Investment reporting solutions for private groups
Waterfall charts are a great way to visualise movements in net wealth between periods, capturing both realised and unrealised movements which can be compared against cash distributed or withdrawn.
It can be challenging for wealthy family groups to get a simple consolidated reporting view of their various investment portfolios in a timely manner and with a decent user experience.
Investments portfolios will often comprise listed equities, ETF’s and managed funds together with property and other custom investments such as private funds. There will often be several different asset managers or brokers involved each with different data feeds and/or reporting outputs. The investments will often be held across more than one entity (companies / trusts) with different tax profiles and funding sources.
While the investment reports provided by the different asset managers (or third-party tools) are comprehensive for assessing portfolio returns, they can’t provide a consolidated view across all group investments. In addition, without the interaction with the Xero accounting files for each entity, the owners are not getting the full picture of their net wealth. This is particularity the case when it comes to including custom investments, taxes paid and other costs to manage their various group entities and structure. Because of these limitations, the owners (or their accountants) are left to the power of excel spreadsheets to consolidate the data for reporting purposes.
While the size and volume of transactions will naturally differ depending on the capital base of the family group, the challenge remains the same…how best to aggregate financial data for consolidated reporting that is both useful and provides a practical user experience?
Turning source data into useful numbers with context
The below interactive report provides an example of a solution to this problem. In this (sanitised) example, the investment portfolio comprises Australian and overseas listed equities held across several different entities. The core accounting is managed through Xero for each entity with traditional bank feeds, together with integrations with third-party tools for data collation from the investments.
The flexibility within the dashboard reporting tool provides the following benefits:
Consolidation of multiple entities: Each entity’s separate Xero files can be consolidated (with the relevant eliminations). These investment entities will typically have multiple intra-group loans, shareholder loans and other transactions that need to be dealt this within the reporting framework. Being able to reconcile back to the Xero files is important so all the net cashflows are captured correctly across the relevant entities within the group. Without this, there is likely a mess brewing in the background with the underlying accounting and the integrity of the data becomes questionable.
Income taxes: Including the amount and timing of actual taxes paid across multiple entities (including taxes paid at the personal level in relation to the investment returns - such as through trust distributions).
Cash distributions: Cash is withdrawn from the investment entities in different ways and in different legal forms (dividends, trust distributions etc). Shareholder loans typically have a role to play here (see our recent article on shareholder loans). This level of detail is not important for these reporting outputs, so the ability to consolidate the various cash distributions regardless of the legal form simplifies the outputs for the users.
Customised data points: In this simplified example, the ASX200 index is included as a reference point for greater context against the annual investment returns actually achieved. Other benchmark’s and KPI’s for measuring performance could also be included and customised.
User experience and sharing capabilities: Investment reporting and dashboards need to be useful. As an interactive tool, we can engage the users in a secure sharing environment without the need to provide excel spreadsheets or pdf reporting.
Useful insights that the user can interact with in their own time
Deployment of interactive reporting tools like this can provide customisable insights to suit the objective of the owners with a better user experience.
Click on the full screen mode (in desktop) for the best experience…
More information
Thank you for taking the time to view our reports. Please reach out to us if you would like to discuss these in more detail.