Wednesday 28th April 2010
Peter Jan Kroon, one of the co-founders of Swiss multi-family office GlobalView Investments, which was founded in 2006, was acutely aware that he needed to provide his family clients with flexible, robust reports tailored to their individual needs. The consequent financial crisis has only served to strengthen this belief.
"The families whose investments we look after don't believe in having a single custodian – they have multiple banks." Kroon exclusively told www.campdenFO.com. "We therefore needed a system that managed portfolios spread across different banks in a coherent and comprehensive manner."
GlobalView is a small family office with five employees and approximately $500 million AUM. It provides global asset allocation and manager selection on a discretionary basis, determines what percentage of the client's assets should be in cash, bonds, equities, hedge funds, private equity or real estate, and typically farms out each of those asset classes to managers who specialise in them.
Kroon and his team discovered they had three options open to them: outsourcing, developing their own portfolio management system and buying in a ready-made system. Discussions about developing something in-house were discarded pretty quickly, so the choice came down to two.
According to Kroon, outsourcing proved to be very expensive (particularly as firms base their prices on basis points of assets), inflexible and did not meet their confidentiality requirements. The decision had ultimately been made.
When it came to choosing a service provider, Kroon says Advent came out on top for a variety of reasons. First, Advent is an established operator that has been servicing financial professionals since 1983. It has a roster of 250 family office clients around the world, the majority of which have been with Advent for over 10 years.
Innovation is a key performance indicator and Advent consistently reinvests 18-20% of its revenue into R&D to deliver cutting-edge products. Compared to other, smaller competitors that did not do a good job of convincing GlobalView that they would be around in three to four years time, Advent was a clear winner.
"Advent seemed to provide for most of the needs we had, their products were sensibly priced and very flexible," said Kroon, who purchased and installed Advent Portfolio Exchange (APX) in 2007.
What's more, as a family office with no legacy system and comparatively few accounts, Kroon says it took just four to six weeks to get up and running on APX.
Second, GlobalView can now offer a high touch, bespoke service that is particularly important when markets are volatile and clients require more assurance. Specifically, Kroon and his team can now generate reports that can be tailored to the individual needs of the family or family member.
For example, one of the reports GlobalView has developed enables them to assign multiple currency tags to a single security or holding to show the aggregate currency exposure taking into account the different currency weightings. "This allows us to have a much better handle on how we should approach our currency hedging strategy," explained Kroon.
Kroon and his team can therefore show their clients what they want to see, how they want to see and when they want to see it.
This leads to the third, crucial advantage that Advent systems can offer – a significant reduction in risk. They do this by reducing manual processes and human error, and by giving professionals such as GlobalView the tools to spot inconsistencies quickly and easily.
"At a macro level, risk has been certainly been reduced. It is particularly useful if, for example, you need to see immediately how an asset class is performing," said Kroon. "At the micro level, human errors will definitely reduce because we will rely less on inputting data manually."
Kroon says the firm is also using APX for CRM purposes – for example, there is an audit trail of significant client developments and that is helpful from a regulatory point of view.
A fourth reason why Advent offers a superior choice is the ability of its systems to be personalised to include special events, ad hoc demands and proactive investment opportunity suggestions, which is useful if you have an advisory mandate.
Furthermore, the latest release of APX will allow them to further automate their reports and improve their visual presentation – a challenge they have faced up till now. However, this also highlights another of Advent's advantages - the after sales support, which Kroon claims is excellent and gives Advent a further edge over its competitors. In conclusion, Kroon says APX is very good value for money and he would recommend it to other family offices who have yet to make the jump to the next level of reporting.
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