Family office software: platform or single installation?

When Family Offices are looking to implement a software it is crucial to understand their business model and needs. The most required features are consolidated reporting, performance measurement, strategy monitoring and violation controls and non-bankable asset management including document management. In addition some Family Offices are also interested in features such as order routing, fee calculation, risk management and stress testing.


One of the most strategic ques-tion is where to host the data: on-premise (in-house) or cloud based (hosted solution). While in the past on-premise installations where standard practice, the fu-ture lies with private cloud hosting solutions, with the aim to reduce cost and increase cyber security. A private survey amongst UK based Single and Multi Family Offices showed that 75% of the participating Family Offices are considering a hosted platform solution because of bad experience with in-house servers where data burned (fire), were flooded (pipe burst) or in one case a person stole the server (fraud case); in another case the server and firewall with client data were hacked and the data owner was blackmailed. Comparing these issues with a FINMA compliant datacentre (private cloud hosting) with full data encryption plus local CRM data encryption in the Family Office premises, a private cloud setup comes strongly recommend.


In house or outsourcing ?

We now explore the “make or buy” question, where a Family Office needs to decide (based on the AuM and annual budget) if they want to outsource all services to external providers, run a mixed setup or do everything on their own.


Outsourcing solution 1: Trust company

From our observations clients like to use Trust companies when they have assets between USD 20 and 100 million, and in rare cases when they have assets above USD 100 million. They benefit from economies of scale with a combination of accounting and tax services. The cost of such services is very often priced by asset under administration and the typical range is 2 to 10 base points per annum. In a lot of cases there are limits in how much tailoring of the reporting can be done as, to ensure scale, most companies will prefer to offer a standard solution for all clients.


Outsourcing solution 2: Multi Family Office

Most families who use MFOs have a net worth comprised between USD 30 MUSD and 300 MUSD. MFOs do not limit the type of asset classes and the number of custodians. The cost ranges from 5-15 base points for consolidation, but can go up to 25-30 bps when including advisory services. Similarly to Trust companies, clients profit from the scaling of cost but can be limited in the level of tailoring to specific needs, as they often offer a standard solution for all clients.


Keeping it in house solution 1: Excel

In most cases people are using Excel Spreadsheets because it is the cheapest solution. Typically they have a smaller asset base that rarely exceeds 75 MUSD and a maximum of 3 custodians. The problems that they often face are linked to the static nature of the data, a high failure rate if the data is entered manually, very limited capabilities in terms of performance measurement (benchmark comparison, manager selection evaluation), complex formulas and macros, a slow system performance and local storage.


Keeping it in house solution 2: Implementing a software

More sophisticated families will prefer to use a software. In that regard Expersoft Systems has developed PM1 which allows a Family Office to perform multi-dimensional consolidation across unlimited levels. It fea-tures ad-hoc consolidation e.g. by family member, across multiple custodians or a valuation of the total wealth com-bining bankable and non-bankable assets (collections, private equity, real estate).

Some Family Offices switched from an Excel sheet ap-proach to PM1 when they had the need to track their se-lected managers by comparing their mandate performance against predefined benchmarks. Through batched controlling jobs, PM1 also supports Family Offices to avoid viola-tions of implemented investment strategies.

Beside their financial assets many beneficial owners are looking for the ability to digitize their collections. They have a need to create an electronic inventory of their collectibles and add the related documents such as pictures, contracts, insurance policies and expertise.


The cost of implementing a software

Expersoft offers several options to family offices:

AM-One SAAS (Software as a Service) – AM-One is a standardized out of the box platform for families with assets between 30M EUR and 300M EUR. The cost would typically start from 25.000 EUR p.a. depending on the number of user licenses and custodian interfaces for data feed. The advantages of this solution are a fast implementation (typically between 2 and 4 weeks), no IT infrastructure needed (hosted at Expersoft Systems data center in Switzerland), the possibility to access our back office services for data management, and the coverage of all asset classes. The main limit is linked to a standardized platform that only allows for limited customization.

Bespoke Environment hosted with Expersoft Systems – This solution is best suited for family offices with AuA/AuM of 300M EUR or higher. The environment is tailored to the individual client needs and the cost would start from 100.000 EUR p.a.. The obvious advantage is the degree of customization that is possible and the hosting of the data with a FINMA compliant data center (Swiss Regulatory Authority). A client willing to take this route has to be aware of a higher implementation cost as this will involve a comprehensive ramp up project.

Bespoke Environment with in-house hosting at the client’s premises – Some clients will prefer to host their data at their premises. The cost will be nearly the same as the hosted solution and the client will need to add the cost for his own IT infrastructure on top, which generally represents an additional cost of at least 250.000 EUR p.a. as they will need to buy their own server infrastructure and hire IT staff.

About the author:


René Raabe is a director at Expersoft. He can be contacted at

Expersoft profile:


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