Sue Devlin, director of IT at Pitcairn, talks to this publication about the firm's journey building its very own data warehouse.

In 2001 the multi-family office Pitcairn embarked on what it describes as having been a “data architecture journey,” catalyzed by intensifying - and conflicting - industry challenges related to customization and scale.

“Families of wealth have complex financial concerns including multiple investment vehicles – securities, partnerships, trust and real estate assets, etc. They also have multiple advisors – from tax consultants to trustees – who need full access to their financial information,” Pitcairn, which works with families and single family offices, said in a case study co-published with Oakbrook Solutions.

Oakbrook provides wealth management consulting services and software solutions globally.

“One of today’s technology buzz words, ‘big data,’ might be used to describe this complicated set of information. But really, the data in family offices goes even beyond ‘big data.’ This data is relevant, varied, complex in nature, and must be delivered quickly and accurately. A better label for this data is ‘compound data,’” the firms explained in Data Architecture: A Tool Well Worth The Investment.

The journey

Sue Devlin, director of IT at Pitcairn, told Family Wealth Report that the firm was seeing heightened demand for customization as far back as in 2001 when it began implementing its data architecture strategy.

But in order to really drill down and customize, the Philadelphia-headquartered firm realized that it had to maintain and control its own client information, prompting it to build its own “data warehouse” named PRISM. The data warehouse was designed to serve as a central repository, feeding information to and from Pitcairn's various systems.

“We set out to control our own data because the tools were not available for family offices back then,” Devlin said.

To give an idea of the implementation process and timeframe, PRISM was built between 2001 and 2003 whilst Pitcairn simultaneously implemented its CRM system – a move that gave clients “static” monthly statements through the firm’s client website.

Then from 2003 to 2007 PRISM was integrated with Pitcairn’s CRM system, internal accounting and other internal systems, enabling it to send content to clients regularly and create customized statements without needing to rely on an external vendor.

During the next phase dating 2007-2011 the firm reviewed its choice of third-party vendors, changing them as necessary to accommodate evolving client demands. Having the data warehouse in place at this stage eliminated many of the issues associated with switching operational vendors, it said.

More recently, Pitcairn engaged Oakbrook Solutions in 2012 to draw up a three-year technology plan, which led to selecting InvestCloud in 2013 to improve its client web delivery and provide mobile reporting capabilities.  

“We want our technology plan to be an ongoing process, not something we do every seven or eight years,” Devlin said.

She added that Pitcairn is very hands-on, explaining: “We don’t want consultants to just come in, do the work and leave - we want to be involved so we can know what’s going on and support their work going forward.”

Well-worth the investment

The data warehouse project has been one of Pitcairn’s biggest expenses, but “we have definitely seen the ROI on that investment,” Devlin said. “It has enabled a level of customization we’d never have been able to buy off-the-shelf. It continues to provide value to us 15 years on and is part of our DNA.”

As highlighted in the case study, the firm has gradually realized a number of efficiencies since 2001, including (but not limited to): a shift away from daily data to client customization; the ability to store high volumes of historical data (Pitcairn has data dating back to 1992, for example); easier ways to create inbound and outbound interfaces; more timely delivery of client statements – printed and electronically; and the ability to respond to information requests from regulators and auditors in a cost-effective manner.

But perhaps most crucially, PRISM has significantly reduced the risk of errors when it comes to client reporting (the bulk of the work involved in compiling financial reports generally relates to data aggregation). Although the firm does still use Excel for certain custom reporting, its preferred delivery mechanism is through PRISM.

Pitcairn acknowledged that Excel has its place and will therefore continue to play a role going forward. However, the program does have some inherent weaknesses such as that it is much more error-prone and produces “stale” reports. For these reasons the firm tends to use it on a case-by-case basis.

Unique

Devlin explained how a data warehouse has a “definite structure, implementation and security level,” with Pitcairn’s having evolved over time based on the foundation implemented in 2001.

“An Excel workbook can be a repository for data, but it is not a data warehouse,” she said.

It is somewhat unsurprising that the task of creating a data warehouse-type structure may simply be too onerous and expensive for smaller organizations like single-family offices – many of which still rely primarily on Excel when it comes to client reporting.

Even though the cost of doing so has come down in recent years, investing in such a project would for some players still involve buying something that far exceeds their requirements - and consume a lot of time too.

“That’s why we decided to build our own, and why we know we can benefit single-family offices by partnering with them,” Devlin said.

Indeed, numerous factors have recently combined to sharpen the industry’s focus on client reporting issues, according to Family Wealth Alliance’s 2014 Inaugural Client Reporting Study. A sizable 40 per cent of respondents said they were less than highly satisfied with their firm’s client reporting capabilities, with multi-family offices conveying the greatest level of dissatisfaction and single-family offices the least. And in line with previous research, a further 40 per cent of participants pointed to client reporting improvements that they would like to make, but have been unable to.

A step back

When Pitcairn began building its data warehouse, only “very large financial institutions were tackling the data challenge,” the case study noted.

It added: “Today, large firms remain committed to effective data management, but we are also finding that these same needs apply to other wealth management providers, including family offices.”

The decision by Pitcairn to create a data warehouse certainly reflects how questions surrounding the role of technology in wealth management have attracted a lot of attention in recent time.

However, while there is huge scope for technology to play a significant role in supporting growing family offices, many players have struggled when it comes to system upgrades due to the sheer task of overhauling legacy structures and the associated costs of doing so.

Adding to the issue is the speed at which the industry’s roster of products and “solutions” is growing, which may complicate matters for those firms that are unsure about which path to take.

The bottom line, Pitcairn and Oakbrook said, is that family offices often use multiple systems, with which come multiple databases, and in turn the need for data integration across platforms.