• Rödl & Partner GbR

Everything in view.

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Digital wealth reporting. Getting an informative, structured overview of your total assets online at any time is the key to successful asset management. Alexander Etterer,  Partner and responsible for the Wealth, Reporting & Controlling division of the auditing firm Rödl & Partner, explains how wealthy families intelligently implement and use this.

The alarm function of the digital asset reporting was triggered at 12.32 hrs. After President Macri im August suffered a severe setback in the in Argentinien primary elections, prices on the stock and currency markets there collapsed. The family's risk budget earmarked for the Latin America region was exhausted. Because all family members were informed immediately, a video conference with the advisors could be set up within 15 minutes. Zehn Minutes later the family had made a decision.

"Today, digital asset reporting must meet the requirements of an efficient and modern risk early warning system to a particularly high degree," explains Alexander Etterer, head of the Wealth, Reporting & Controlling department at Rödl & Partner. "As soon as an 'alarm' is triggered, the intended recipients automatically receive an e-mail message. It can contain information about the violation of investment limits and risk key figures or target/actual variances. This allows the asset holder or his family to act without delay. Because only those who are informed immediately can decide immediately."

In fact, the time is long gone, as the family discusses the development of assets once a quarter at a fixed personal reporting appointment with consultants and administrators in the rearview mirror. "Especially in more volatile market phases on the global financial markets, this is simply not enough to be able to make well-founded decisions."

But this is only one reason why Alexander Etterer has been tirelessly promoting professional wealth reporting to wealthy families and wealthy private individuals for years. "Today, these investors generally mandate three to six banks or asset managers to diversify the management of their liquid assets. There are also a number of illiquid investments - closed-end investments, private equity, art, real estate, special automobiles, wine and whiskey barrels. Different currencies also play a role. Only if it is possible to consolidate all this in real time - around the clock, 24 hours a day, seven days a week, regardless of location - can assets be managed intelligently," the expert makes clear.

When set up correctly, asset reporting becomes the central control unit for the wealthy. In this way they can analyse, monitor, control and orient their overall wealth strategy towards the future. "Nevertheless, I am surprised again and again how many families hardly think about it and ultimately let their assets be managed blindly by asset managers."

Only recently Alexander Etterer was able to successfully convince a very wealthy company salesman. Several years ago, he had already sold his company for more than 200 million euros. Since then, asset managers have been entrusted with several securities portfolios in the USA, Great Britain, Switzerland and Germany. The discussion also included land, real estate and works by an American pop art artist.

"However, the asset holder did not have a consolidated overview of his total assets. Not to speak of a holistic asset valuation at current daily rates. My argument that this was extremely important for successful asset management and protection against asset losses ultimately convinced him," says Alexander Etterer. Today, this asset reporting also provides valuable services with regard to the preparation of the income tax return and the ongoing calculation of the deferred burden with inheritance and gift tax. And is used intensively by various report recipients, such as asset holders, tax advisors, family officers and consultants. "Everyone has the information they need configured individually and always ready to hand. This provides an enormous gain in efficiency."

Especially the transition from the old analogue to the new digital reporting world creates completely new perspectives. Vor everything makes it possible to navigate and inform in real time. "The next generation in particular is pressing for this today," Etterer points out. "A few days ago I had father and daughter in the law firm, the daughter was the driving force - father, let us please now properly record the total assets taking into account the respective shares of the family members. So each of us has the highest transparency via an individual online access.'"

According to Etterer, anyone who wants to implement this must above all ask himself three questions: Do I want to organize the investment accounting and reporting myself or outsource it to a professional service provider? Wer should this service provider be? And what role does the reporting software play in this?

"The first question has to do above all something mit Aufwand and costs. In order to become active, the family would have to release a lot of resources. A trained investment accountant is not enough to ensure reporting operations at all times," Etterer explains. The software providers also frequently measure the costs for efficient investment accounting and reporting software according to the total assets.

"All this is often underestimated. From my experience the minimum expenditure for technical personnel and software is about 200000 Euro per year. A service provider, on the other hand, is far below these costs. Above all, if he charges his fees fairly on the basis of actual expenditure on the basis of a quantity structure and not on the basis of the total assets," clarifies the expert.

The question about geeigneten Dienstleister was also answered quickly. Asset managers often choose between classic family offices and independent reporting service providers. "I would always entrust this task to an independent third party. Specialised international auditing companies with their strict professional principles, such as independence, discretion, conscientiousness, professionalism, objectivity and integrity as well as the prohibition of commission, are particularly suitable for this."

In addition, these providers incorporate interdisciplinarity and expertise in international capital gains tax, inheritance tax and gift tax into their reporting quality.

When it comes to concrete implementation, the choice of investment accounting and reporting software plays a key role. "It must be in a position to react extremely flexibly and individually to the requirements of the asset holders. Anything that doesn't fit yet will be made to fit promptly," Etterer makes clear.

According to the professional, reliable data security at the highest level is just as self-evident today in this context as mobile retrieval options via a smartphone app. "And I would also ask the supplier how he ensures continuous development. Das System must always be state of the art if it is to be used for the grandchildren's generation".

In addition, the daily work - the concrete recording of figures, data and documents - had to be carried out by a very experienced, stable and service-oriented reporting team.

In order to meet these requirements for his very heterogeneous and demanding clientele, Etterer changed provider himself in 2015. His reporting team has since been working with QPLIX software, a solution originally developed for the VC investor's own Family Office Extorel, Falk Strascheg

"The move to QPLIX was a challenge - but in retrospect it was the best decision we could make. With QPLIX we can meet the most complex requirements of our clients and constantly expand our range of services". For example, the software is also the basis for the in-house VV card for asset management strategies of banks and asset management companies. In this way, Etterer supports asset managers in presenting their management performance in an objective, comprehensible, transparent and investor-friendly manner. "With the digital possibilities of online reporting, they can use specially developed smart charts to make their management know-how comprehensible and convincingly present it to new customers. This, in turn, helps investors make better informed decisions when looking for suitable asset managers - a clear win-win situation."

The next logical step would then be the implementation of intelligent asset controlling. "Digital reporting is, so to speak, the basis of controlling. While the preparation of pure data and figures is the starting point for further considerations, ongoing controlling focuses on the asset owners with all their needs and individual risk-bearing capacity".

With the help of the controlling activities, all investments of liquid assets can be examined with regard to their return, risk and cost structure and optimization potentials can be identified. In addition, the selected investment strategy is continuously reviewed by the commissioned asset managers with regard to its actual implementation. The periodic reports of the respective asset managers are also subject to a plausibility check.

"The knowledge gained from asset controlling thus serves to plan and manage total assets and ensures that possible risks of individual investments are identified at an early stage and that family assets do not suffer sustained damage", verdeutlicht Alexander Etterer concludes: "Digital reporting and controlling are therefore closely interlinked. Together they ensure that risks are prevented and that rational, goal-oriented asset management is possible. "Wealthy families cannot do more to secure and increase their wealth in the long run."


Features of powerful digital reporting.

What does digital wealth reporting have to achieve? Und how much can it cost? Alexander Etterer enlightens.

The most important features of digital reporting:

// 01. holistic depiction of liquid investments and illiquid assets (investments, art, real estate, infrastructure, collectibles)

// 02. access via smartphone application

// 03. representation of different charts of accounts (for example SKR03, SKR04, SKR49)

// 04. presentation of individual asset and ownership structures. Dies enables the management of sub-funds

// 05. Individual report contents for very demanding asset holders

// 06. connection of liquid securities accounts to current stock exchange prices

// 07. booking interfaces to custodians, data interfaces, import and export possibilities (DATEV, Excel, Bloomberg)

// 08. possibility of data sharing (this is the only way for co-working and data processing to work in real time)

// 09. slice-and-dice: assets must be grouped, filtered and evaluated according to individual criteria (currencies, ratings, residual maturity, regions, subcategories)

// 10th Digital Archiving and Document Management System

// 11. capital gains, inheritance and gift tax reports

Transparent cost information:

"In order to provide our clients with a cost indication relatively quickly, we have developed a small calculation tool that can be used to estimate the time required," explains Etterer.

Based on the quantity structure, a certain amount of time is required, which is displayed in man days. Multiplied by the agreed daily rate, the total fee is calculated. The following information is essentially required for the quantity structure required:

- Number of securities accounts

- Number of securities portfolios

- turnover rate

- Number of income payments from dividends and interest income

- Number of illiquid assets (real estate, investments, etc.)

- Number and type of report recipients

- reporting cycle

- Capital gains tax reporting

- Reporting on the deferred burden of inheritance and gift tax

- Entry of a securities history

This information can then be used to calculate the one-off costs of implementing the mandate structure and the ongoing accounting, reconciliation and reporting costs. Irrespective of this, many reporting service providers still charge a fee for the provision of the reporting software.


What your asset controller needs to be able to do.

// 01. immediate clarification in the event of anomalies with regard to the transactions carried out and booked (plausibility checks)

// 02. regular check-ups of all investments with regard to investment structure (strategic asset allocation), return/risk/cost structure, product selection/quality, investment strategy/management concept and risk management system

// 03. review of yield and risk management quality/reliability

// 04. target/actual comparisons, deviation analyses, structural analyses

// 05 General early warning function for risks

// 06. support in discussions with other asset managers or financial service providers

// 07. compliance with investment guidelines or personal targets

// 08. regular communication with the asset managers

// 09. ongoing contact person for concrete questions on the further development of the plant structure and optimisation measures

// 10. independent and objective discussions on the appropriateness of the products and investment concepts used as well as on market, interest rate and yield developments with regard to the financial and real economic situation

// 11. holding quarterly status talks and unscheduled rounds of talks as well as participating in investment discussions with asset managers


The "R&P VV badge" - quality label for administrators.

// 01 Investors demand independent proof of performance and quality.

Investors and asset managers want to talk to each other on the basis of audited results from an independent third party. However, there is often a lack of objective and neutral proof of performance and quality with regard to the returns achieved and the associated risks.

Especially new clients want to understand the investment concept, the concrete implementation and the working methods of the asset manager. The information must be understandable, credible and comparable.

// The R&P VV pass provides this proof.

The daily business transactions are recorded independently of banks by selected model asset management strategies. This documentation provides ein Höchstmaß with information and transparency. Interactive "smart charts" illustrate the working methods and specific strengths of each asset manager.

Digital online reporting and uniform investment guidelines enable an objective comparison. Anyone who faces up to this will be awarded the transparent bull.



Special publication:

Rödl & Partner GbR; www.roedl.de

In the customs port 18; 50678 Cologne

Alexander Etterer, Partner, Manager

Wealth, Reporting & Controlling

T.: 49 221 949909 600

This email address is being protected from spambots. You need JavaScript enabled to view it.

Photo: alamy RF/Quality Stock

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