Best Practices

Hope is Not a Tech Strategy

Strategy is the Starting Point

Technology cannot be implemented in a vacuum; no matter how small the office, a strategic technology plan or roadmap needs to be developed first. This strategy should identify the firm’s goals, key pain points, budget, and time frame. From here, specific solutions can be identified, resources allocated, and milestones developed.

The term “strategy” can be overused, but family offices should have a high-level plan of attack before engaging with specific vendors and point solutions. The hard part tends not to be figuring out what to do, but what not to do, as family offices of all sizes have limited resources. Technology is not a means to an end but is a key component in helping family offices better serve their families.

Starting with your firm’s goals and identifying key gaps and pain points first will make the selection process much clearer. Your technology strategy will act as a north star during this process. When developing your technology strategy, one thing to consider is that technology is a moving target. Technology is constantly evolving as vendors incorporate new features, improve performance and security, deepen integration with other platforms, and better user experiences. So while your goals may remain static, the available solutions to help you achieve these goals are changing over time.

Identifying Family Office Technology Trends

A recent “Top Ten Family Office Trends” survey, published by Deloitte, identifies ten family office technology trends. The survey involved 354 single-family offices, from around the world, with an average of $2 billion in assets under management (AUM). They include a “Jumping on the tech train” section, which is designed to gauge the level of technology investment by family offices.

  • 72% note that their investment in technology is insufficient
  • 43% of family offices are developing or rolling out a tech strategy this year
  • 17% recognize that inadequate investment in technology is a business risk
  • 34% are underinvested in technology needed to run a modern family office

The survey indicates that family offices are aware of the technological challenges they face and are responding with investment. Technology is a key component to staying relevant and modern family offices need to constantly invest in technology in order to meet the growing expectations of the families they serve. The good news is that family offices have more choices than ever before, and vendors are responding with technology solutions that address most if not all aspects and needs of a modern family office including:

  • Investment management
  • Data aggregation
  • Financial and client reporting
  • Client communications
  • Bill payment
  • Cyber security

Moreover, the tech tools and platforms enable the family office to be more secure and to offer information to their families more quickly and on their device of choice (mobile) helping to meet the expectations of the rising generation of wealth. Families use a wide variety of technology in their personal lives and expect their family office to offer similar capabilities to what they already have on their phones today. 

Most Common Frustration: Inadequate Technology to Support Wealth Reporting

The survey reported that the most common frustrations in operational technology surround producing wealth reporting. Family offices need to report on a wide range of very different types of data to produce holistic wealth reporting. This includes investment reporting with both marketable securities and alternative investments. Beneficial interests of pooled investment vehicles and financial accounting, which is very different than investment data (dual-sided vs. single-sided). All this data needs to be compiled into one reporting package.

This has always been the holy grail for family offices and there have been several options recently introduced in the marketplace that can help solve this complex problem. At Risclarity we are specialists in combining data from disparate systems to produce outstanding client reporting.

Key Take Aways

  • Family Offices need to continuously invest in technology
  • A technology strategy and road map should be developed based on the firm’s goals and major pain points
  • This road map will act as a north star when selecting new solutions
  • The family office technology landscape has matured with solutions that solve most major pain points firms face
  • Wealth reporting is a major operational challenge because of the complexity and variety of inputs

Resources

Deloitte: The Top Ten Family Office Trends, 2024

https://www.deloitte.com/cbc/en/services/deloitte-private/about/family-office-insights-series-global-edition.html

 

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