Providing clients with quarterly financial reports consumes almost a third of the average family office's time, a new report shows.

While most family offices (80 per cent) provide clients with quarterly financial reports, this procedure consumes almost a third (32 per cent) of the average family office's time, new research shows.

The report by Family Office Exchange, Financial Reporting in the Family Office: Elevating the Conversation, also revealed that although offices are increasingly exploring secure online solutions for the distribution of financial information, the majority (67 per cent) still provide clients with hard-copy reports. Meanwhile, a little over half (51 per cent) provide a consolidated annual report.

Such findings come at a time when the wealth management industry as a whole has faced an increase in compliance and related costs which also take up organization's time. 

When asked what percentage of staff time is devoted to accounting and reporting functions every year, responses ranged from 10 to 75 per cent. "This variation stems from differences in the number and nature of the entities owned by family members, the structure of the office staff, and the office’s investment in technology, among other factors," the Chicago-based membership network for wealthy families explained.

Meanwhile, the findings also demonstrated that offering "truly customized" reporting for each client remains a challenge. For example, just 34 per cent of offices provide each client with a custom report, with the remainder providing the same, standard quarterly report.

In terms of how often office staff meet with each client to review financial reports, 42 per cent said "on demand," while 26 per cent said quarterly, 19 per cent annually, 7 per cent monthly, and 6 per cent cited "other."  

Changes within family office financial reporting

"While the challenge 15 years ago was consolidation and integration, today’s challenge is customization," FOX noted. "Clients increasingly want access to information online and in formats that illustrate their financial picture on a pageor two."

Accordingly, the research showed that reports which participants said they wish they could provide - but do not currently - include:

• Annual report card of financial health;

• Better, more meaningful graphs for investment performance;

• Look-through asset allocation reports;

• More detailed cash flow analysis and projections, and;

• Online dashboard with total net worth for individual family members.

“Effective financial reporting is a matter of communication,” said FOX founder and chief exective, Sara Hamilton. “The challenge is to show how the numbers are relevant to the client’s goals in a manner that accounts for their learning style, preference for information and financial literacy.”

With regards to accessing financial reports, paper remains as the preferred medium, as stated by 67 per cent of the respondents. Nevertheless, a "growing number" (21 per cent) are sharing information electronically.

In May and June FOX invited all of its family office members to participate in an online survey; The report was developed by FOX in conjunction with Advent Software.