Modern Technology Enables Easier Accounting for Jointly Owned Accounts, Trusts & LPs

Modern Technology Enables Easier Accounting for Jointly Owned Accounts, Trusts & LPs

“Integrated” and “transparent” are common buzzwords associated with today’s wealth management technology platforms—except when it comes to accounting for trusts with multiple beneficiaries, as well as limited partnerships and jointly owned accounts. But now, thanks to software updates within the industry, this is no longer the case.

Innovative Percentage-Ownership Functionality Changes the Game
The industry-standard product in 2016 involves a single, unified wealth management system in which advisors and their support staff can easily switch between portfolio management, reporting, billing, client relationship management (CRM), trading, rebalancing, and other applications. It also offers a client portal where clients can safely access reports, view account updates, and exchange communications with their advisors, which enhances the client/advisor relationship. This type of software platform can also enable advisors to grow their businesses by providing visual tools that demonstrate the value they have to offer.

However, many software applications are incapable of improving the wealth management experience for client accounts involving limited partnerships and other complex trusts. Performing trust accounting for limited partnerships—including family limited partnerships and private equity investment agreements with multiple limited partners—can remain just as laborious for advisors after they adopt new technology as it was before. The reason is that, for all their advancements, many of today’s wealth management systems aren’t capable of opening and managing—in an automated, integrated fashion—accounts that consist of percentages of assets in existing accounts.

Some wealth management systems do offer features related to percentage-ownership accounting, but only via separate products or modules at an additional cost—not as integrated components of their portfolio management or reporting applications. Many of these products, though, are limited in scope, and only capable of generating data valuations based on surface-level data and then reporting those valuations through a small selection of reports.

The great news for advisors is that this has all changed. Advisors can now effectively monitor and report on jointly owned accounts, limited partnerships, and multiple-beneficiary trusts from within the portfolio management application of an integrated wealth management technology platform. Additionally, RIAs are winning new business by using these capabilities to easily generate demo accounts that mimic a prospect’s portfolio – providing visual and mobile tools that demonstrate the value of the firm.

An Industry-First Integration
Earlier this year, we rolled out an upgrade to Advisor® Xi, Envestnet ৷ Tamarac’s web-based, custodian-agnostic, and fully unified wealth management platform for independent RIAs, which enables advisors to open, monitor, and report on accounts made up of percentages of assets in existing accounts within Advisor View (the portfolio management and reporting arm of Advisor Xi). This is the first time that such percentage-ownership capabilities are available to advisors as part of an integrated platform.

When setting up jointly owned accounts, limited partnerships, or multiple-beneficiary trusts,  advisors can set splits in ownership at the security or account levels, or both. Advisor View maintains a historical record of all account ownership splits and capital flows, which allows advisors to seamlessly recalculate ownership percentages over time. Advisors can also communicate these adjustments using any Advisor View reporting option—such as PDF reports, dynamic holdings reports, or performance and transactional reports—and instantly upload the chosen report to Advisor View’s client portal. All Advisor View reports are available for jointly owned accounts, trusts, and limited partnerships.

These integrated capabilities have many practical uses for advisors. For example, advisors can easily show trustees their respective portions of trust accounts, and provide reports to individual investment partners that demonstrate the performance of their stakes in a partnership as well as overall asset performance within the partnership. In addition, advisors can create detailed and customized demo accounts with different ownership stakes for prospects in Advisor View.

Envestnet ৷ Tamarac’s RIA clients that manage family limited partnerships have told us that these integrated features have made the reporting process for these complicated trusts much more transparent and efficient, thereby enhancing engagement with multiple family members. Advisors can provide data related to each ownership stake in a family limited partnership within a family unit’s reports—and the data can be broken out at the transactional level, providing a much more in-depth picture of changes in ownership splits over the short and long terms.

Advisors using other applications on the Advisor Xi platform can also experience the benefits of the percentage-ownership capabilities in Advisor View. Advisors can incorporate information on jointly owned accounts into Advisor CRM®, Advisor Xi’s client relationship management system, to create a more accurate and holistic representation of a household’s net worth.

In addition, advisors can view percentage-ownership stakes of jointly owned accounts within Advisor Rebalancing®. The capability to see alternative assets as part of a household’s total allocation gives advisors a much better perspective on how potential trades can affect a household’s overall financial health.

Dawn of a New Era
Portfolio management, accounting, and reporting for ownership splits in jointly owned accounts and complex trusts or limited partnerships are no longer outside the scope of fully integrated technology platforms.

As this type of integrated percentage-ownership capability becomes more commonplace throughout the industry, advisors will have more opportunities to demonstrate their value to (and enhance their engagement with) multiple generations of clients, as well as prospects. This ongoing trend toward more integration and stronger engagement will bring more transparency to the management of alternative assets, and enable advisors to provide an even more holistic picture of each client’s wealth.

Stuart DePina is Group President of Envestnet | Tamarac (www.tamaracinc.com).  

Envestnet, Inc. (NYSE: ENV) is a leading provider of unified wealth management technology and services to investment advisors. Our open-architecture platforms unify and fortify the wealth management process, delivering unparalleled flexibility, accuracy, performance and value. Envestnet solutions enable the transformation of wealth management into a transparent, independent, objective and fully-aligned standard of care, and empower advisors to deliver better outcomes.

 Envestnet | Tamarac’s web-based platform for independent RIAs, Advisor Xi®, deeply unifies portfolio management, modeling, rebalancing, trading, billing and reporting with a client portal and enterprise-level client relationship management (CRM) system.

 For more information on Tamarac Advisor Xi, please visit Envestnet | Tamarac and follow

Author’s disclaimer: The opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities, or investment advice, or a recommended course of action in any given situation.

Stuart DePina
Stuart DePina
As President Envestnet | Tamarac, Stuart DePina manages the long-term growth strategy of Tamarac. His balanced leadership is rooted in deep financial experience and the belief that a solid organization is built on customer focus, commitment and thoughtful business practices. DePina's professional history is distinguished by leadership roles in guiding firms through various stages of development including initial public offerings and acquisitions.

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