The power of analytics in a family office

Tony Solomou - January 11, 2022

Does your family office get all the benefits it can from analytics?

It's worth spending a few minutes to understand what data analytics is, even if the term is so widely used in business that it may sound as if I am stating the obvious. I like the following definition from a search on the internet. The article expands on the details of the subject and for those who are interested, feel free to read it. 

"Data analytics (DA) is the process of examining data sets in order to draw conclusions about the information they contain, increasingly with the aid of specialized systems and software. Data analytics technologies and techniques are widely used in commercial industries to enable organizations to make more-informed business decisions and by scientists and researchers to verify or disprove scientific models, theories and hypotheses." UTechTarget from ""

The concept of analysing data is not, of course, new to Family Offices, who have been historically involved in Portfolio and Investment Management. I believe that this was the first industry to ever use statistical tools to analyse trends in assets values and to try and extrapolate and predict the future (mostly with very little success, with the exception of some quant funds like Renaissance Technologies). Predictive analytics is now popping up in just about every industrial and commercial sector and is a standard feature of any Business Intelligence (BI) tool worth its money.


What are the data analytics needs of a Family Office?

"Business analytics is a methodology or tool to make a sound commercial decision. "

Management Study Guide

If you are an investment professional or involved in a Family Office that employs or uses external advisors, you certainly have no need for me to tell you of the use of statistical and quantitative analysis in your business. You may still find some of the tools that are available in today's generic software, powerful enough to carry out a lot of the number-crunching that you used to get from proprietary, legacy applications and even be creative in creating your analysis tools.

But let's talk more about the other areas that Family Offices can find useful in applying Data Analytics:

  • Family Offices are increasingly diverging into non-traditional activities, such as direct investment in private companies, real estate, leasing and rental, secondary lending, etc.  
  • Within each activity, the use of analytics will facilitate performance evaluation. The abundance of availability of data - even if not internal - enables the investor to use such tools to understand how efficiently the activity is undertaken in comparison to industry indexes, etc.
  • ROI and other relevant measures will need to be assessed across all activities, so that strategic decisions can be made on how available funds are best diverted towards maximising profits or any other targets set. (Read our popular blog on performance management to learn more)
  • Managers and family members can be made aware of adherence to mandates and budgets in a timely fashion.
  • Internal analysis and reporting on areas such as cash flow - past and predicted - are as critical for a Family Office as any other business.

To sum up, the use of Analytics can prove to be a very powerful tool in the management and control of the diverse activities of a family office. And to return for a minute to the use of software in classic asset management analysis, users should not discount these generic tools for their needs. As you read further here about choosing the right application, in the right hands, these tools can prove to be extremely useful, providing a wide range of capabilities. 

Challenges of using data analytics in a family office


Essential elements that your data analytics tool should contain


Ease of access of your underlying data

Before you start looking at choosing a specific wealth management software for your organisation, you must first look at the data sources and containers involved in your system. You can, of course, access any data within an organisation in one way or another, but ultimately it will be the ease of access and the understanding of what the data means, that will decide how efficiently you can carry out Business Intelligence and analysis. There are two broad requirements here:

  1. Your underlying database needs to have a uniform structure throughout. The best way to achieve this is to have one single application managing all activities, this ensures the design rules remove the possibility of duplication.
  2. The data must be labelled and identifiable as clearly as possible, avoiding cryptic coded tables and column names. You should not need a developer to select the data you want to analyse.

Choosing your data analytics family office software

Choosing which Data Analytics software to buy.

So, you have evaluated the quality of your data and if you were in the process of selecting an Investments accounting software solution, you ensured that your choice meets the standards. You now need to make a choice out of an abundance of family office software products available in the market.

What are the essential points that you need to bear in mind before you get immersed in the details?

  • Your Family Office employs a number of professionals in different areas, but you will probably want to stay away from creating a new department with statisticians or data scientists. 
  • You do not want to add resources to your IT department or make more investment in computer hardware to carry out number crunching / data warehouse.
  • You want to avoid a steep learning curve for your staff during the adoption process.

 A good BI system should not need special skills such as programming etc. It may sound surprising to hear this, but Excel's Pivot Table functionality provides a very powerful analytical tool. But if you really want to do in-depth analysis you may have to delve into more esoteric subjects, e.g. DAX for Power BI, R or Python, or use subcontracted consultant resources to build your analytics templates.

To resolve the rest of the requirements above, there is a very simple answer. Just make sure your solution is Cloud BasedYou will get all the power, flexibility and ease of use that this environment provides.

Finally, it's worth noting that the technology of Business Analytics software is advancing very quickly. The introduction of Artificial Intelligence and Robotics is making analytics solutions more powerful and intuitive to the users. 

Making the right choice in Family Office software


If you haven't done so yet, consider introducing an analytics solution for your family office

Decision making is becoming increasingly complex, as the activities of a family office diversify. Within the context of your fund accounting software and family office software, you need to consider the advantages of data analytics and the positive impact on the performance of your staff and of senior management to steer the family members in the right direction.

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