your pricing proposal. These costs are typically framed as processing fees for any cash movements between accounts or invoice payments. More often than not, this type of fee is in addition to other software-based fees, like per user or per entity subscription fees.

Tiered

A tiered pricing model is fairly common amongst family office financial solutions. This pricing structure offers firms economies of scale. The tiers represent scalability and are designed to provide per unit cost savings as you increase your usage of the solution. Tiers might be based on the number of users, number of entities, number of accounts or assets under management. In a tiered pricing model, you can incrementally increase your subscription as your organization or assets grow.

Assets under Management (AUM)

AUM-based pricing can be one of the more volatile pricing models. Similar to AUM pricing models typically employed by investment advisors, this structure charges basis points, or a percentage of assets, based on the amount of money that’s being aggregated and reported on by your fintech solution. Since market conditions directly impact asset valuations, the amount you are charged on a monthly basis may change drastically. For this reason, most AUM-based pricing structures also include minimums, or floors, that require a minimum amount to be paid should asset valuations drop noticeably.

Per Entity

No two family offices have the same infrastructure and their unique ownership structures can become very complex – from nested entities and family partnerships to creative investment strategies and esoteric holdings. To handle this degree of complexity and the associated system configuration, some family office fintech companies use the number and type of entities – among other relevant data points – to determine pricing of their solutions. This type of fee is common amongst tailored family office solutions that require substantial solution configuration to meet the specific needs of each client.

 


 

More often than not, fintech providers will use a blend of the aforementioned fees to create their own proprietary pricing model. It’s also common for vendors to package pricing into phases. For instance, they may charge a per account fee for upfront implementation – or setup – costs, while using a flat subscription fee for ongoing usage of the platform or service. Keep in mind that you can control costs by changing variables and inputs within the cost models to help you ultimately find a solution that meets both your capability and budget requirements.

Although fintech software prices can vary dramatically, understanding the different family office software fee structures can help you anticipate the size of the investment and the degree of scalability in a family office software solution.

Interested in learning about how we price our technology and service solutions for family offices and financial institutions? Connect with a member of our team to learn more about our award-winning accounting, investment data aggregation and client reporting tools.

 


 

Dennis Mangalindan
Dennis Mangalindan
Vice President, Business Development – SEI Family Office Services

Dennis is responsible for developing strategies to help SEI Family Office Services reach new markets, attract new leads and acquire new clients. In this role, he leads speaking engagements at industry events and manages the sales cycle. With a core focus on family offices, accounting firms and other wealth management organizations selecting a technology solution, Dennis has worked with many of the Forbes 185 families and Forbes 400 individuals for over 17 years. Prior to joining SEI, Dennis served as Managing Director of Sales and Marketing at Financial Navigator, Inc. where he was responsible for the company's growth and market penetration.

Dennis holds a Bachelor of Science in Business Administration with a concentration in Marketing from San Jose State University. Outside of SEI, Dennis enjoys traveling with his family, reading and scouring used record stores to grow his vinyl record collection.
Dennis Mangalindan

Dennis Mangalindan

Vice President, Business Development

SEI Family Office Services