What Reporting Should a Family Office Produce?

A family office should produce reports that give the family a clear view of its assets and obligations, with activity shown across accounts. The report set should reflect the decisions the family needs to make and the data available from each platform. First agree who receives reports, what questions they need answered and how often they review them.

Cover Holdings and Activity

At a minimum, reports commonly bring together account information, asset values and investment results. They can also show cash flows, commitments and distributions. Where the family owns operating businesses, real estate or private funds, distinguish those holdings from assets with frequent market prices. Show the source and date of important values so readers can judge their age and comparability.

Family office administration can include formal reporting and value calculations, as well as distribution calculations for family members. These tasks become harder when the portfolio contains illiquid assets, such as real estate, businesses or private investment commitments. Document the valuation approach and flag estimates based on periodic information or outside inputs. For legal or tax treatment of a holding, talk with your attorney or CPA.

Make Reports Useful for Decisions

A good report is organized around the family's needs. One section may show the consolidated position across accounts and entities. Another may track portfolio activity, investment performance and liquidity. If the family has several members receiving distributions, show the calculations in a format they can understand. Keep detailed supporting schedules available so the main report remains readable.

Consistency matters. Use the same definitions and presentation from period to period, and explain changes in method. A family should be able to see whether a change reflects new activity, a revised valuation or a different reporting treatment. When records come from multiple custodians, administrators and managers, assign an owner to reconcile discrepancies before circulating the report.

Match the System to the Complexity

Many smaller and mid-sized offices outsource accounting and reporting when the core team cannot cover the work. A CFO, CEO or analyst may already have the skills to complete basic reporting. If not, an outside provider can suit the office better than hiring someone full-time for the task. Complex trust or fund structures may call for third-party administration to support valuation and reporting.

Technology can help gather accounts and produce reports, though custom systems can become costly. Define reporting requirements first, then choose tools that support them. Check whether the family can trace figures to underlying records and repeat the process reliably. If reports take excessive manual work, address the specific data or system bottleneck.

Set a Clear Review Rhythm

Set out who prepares each report and who checks it. Specify who receives it and when, based on the family's decisions. Build in review of unusual transactions, valuation changes and distribution calculations. A report should make open questions visible so the family can assign follow-up work.

To build this process, consider the technology that supports reporting, define the office's operational processes, and clarify internal controls for approvals and reconciliations. Families assessing whether to outsource the work can also review how service providers fit into an office.

The administration in a family office involves formal reporting, value calculations, and distribution calculations for various members of the family.

Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.