Financial Reporting for the Modern Family Office

May 17, 2019

10 Types of Reports Every Family Office and Financial Institution Should Have in Their Toolkit

It’s no secret that providing the right financial reporting to your clients can be a time-consuming and demanding task for family offices and financial institutions. Not only are you reporting on complex investments and intricate ownership structures, but you’re dealing with multiple individuals that each have a unique set of preferences and expectations. Simply put, what works for one family member may not work for another.

At the end of the day – or week or month or quarter – producing a set of reports that captures the right information and, more importantly, can be easily digested by the end-client is critical to establishing transparency and building client trust.

Why Personalized Financial Reporting Matters

As technology continues to evolve and play a larger role in family offices and financial institutions, expectations to go beyond the “one size fits all” approach are heightened. Based on Wendy Spires' commentary from this Family Wealth Report article on high net worth client reporting, you lose your competitive edge if operating under a traditional financial reporting style. Furthering this notion, Spires implies that adopting a personalized reporting construct for each unique client lends itself not only to higher client satisfaction and stronger relationships but also to better decision making.

As you begin evaluating personalized report packages for your clients, we encourage you to think about the story that you want to tell. Identify your audience and their expectations. Ask yourself:

  • Who will be reading this report?
  • What information is relevant to them?
  • Will they get more out of a single page financial dashboard? Or do they prefer granular detail?
  • Are they making decisions or just checking in?
  • Will these reports enrich your client's understanding of their financial position? Or will they create confusion?

According to Spires, many firms consider progress in reporting systems as a means of pumping more information at family members rather than delivering the right information. But when this approach is applied universally across all clients, it can result in client disengagement. As she puts it, the better approach to client reporting is to provide your clients with visually compelling and useful information that aligns with their goals and ultimately helps them make better decisions.

Aligning Reporting with Client Goals

Finding the right set of reports for each client can be challenging. We recommend sitting down with each client to get a better understanding of their financial comprehension, their presentation preferences and their short-term and long-term goals. It’s equally important to acknowledge generational divides and how they can affect your clients’ reporting preferences. For example, some clients may prefer hard-copy paper statements, while younger generations tend to have an affinity for mobile, on-demand reporting.

As your client’s advisor and financial caretaker, your responsibility is to provide a clear and honest financial narrative that helps them reach their goals and become a more active participant in their financial story.

To help you compose the right report package that speaks to your client’s financial goals and unique interests, we’ve identified 10 types of reports that every family office and financial advisor should have in their toolkit.

Top 10 Reports4


Financial Statements

Traditional financial statements like the balance sheet, income statement and statement of cash flows are certainly not for every wealthy investor. For some, these reports are lackluster and void of interesting information. But for the astute investor or former business owner, these financial position documents are a cornerstone piece of understanding the sustainability of their wealth. They provide a clear picture of what they own and what they owe along with current and future profitability. Seems important, right?

Knowing that these inquiries may surface, family offices and financial institutions should always be prepared to address questions around the financial health of any given individual, household or legal entity – and financial statements provide the answers they need.

Net Worth

Family offices and financial institutions are acutely aware of the fact that high net worth individuals and families pose a distinct challenge when it comes to net worth reporting. Not only do they have multiple banking and custodial accounts, but they’re oftentimes involved in various investment partnerships, private equity and hedge fund deals, real estate properties and direct business ventures. That’s still not taking into account their personal assets like homes, vehicles, aircraft, artwork and jewelry.

There’s no arguing that there are a lot of moving pieces, but that won’t stop clients from asking how much they’re worth at any point in time. In turn, the burden rests on you to leverage technology and outside resources to put together a snapshot that accurately portrays your client’s overall financial position – regardless of where those assets reside.

Asset Allocation / Exposure

Based on the 2018 Global Family Office Report prepared by Camden Wealth in partnership with UBS, family offices are continuing to iterate their investment strategies on an annual basis as they seek to balance wealth preservation with growth. As strategies change and allocations to specific asset classes, regions or managers fluctuate, it’s important to be able to track and report on these changing allocations at any point in time.

It goes without saying that you should be able to put together a variety of allocation and exposure reports that give your client a window into how their investments are performing against their investment strategy and its benchmarks. Being able to produce reporting that shows actual allocation against target allocation models, asset allocation history and investment exposure across various legal entities can go a long way in gaining your client’s trust and proving your worth as an advisor.

Activity and Holdings

How many shares of GE do I own across all of my investment accounts? What is the cost basis versus market value of my investments? How much cash flow are my investments expected to generate?

If you’ve ever had to answer questions like these, you already know how important activity and holdings reports are. Consolidating holdings across multiple custodians and managers can be difficult for high net worth investors and their advisors, but with the right reporting tools, you can do just that. Not sure where to start? Consider evaluating a technology solution or outsourced service provider that uses direct data feeds to banks and custodians to help you collect, standardize and manage your client’s financial data.

Performance and Attribution

Performance and attribution are key metrics used by high net worth investors to gauge the success of their individual investments and managers. Research conducted in 2018 shows that family offices prefer to outsource the management of their equity, fixed income and hedge fund investments, while managing their private equity portfolio in-house. This can add up to quite a few external players, which means taking on the arduous process of collecting performance details from several different sources and, in some cases, aggregating the data by hand. But performance is tricky and requires a degree of expertise that can’t necessarily be found in spreadsheets.

Instead, we suggest taking a holistic approach to performance analysis that focuses on consolidating your information across asset classes, managers, custodians and geographies and presenting that information in a single view. By leveraging sophisticated tools like performance reporting software, APIs and automated data feeds, family offices and financial advisors can create reports that represent the broader financial picture – not just the small slice of pie that is managed internally.

Risk Analytics

Gaining position-level transparency can be a difficult problem for family offices and financial advisors to solve, especially when it comes to separately managed accounts or alternative investments. But with more and more family offices seeking greater transparency into the risks associated with their overall investment strategy, it’s important for you to harness the power of consolidation. By establishing a single database of investment information for your high net worth client, you can easily analyze the data across multiple dimensions – like asset class, manager and liquidity – to understand the underlying risks.

Additionally, with more technology firms providing visibility across widely-accepted risk metrics like Standard Deviation, Sharpe Ratio, Drawdown, Beta, Alpha, R-Squared, Correlation and Up/Down Capture, high net worth individuals and families are gaining greater access to institutional-quality reporting metrics.

Alternative Assets

Over the past decade, alternative assets have become a staple within the investment portfolios of wealthy families. Yet many advisors struggle to capture this piece of their client’s overall investment portfolio, and rightly so. With innately unique performance and activity attributes, alternative assets can be challenging to incorporate into traditional financial reporting.

With such unique qualities, many advisors turn to workarounds like spreadsheets and over-simplified single-line valuations on statements. But the truth is that this information doesn’t provide enough detail to really help clients understand their hedge fund and private equity investments. However, with the right tools in place, advisors can comprehensively track cash flow activity, fair market value, basis, performance, investment liquidity and fee structures. The result? A well-rounded assessment of your client’s alternative assets and their role in the overall investment portfolio.

Fixed Income Analytics

Bonds and other debt instruments continue to be a significant player among many family offices’ investment strategies, on average making up nearly 16% of the family office portfolio. This means that the ability to deliver a snapshot of fixed income characteristics, accrued interest, cash projections and credit ratings is crucial to managing this important asset category.

Putting a system in place to capture details like par, market value, yield, duration and convexity – and, better yet, automatically calculate interest and amortization – can be an effective way to deliver clear insights into your client’s fixed income investments.

Budgeting and Forecasting

Wealthy or not, it’s important to know how much money we have – and will have – and how it’s being spent. But those can be difficult questions to answer when you’re working with high net worth individuals and families. From aggregating information across multiple checking and savings accounts to keeping tabs on investment liquidity and impending cash flows, family offices and financial institutions are responsible for meeting their clients’ high – and varying – expectations.

Whether your client needs to pay an unexpected medical bill, purchase a new home or procure cash for a new investment, preparing budget to actual comparisons and cash flow forecasts can help you quickly and accurately assist your clients when planning for small and large expenses alike, while keeping their sights on their long-term financial goals.

Expense Summary

Even for the average individual, it can be easy to lose track of how much cash you’re spending. For the ultra-wealthy, spending activities only increase in complexity from simple utility and credit card bills to household expenses for multiple properties, investment capital calls and even tax payments. Between the lengthy list of vendors and the endless transactions, family offices and financial institutions struggle to track, categorize and manage their clients’ spending behaviors.

Reports that offer insight into how much your clients spend, how those expenses are allocated and who is getting paid are all key to getting your arms around your client’s spending habits. Prudent expense reporting can also help ensure that both you and your client remain compliant with the family’s wealth preservation mission.

If you're interested in learning how to tailor investment reports using each client's unique financial knowledge and investment goals, download our Optimize the Creation of Performance Reporting white paper.

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Steven Edelman


Steven Edelman
Managing Director, Institutional Relationships – SEI Family Office Services

Steven is responsible for the management and growth of new and existing client relationships with private banks and financial institutions. In this role, he ensures client satisfaction as well as develops existing and new business relationships. Steve joined SEI Family Office Services in 2015 from Private Client Resources (PCR) where he held the position of Managing Director, Relationship Services and developed relationships with the firm's Private Bank, Registered Investment Advisor (RIA) and Family Office clients.

Steve holds a Bachelor of Arts from the University of Albany and a Masters in Public Administration from John Jay College. Outside of SEI, he enjoys spending time with his family and watching the Mets.

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Steven Edelman

Steven Edelman

Managing Director, Institutional Relationships
SEI Family Office Services