Consolidated Reporting 101

Jeremy Langlois is the Partner, Head of Client Advocacy at Mirador, a firm specializing in consolidated reporting for families and their Family Offices.

Jeremy joined Mirador as a Partner in 2016. As Head of Client Advocacy, Langlois manages Mirador’s growing team of Client Advocates and oversees business development initiatives.

Langlois is a subject matter expert in financial reporting solutions and leverages today’s best-in-class financial technology to provide Mirador clients with premium reporting solutions and exquisite service. Until recently, Langlois also balanced his responsibilities at Mirador with a demanding professional hockey career of five years.

Prior to joining the firm, Langlois worked at Credit Value Partners, where he analyzed high-yielding and opportunistic debt investments in private corporate debt. Langlois received his B.S. in Finance and M.B.A. from Quinnipiac University.

Jeremy values giving back to the community, and he has enjoyed coaching local youth hockey for several years. When Jeremy isn’t busy running our Client Advocates or at the rink, he enjoys spending time with his wife, new son, and dog “Duke,” an English Cream Retriever who is the mascot for “Team Mirador.”

 Kirby Rosplock

Welcome to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock, and today we're talking about consolidated reporting. This is a very important topic that is not easy to get your arms around, but we are lucky enough to have Jeremy Langlois from Mirador, who's going to share a lot more about What is consolidated reporting? Why should you care? How do you actually create a consolidated report? How do you read it? What might be inside of it? And more. So, Jeremy, thank you so much for being here. I'm excited to dig into the topic today.

Jeremy Langlois

Thank you for having me. I appreciate you having me on here today. And I'd love to maybe just set the stage to say, why am I here? Our firm, Mirador, operates performance reporting systems on behalf our clients. The idea behind starting Mirador is really born out of our managing partner, was working at a private bank that was offering aggregated performance reporting to aggregate on any client's asset, no matter where it was held. And after building out a team there, he realized nobody was really sitting on the client side or the family side running these tools and these technologies. And so we started with a large single family office out of Greenwich, Connecticut. We're aggregating assets in multiple countries for multiple generations and implementing them on a system called Adapar. Today, over the last six years, we've grown that business to now represent a little bit over 120 clients and a little bit over 130 billion in total assets that are reported on. So work directly with a lot of families and wealth management firms to run their performance reporting systems, i.e, We're a service that works as an extension of our clients or our family side, helping them through consolidated report.

Kirby Rosplock

And you've had quite a run at Mirador in terms of your involvement. What, six plus years now you've been with them and really seeing them grow? And of course, I have to give a shout out that you're a hockey player. And actually we're juggling both while your early days at Mirador. Tell us a little bit more about your role and you're the advocate, right? So you're really charged with making sure these client relationships work.

Jeremy Langlois

Yeah. It's It's funny to look back what is six years ago now. I met Joe, who's our managing partner in a coffee shop with the business plan. And at the time, I was playing professional hockey. And I had worked at a hedge fund and I'd done some finance jobs for that, but I was a professional hockey player at the time. And after sitting down and deciding what was the next step, I'm not a person who just sit there and do nothing during the summers. And it sounded like an interesting intersection between technology and the finance side of it. And I think that's really what our firm has executed in melding those two things together over the last number of years. I finally hung up the skates a number of years ago now and I've been dedicated and focused on being an advocate for the client. I directly work with a lot of our families and helping them pick these tools, as well as making sure that on an operational basis, our team of client advocates are executing and fulfilling our client request. So it's a nice intersection of having a lot of conversations about finance, which I like, as well as making sure that the technology is leveraged on behalf of the clients.

Kirby Rosplock

Well, this is great. I'm very excited to dig into consolidated reporting. I mean, today we're really covering the 101, but maybe you can just start us off with giving us more insight. What is consolidated reporting?

Jeremy Langlois

Yeah, I'm going to share some slides today to just go over what is consolidated reporting from that point of view. I think it's interesting to go through what are the reasons behind it? I think as you move forward in complexity, you have simple family situations where you have a husband and a wife and retirement accounts. And with that becomes, yes, you need to track. And people may be familiar with the mint.com or some of those other ones, right? If you plug in some of your relationships and you can see assets. Now, with complex wealth, the requirements are many more in family many members, many more banking institutions, and usually not just liquid assets, but illiquid assets, whether it be family holding companies or real estate or anything else. So with greater wealth comes greater complexity around those things. And with that becomes the need to be able to appropriately track on those. So you can see some of the benefits that arrive from some of that wealth that ends up happening. So to take you through a family tree, and this We have it labeled as complex, would be like a run of the mill family for us.

Jeremy Langlois

We'll see things that are, like I said, multiple generations, 50 family members with pooled family entities and the whole like, that I know you're very familiar with, too, Kirby. But this is a good example of you have a husband and wife, you'll have a family holding company, you'll have multiple LLLCs, trust for the children, the like there. The drivers of wealth can come from a variety of different areas. Maybe it is the family holding company, maybe the matriarch or patriarch is an executive or wealth driver in some certain areas. But within these different levels, they're all going to have banking relationships. They're all going to have investments that are going to reside under there. And so when families start to add more of these structures that may come with more kids, that may come with just more money and more assets. Those type of structures lend itself to... You need to be able to accurately track those things to know how well you're doing and some of the actual benefits behind it. So I'm sure many of the audience that we're speaking to have seen family structures like this, have seen family structures much more complex.

Jeremy Langlois

The complexity doesn't always mean you have more entities. Complexity could also just come from the investment types that you have. So the clients that we have that are private equity executives, they're going to have many more private investments, and that requires more tracking and more maintenance of the data behind the But I think it's helpful to add a visual to the example.

Kirby Rosplock

For sure. I totally agree. Are families and family offices really the only clients that you serve, or are there others that really leverage aggregated consolidated reporting?

Jeremy Langlois

Yes, so about 60 to 70 % of our business is working with single-family offices and wealthy families. The other side of it is there is wealth management firms, whether it be multifamily offices, RIAs, anybody that really manages wealth from that perspective that also use aggregated performance reporting. Sometimes there's limitations to that. Sometimes they only aggregate what they're actually managing. And so we take a holistic view of reporting on any asset, no matter where it's held. So there are some cases where wealth management firms are providing some consolidated reporting, but likely it's more generated around what their mandate is, what they're looking at. Endowments and Foundations is a growing part of our business. And so the asset types that they're reporting on, usually less on the structure, less entities, but more on the asset side, more on the tracking side. So I think it's across the board every day people need to know where their money is and what their risk is and how well they're saving for retirement or how well they're planning. It's just when you get to certain levels of wealth and certain levels of complexity, using a firm or using somebody that provides the aggregator reporting or doing aggregator reporting in-house, lends itself as the wealth increases.

Kirby Rosplock

Well, maybe you can tease out really how aggregated and consolidated reporting are different than maybe traditional reporting. I mean, are there benefits? I mean, is there a clearly enhanced view when you look at things in aggregate?

Jeremy Langlois

Yeah, I think there is a lot of benefits to it. Now, with the benefits, there is a cost. So you need to pay for technology, you need to pay for people. But the benefits are the traditional, 'you don't know what you can't see'. And so as you're busy managing the family or managing business assets or anything else, other things are going on the sidelines. You need to be able to wrap your arms around in a consolidated view. The data aggregation technology, yes, you need to spend on it. But once you do, you can now slice and dice the data as needed to give you the what we call the better tools to make better investment decisions or better allocations. And so we're not here to tell you to invest in Apple or to buy Microsoft we're telling you, here's your allocation, and it's up to you to either speak with your managers or to see concentration risk or anything like that. The ability on the consolidated reporting is now you can see what you own, regardless of whether it's an asset, whether it's a liability, whether it's located at Goldman Sachs, JPMorgan, or Credit Suisse Bahamas.

Jeremy Langlois

You can manage all of those together, even if they're in completely different geography, locations, or asset types. So it gives you the ability to then gage risk, gage performance. And so, yes, your managers are giving you things on how well they're performing. And maybe they're giving mandates on benchmarks or allocations. What you then What you do as the family office is now they're not self-referring. You're tracking performance. You're tracking how well they're staying to their mandate and their allocations. And then you're doing it at a top level. So if you are using multiple managers, now you're seeing manager one, two, three, and you're seeing them all together to be able to gage risk. And so there's ancillary ways of some of those benefits, whether it's concentration risk or being able to break down into geographies or sectors or anything like I think an important one to touch on is either the estate or the tax planning side of that. And so a lot of families, as they will have many entities, some of them will be taxable, some of them won't be taxable. Some of the trusts will have different implications behind them. So as you're being able to track all of these across, if you're needing to sell for tax reasons, if you're needing to do reallocations or transfer money or loan money from trust to trust, by being able to have all those things aggregated, you can easily make those determinations rather than putting it all into Excel, typing it up and trying to figure out, Oh, this owns here, this owns here.

Jeremy Langlois

The technology does that on the fly with a click of the button. So what used to happen is people would do a lot of this in Excel. They pull up a statement from JPMorgan, Morgan Stanley, everywhere else, and then they would be able to make some of those determinations. That's a lot of man hours and time to just do that. So the benefit is now everything on the technology side has those things aggregated. So yes, you can do some of those allocation work, but you can also layer in a time-weight of return or risk calculation or something like that, something that's iterative that these technology and tools can just do on the fly.

Kirby Rosplock

Well, and not to mention the human error, right? We're all so driven, but there's a lot of, probably the greatest risk is human error when you're using Excel and other manual-based inputting type software packages and everything looks great until you miss a zero or you put the decimal in the wrong place or you just input the number incorrectly. And the next thing you know, everything is skewed. And then you got to go find out, where did I make that mistake in the spreadsheet?

Jeremy Langlois

Yeah, 100 %.

Kirby Rosplock

So maybe we can actually just jump in and check out what some of these reports look like, and maybe you can talk through them.

Jeremy Langlois

Yeah. So like I said before, we work with a wide range of families and wealth management firms. So these reports can all be tailored to the family. We usually start with what is the goal and what are you looking to see? Being able to distill this down, it is a little bit of an art and a science, right? So it's an art. You need to make it visually appealing. You need to make sure it's telling that story for the family. And then there's the science and math side of it. The numbers need to reconcile. You need to have everything from a calculation base work correctly. But once you have those together in views, you can then create these reports. So here's a basic example of a dashboard at an overall family view. This overall family view can be aggregating across multiple managers, multiple entities. And so now you can see asset allocation across. Where is the family allocated to equity versus fixed income versus the other asset classes? The bottom chart on the left, the change in value. What did I start with? What did I end with? Did I make money? Did I lose money?

Jeremy Langlois

Did I pull out money? And that's the reason why the portfolio value went down. And I think the chart on the right that's blown out there, the performance by manager. I think that that's where the families, by handling consolidated reporting on their own, get to be in control of that. So they can set manager performance from that side of and then hold them accountable and be able to track that on their own side.

Kirby Rosplock

Yeah, I love that you have the benchmarks in there to compare performance.

Jeremy Langlois

Yeah. There's some cool things with some of the benchmarks. You can create your own custom benchmarks. We often see families will have the managers confirm or select their own benchmarks, and then they'll actually do blended benchmarks at entity levels or blended benchmarks at family levels. So you can create your own index composite that resides the overall of your family benchmarks on that side. You can also see here we're showing it at the matriarch or patriarch. So we can show them at different levels and break out what the children own. What we often find is once you have this technology, the discussions around it become even more important. And Kirby, I know you spend a lot of time on that. And being able to articulate and have the discussions around wealth So the system is a lot you to tailor some of those. So you can start with just giving them an asset allocation view. Here's some assets and here's the drill down. As they get more familiar, you can show them what resides within the accounts. What is the performance of those? What is the underlying risk characteristics, who manages those, introducing them to advise, introducing them to people.

Jeremy Langlois

So it allows you to curate reports at different levels. Maybe the matriarch and patriarch will have a 20-page report that dives into everything where the children have a smaller report. So you can segment and break those out as needed. So you're telling the correct story at the right time.

Kirby Rosplock

I love that. That's really powerful.

Jeremy Langlois

I was alluding to it earlier, the asset location and where things are at, whether you're be custody to Schwab, J. P. Morgan, Fidelity, Pershing, whether they're in overseas entity, being able to track where those are, what is the allocation, and then being able to also track the liability side of it. So we work with families that will look at revolving loans, intrafamily loans, mortgages, anything that they end up having on the liability side to then track what is that balance sheet look like. So there's a lot of power in being able to just see that. That gets again back to where is your money? How do you know that? Are you tracking on an ongoing basis? What used to happen and what still happens a lot today is they're doing it on a monthly basis or a quarterly basis. So they're pulling up manager statements on some a desperate basis whenever the patriarch or the investment owners ask. This technology allows you to do this on a daily basis. So we have families that run weekly flash reports. We have families that will call us up and say, Hey, the market's down. I want to see a list of all my cash accounts and where it is, or I want to see how well XYZ manager did today.

Jeremy Langlois

So there's power in having those things. When it's the other way, when something does happen, whether it's a death in the family or whether it's in a market event or whether it's some liquidity event, your time to decision is now much longer. Now you need to have somebody go into Excel. And to your point, hopefully they don't fat finger a number. Now you're running into a situation of finding out why is it an extra zero there? So there's benefits to that. The target allocations and actual allocations are important, too. So it just gives you a better framework from a wealth management perspective of what is your targets? What is your goals, how are you staying from those? Are you deviating at all in certain areas? And do you need to have a discussion around why are you allocated into a certain area or are you under-allocated into others?

Kirby Rosplock

Yeah, the story behind these reports is just pretty powerful. I think whether it's planning for capital calls or tax payments or just longer range planning that you need to capitalize a business more or you're winding one down, the power behind having an aggregated lens to your holdings and what you're trying to achieve with your wealth and your business is, is incredibly powerful. But, Jeremy, tell us about the back side of this. How does the data all feed into these reports? Tell us more about that side of it.

Jeremy Langlois

Yeah, it's a good question. I think I got back to how often can you run these reports? Since this is a one on one type session, I don't want to get too into the weeds, and there's differences between some of the systems. But I'd say the best example would be if you think about the family circle, most of the accounts that are held at the liquid custodians, if you see the Swabs, the JPMorgan, the Pershings, and many of the larger institutions, they'll have direct data feeds that go into these aggregation tools. So on a nightly basis, they're sending in transactions, valuations, cost basis data, anything else that's coming over from the custodians. They're then coming in directly into these systems. Anything that's not directly fed in, so private investments, real estate, family holding companies, anything like that, you need to enter and track in the system. But once you build out that family tree and structure, once you hook in the liquid assets and enter in the e-liquid assets, you can then have that beautiful reporting where on a daily basis, you can run reports and you look at things on the fly. So the tools and technologies have evolved a lot over the last, I'd even say three or four years.

Jeremy Langlois

And most things are cloud-based or SaaS-based systems. A lot of them have garnered a lot of attention as technology has grown. I like in the industry, they're in arms race right now. There's a lot of technology spend. There's a lot of money that's been poured into the different tools. And with that, it becomes better functionality for the end client. So I think we're still at the middle innings of what these technology and tools look like. And the pace of growth and the new feature sets and things like that continue to increase. So the industry So my industry's goal is to get as many people off of Excel as possible. And I think Excel fits a great number of reasons why you use it. I use it on an everyday basis. But being able to aggregate that much data across different managers and be able to run calculations on the fly. Yes, you're going to be paying a fee for that, but usually that fee and just time to execute and wrapping your arms around it is justified by a lot of clients once they get into it.

Kirby Rosplock

Sure. So where would a family or family office begin if they were maybe using Excel or Sage, Intac or some other accounting system? Where would they start if they wanted to go this path of ramping up their reporting and going towards a consolidated view?

Jeremy Langlois

Yeah, I'd say it's not a one size fits all solution, that's for sure. There's a lot of use cases, whether it's how you're staffed internally, how you're handling investments today, how you're handling accounting today. Are you doing accounting and tax in-house, are you having those things outsourced? My recommendation would be to go to trusted people that that you know within the group. I think Tamarind Learning does a great job, and I know you guys are connected to a lot of wealth owners and families from that perspective. I always start off those with more of the consultative approach on the mirador side. You need to know that needs assessment. What is your end goal? What are some of those pokey-proddy questions of networth, family structure, staffing, all those things? But once you know that, you can distill down what is the right technology solution for the family. That's what I spend a lot of my time during the day is distilling down all of those technology decisions that we just walked through into solution sets that fit the family for today, as well as tomorrow and what they're going to grow into. And nobody has a crystal ball into what that's going to look like, but I think we can all probably say technology is going to continue to increase.

Jeremy Langlois

I think the newer generations and adoption to mobile apps and data on your fingertips is going to continue to increase. So my recommendation would be to continue to press on and look for either your wealth management for firms, your wealth advisors, or trusted parties like a Tamarind or Mirador that are definitely in tune with the complexities of wealth and what is the correct way to manage your technology around that.

Kirby Rosplock

Yeah, I think that's great insights. I also think about the fact that a lot of wealth managers have the ability to provide some level of consolidated reporting. However, I will say from my personal direct experience in working with families, sometimes they don't always have the ability to have the data feeds from the other holdings at other institutions, because obviously other institutions don't necessarily want to share how they're investing with potentially their competitors. So the reality is a lot of families have to think about this independently from where their accounts might be set up and held and invested as a way to bring it all together. And I can imagine on a staffing perspective that this would greatly enhance efficiencies of personnel and people if you don't have 20 analysts doing a lot of manual data computations, and you have a lot more clean data coming in directly from the source. So I can imagine there are just so many benefits to staffing your family office or whatever structure that's supporting your family. And also just the honesty side of really having that transparency of what you think is really happening in all these different institutions that might be serving your different accounts.

Kirby Rosplock

So I'm really thrilled that we have a chance to talk to you, Jeremy. And I know we have the desire to dig deeper into technology and reporting because it is moving at the speed of late. So I'm glad that you're on the cusp and seeing it firsthand because it's changing so rapidly every single day. So I can't wait to dig in more at a future podcast with you. And we'll go into more about just the setup and design and the technology support and needs of families and the complexities that are arising. So thank you so much for joining us here in the Tamarind Learning podcast.