Tony Poulson (Allvue Systems): tech on investments
Tony Poulson, Marketing Director at Allvue Systems, shares his views on the effect of technology on the activities of family offices and GPs.
How is technology influencing family offices’ activities?
Single-family offices are becoming exponentially more complicated in their structure and, subsequently, in their technology requirements, which they must use to manage their growing family base and relationships. New generations, more entities, more co-investments and direct deal making all require the establishment of more legal entities, trusts, etc. Whereas using applications like Excel or a generic accounting package may have been sufficient at a certain time, the need for accounting and reporting capabilities which are specific to family offices has grown. In addition, as younger family members reach adulthood, their relationship with technology and information is very different to that of older generations. This new generation is more comfortable with technology and there is an expectation that information, particularly regarding investment performance, should be made available with minimal delay. Any kind of downturn in the markets can only compound this “information-demand” from all generations.
“Many LPs are now co-investing with their GPs, driving the need for more periodic updates”
What major trends do you identify in the PE/RE industry?
LPs are driving the need for GPs to adopt more sophisticated technologies with which to run their firms. GPs used to send quarterly updates and reached out only when fundraising; now, there is a much higher level of engagement between GPs and LPs for a number of reasons. Firstly, many LPs are now co-investing with their GPs, driving the need for more periodic updates. Secondly, LPs remain wary that the current bull cycle is nearing its end with dry powder currently at an all-time high. LPs want their fund managers to be disciplined with their investment processes, monitoring these fund managers closely to see how this discipline manifests itself in terms of the portfolio. Lastly, LPs are taking a greater interest in fee calculations, the use of credit lines and the potential impact on their own IRRs.
Better use of interactive reporting (by means of dashboards and CRM systems to manage LPs’ communications, for example) are quickly gaining traction to serve the information demands of investors.