Why Are So Many Home Offices Using Excel?

Microsoft Excel is a household name – and so well received that it has become the general name for spreadsheets (along with other competitors such as Google Sheets or Apple Numbers).

However, in an age dominated by sophisticated financial tools and the sophisticated data analyzes that Excel has helped to inspire, it may be surprising that many family offices – with more access to cash – are they still rely on software for many basic tasks and functions.

A recent LinkedIn article poked fun at this issue, as family offices may be slow to adopt new technologies that support the advanced data collection and investment management tools their core businesses demand.

To dive into post ideas, there’s a lot to clear up.

What exactly is Excel used for?

In short – Excel can be used like a Swiss Army knife in almost every organization, and the same goes for family offices.

Data teams use Excel to organize data, sales teams use it to organize leads and sales funnels, marketing teams for customer data, HR teams for employee data, status sections C for reporting on key metrics, and, of course, financial teams use Excel. for everything financial from budgets, to cash flow, budgets, P&L – you name it.

In the family office environment, the investment teams also use Excel to evaluate investments and, together with the finance teams, make reports.

Excel’s Endless Appeal – Why Do It Matter?

There are several reasons why Excel has cemented its position as an invaluable tool for managing family wealth problems – among them, and perhaps most naturally, Excel is incredibly versatile, widely used, and understood – making it accessible to many users. in the family office.

Custom

Excel was first released in 1987 – making the program itself 37 years old today. For many older generations, Excel is still an important part of their lives.

As Microsoft continues to improve Excel, home offices have also customized spreadsheets to suit their unique needs in a wide range of applications – from tracking investments to managing expenses. family. Although it also has many powerful features, Excel also has a relatively straightforward learning curve – enabling new users to get up to speed quickly.

Marc-Phillipe Davies, co-founder of Deallocker, said it best – quipping that “Excel is not complicated just because everyone has it and it’s cheap. It’s a testament to how what a wonderful instrument! faithful, faithful”.

As a result, many family offices continue to hold on to Excel as a reliable source of truth. Which leads to…

Resistance to Change

The saying, ‘if it ain’t broke, don’t fix it’ applies easily to many family offices that continue to use Excel. Older generations of families may feel more at home with the software.

It is also important to mention that this objection is usually not the fault of the family office itself. In an industry known for its lack of visibility, there are few signs that can force family offices to significantly improve their performance by updating their technology stack; contributing to resistance, and fear of widespread change – although options and new features can greatly improve the ability of portfolio reporting to complex financial instruments at least.

As Michael Casciano of EVO Wealth Tech adds about the game, “Inertia is the second most powerful force in wealth management after compounding interest!”

Expenses

There is also the fact that compared to specialized financial software, Excel is relatively inexpensive, making it a good choice for many home offices, especially those that are just starting out. or that have been around for decades.

“I also see a high reliance on spreadsheets, and the reluctance to change is high for the reasons mentioned, especially ‘costs,'” explained Ian Keates, CEO of Altoo AG.

Excel can integrate with many other software applications (such as accounting and CRM platforms) to improve its use in the home office environment.

While there are many platforms that can expand on Excel’s feature set and integrate with other complex investments or help with ESG or Impact reporting, these tools can come with their own price tag – which means that many family offices may choose to ‘go’. only’.

Software Vendors Don’t Make It Easy

Finding the right technology foundation, or replacing Excel, is not an easy task. Many vendors who are the first to point out that family offices should not use Excel do not simplify their marketing, messaging, and introductions to show how family offices can understand, compare, buy and implement their solutions.

While there are many interesting and unique selling points among home office software providers, few invest the time and effort to clearly highlight their value propositions and features. unique that can from Excel.

From Excel to Stars

While Excel is a powerful tool, it is important to be aware of its limitations. For large and complex family offices, it may not be enough to manage all financial and operational details – moreover, manual data entry and calculations can be time-consuming and prone to errors. The risk of the principal being involved is the only person who knows how the papers they have built work is also a risk that is often completely overlooked.

For family offices looking for a centralized solution, many use hybrid methods, combining Excel with specialized financial software for specific tasks. This allows them to use the power of both devices and improve their performance.

The key takeaway is that while Excel may be enough, home offices looking to upgrade – and those willing to expand their capabilities based on new tools as investments – can access a wide range of new technologies. who are reshaping the market.

As Oliver Topham, Director of Business Development at Flanks, concludes “…The mindset that ‘we’ve done it this way for years and it works’ will set the wealth management industry back.” and they need to consider how much time and money is saved by looking at the many technology solutions available today.”