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A Universal Family Office Platform: Is It Possible?

Published

February 17, 2022

"Tailor-made" is a popular expression that suggests a great fit for a given need or situation. A great fit can be fantastic if achieving that right fit doesn't require exorbitant amounts of time, inefficient manual processes, costly custom software development, and too many resources.

For the family office of the future, Eton Solutions® believes achieving the right fit should begin with a standard, best practice business structure that can be optimized depending upon a wide range of factors, such as assets under management, investment focus, family needs, operating jurisdiction, and so on. Other critical challenges, like staffing, can be addressed with the appropriate application of technology and a refined business model. The test for technology is its flexibility in addressing the specific needs of any office.

Such a universal technology platform heralds a new era of a family office. The family office of the future exists on a universal family office platform with a best practice business structure that can be optimized in alignment with the specific needs and factors of the office.

A Custom Solution Using a Common Platform

There's an adage in the family office world: "When you have seen one family office, you have seen one family office." In other words, every family office is unique with a singular operations model. This bespoke operating model addresses only the needs of the specific clients it serves, frequently using custom-made software developed only for that organization and supported by various manual processes. This custom-built approach is inefficient and out of date in today's world. The bespoke analogy brings to mind men's tailor-made suits, but such suits are based upon common elements and a common approach.

In this day and age, a family office should not rely on significant manual processes or a fragmented set of crudely built point solutions to partially address an office's needs. The rapid growth in the number of family offices worldwide has facilitated formal and informal networks where offices talk and exchange information. But the key is the actual commonality of the tasks a family office performs. Eton Solutions has mapped and deconstructed these tasks, as the image below shows. The result is a universal operating model supported by a common flexible platform, AtlasFive®, that can adapt to the many factors each office must address.

The mapping and deconstruction of family office tasks.

Let's take the bespoke men's suit analogy further. To offer a bespoke suit, a tailor must be very skilled and knowledgeable about what works and what does not when using certain materials to create the best suit possible for a person's unique body. The map above and the business processes and workflows it incorporates, demonstrate the degree of knowledge needed for a bespoke family office platform—making Eton Solutions an exceptional tailor.

Mastering these processes allows the family office operating model to be adapted for the broadest possible range of requirements, such as the size of the office, the specific focus areas for the family or families it serves, or the regulatory and reporting requirements of the country where it is based.

Bespoke Service for Any Business Model, Anywhere.

For example, Eton Solutions has several family office clients in Canada where regulatory and reporting requirements are different from that of the United States. Many Canadian family offices deal with at least CAD, USD, and EU investments. The base currency for reporting to the family is typically in CAD, but reports are also needed in the investment currency. All this currency conversion is seamless in AtlasFive because it is a universal family office technology platform featuring multi-currency functionality at its core.

In addition, Canada operates on an adjusted cost basis (ACB) for investment in securities. The calculation includes the original purchase price and all costs related to purchasing an item, i.e., those costs incurred before the item/asset is available for use. It is imperative to track and report on the ACB of any investments or property that could result in a capital gain or loss on disposition or deemed disposition.

The ACB of an investment in securities includes the purchase price and any commission paid. It is calculated separately for each security owned. The total cost of all shares of that security owned in all non-registered investment accounts must be calculated and divided by the total number of shares owned in all non-registered investment accounts to get the cost basis per share or weighted average cost per share. This cost per share is then used to calculate capital gains or losses when some or all the investment is sold. There can be adjustments to the ACB when the shares are owned, such as the return of capital (ROC) on mutual funds, exchange-traded funds, or income trusts. ROC reduces the ACB of your shares.

The ability to do this calculation and report on it is a core requirement for a Canadian family office. It is an excellent example of how the AtlasFive best practice business model can be configured to meet a specific use case related to regulations and geography.

A new client in Australia, which will go live in 2022, is another example of the universal validity of the AtlasFive family office business model and its dynamic ability to service any bespoke office. Like our Canadian clients, this office has its own set of regulatory and reporting requirements, all of which are seamlessly supported by AtlasFive.

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