The author of this article explores the challenge of how investors can keep a close grip on highly diverse portfolios, and the role technology plays in pulling off this feat.

Investors are urged to spread risks around in their portfolios and consider new ideas and areas of investment but keeping tight control is a challenge, particularly if one is trying to do this relatively cheaply. Pulling off the balancing act is difficult. In this article, Tom Amy, managing director at Elian, an international provider of corporate, fund and private wealth services, gives his views. Amy is based in Guernsey but his views are applicable worldwide, so we hope readers from all regions find this item useful. As ever, the editors of this publication, while grateful for the chance to share these insights, do not necessarily endorse all the views expressed.

Investors are looking for diversity in their portfolio, with an increased appetite to consider new alternative investments and new markets. This presents challenges in maintaining a cost effective oversight and control process. Through careful partner selection, recognising the material value which technology can offer, keeping control of complex investment structures need not be the time-consuming headache that one might expect.

Trends - governance, globalisation and alternatives
The Global Family Office Report 2015 highlighted multiple jurisdictions, private equity, generational mathematics, soft services (including governance and educating the next generation) and professionalism as some of the key emerging trends. These mirror our observations, where clients are frequently expanding their reach into new sectors, markets and investment relationships. In addition, a lack of familiarity has prompted clients to seek support and resources to ensure opportunities are executed and managed with appropriate rigour and expertise. 

A frequent pitfall is that, over a period of time, clients undertake deal-by-deal decisions and establish corresponding isolated relationships. The inevitable outcome is that clients do not benefit from economies of scale. They also maintain an immensely complicated network of third party relationships, each with differing service standards and processes, and they struggle to access the information they need from third party service providers. Whilst each relationship may access an isolated expert in a respective asset class or market, this comes with premium charges, and they will not receive the "key client" service they expect.

Further, as average investment returns are squeezed, private investors and family offices will scrutinise all operating costs; through their accountability to their respective stakeholders, they will often need to justify the fees and services from third party firms. If a client representative was to step back and assess the totality of relationships, services and charges, the resulting approach could be quite transformational. 

Jerry Maguire's epiphany
The 1996 story of Jerry Maguire, a sports agent who had a moral epiphany when reflecting on the lack of true customer service displayed in his industry, carries many similarities with relationships in finance.
In selecting a corporate service provider, perhaps for secretarial, administration and accounting services to one or more investment holding structures (perhaps in connection with direct real estate investment, private equity interests and/or a share portfolio), clients will often be promised the earth. These assurances typically relate to the highest standards of customer service, an expert relationship team and an assured "fixed" annual fee.  

The reality is that private wealth and family office clients have little or no insight into the credentials of a service provider, and alarm bells may quickly sound as telephone calls and emails are unanswered (perhaps due to a time zone difference between client and service provider), relationship contacts demonstrate insufficient knowledge of the investment activity and additional billings are issued at every opportunity. These frustrations not only result in a negative, time consuming relationship, but most importantly, that time would have been better committed to value creating, wealth management activities.

So, why can't a client have the best of both worlds? A trusted administrator which is able to provide a bespoke universe of data on the investment holding structure and underlying investments, in a timely, accurate and cost effective manner?

The power of the portal
Document portals (or data rooms) have typically been associated with M&A transactions, as vendor and buy-side deal teams, often encompassing a network of advisors, access information and track questions across a vast universe of data.  By using a bespoke portal, private investors or family offices can demonstrate effective governance, make decisions swiftly and share information whilst keeping a careful control of costs. Many administrators use such portals, not only for private wealth relationships, but across wider corporate services and investment fund administration relationships.

An effective portal application provides a secure online library and a mechanism for tasks, events and questions to be raised, allocated and monitored in a centralised manner. It can also track user activity and generally share and edit documents from a single source. It reduces email traffic, typically because a client no longer needs to chase the relationship team for the information required. 

As with many IT driven solutions, the benefits of using a portal are dictated by the time and effort in setting up the site and in understanding each client's individual needs. We have implemented portal folder/reporting structures spanning company secretarial, financial, tax, investment reporting, and regulatory responsibilities. We will agree what a client wishes to access, how that information will be received, scrutinised and uploaded and within what timeframe.

Recently established portal sites have been tailored not only to a client's own team, (typically around six individuals), but also have specific access rights for third party advisors. Auditors will regularly be given access to relevant folders for a specific period. However, the resulting benefits may include reduced audit fees and the ability to monitor what each audit team member is accessing on the portal.

A single trusted partner
In today's competitive, sometimes volatile climate, the ability to make informed decisions and act with a decisive purpose is paramount. From our experience, clients will not achieve this in a consistent manner from a multitude of relationships and without real-time access to meaningful data.  

Unlike in Jerry Maguire, clients will not be won at the point of "hello". Instead, they expect consistently great service. Good portal functionality can relieve many of the pressures clients face when running their investment structures, and our ability to work internationally in a seamless, cohesive manner, provides service continuity. Working this way provides an effective operating cost framework and decision-making freedom, which every client deserves.