By Yash Poddar, Founder, FamO
Family offices globally are booming, and so is its management. From using traditional document management tools to new age tech-first tools, there has been a significant shift. Complex financial markets, ever-evolving regulatory landscape needs a more nuanced approach, a more holistic approach to managing wealth and this has resulted into a slew of technologies finding prevalent use cases in the space. Similarly, the transfer of wealth between generations, technology revolution we witnessed in the last two decades and increased need of simplicity and visibility constantly begs for solutions which offer greater autonomy to family offices.
Family offices are constantly on the lookout for agile investment tools and approaches to manage wealth, especially in this volatile economic environment. There are multiple tools and technologies available today, but it is pivotal to ask ourselves – why, and what is this technology helping us solve?
Citing an example of insights from RSM’s 2024 Family Office Operational Excellence Survey – a striking 62% of respondents find managing top tier technology internally a daunting task, acknowledging the relentless march of technology and the struggle to keep up with cutting-edge solutions in-house. While the importance of data and technology is recognized, achieving and sustaining excellence in technology remains a formidable challenge.
Before we delve into the solution, it is important to understand why technology could be as big a challenge, as the solution itself.
A growing technology divide, whether in adoption or utility!
Interestingly, the same RSM survey reveals a technological generation gap among family offices. Newer establishments lean towards cloud technology, while older counterparts rely more on automated investment reporting. This disparity underscores the evolving landscape of technology adoption within the family office domain.
Similarly, the reliance on basic tools such as Excel and Word, though convenient, falls short in asset administration. Designed more for data recording than intricate financial management, these tools reveal their limitations as family offices expand and collaborate with multiple advisors. Manual methods, once relied upon, now pose risks of data inaccuracies, compliance breaches, and a lack of real-time visibility, hindering decision-making and compromising client satisfaction.
The SaaS solution for family offices
Despite having the intent and the wealth to manage wealth more efficiently, family offices are often forced into using traditional tracking tools such as Microsoft Excel and old school methods to create a makeshift MIS. Similarly, as new investment tools and opportunities evolve, using these traditional methods does not bring clarity, but increases complexity of data management. This creates 2 specific challenges: first, family offices are forced to work with multiple advisors, and secondly, they are increasingly diversifying assets. Both these problems combine to create massive data fragmentation and scattering of key information across places.
SaaS technology platforms which offer API integrations to various asset classes, real-time information on market data, transparency, collaborative features and most importantly, a platform which is the one source of truth for managing the wealth has the potential to transform the way family offices operate and invest in technology.
In fact, Deloitte’s insights further emphasise the importance of aligning people, processes, and data under suitable software. Their recommended steps for implementing new technology stress understanding specific needs, effective vendor management, meticulous data conversion, adherence to timelines, and maintaining transparency across the family enterprise.
Technology should bring intuitiveness and seamlessness, enabling family offices and U/HNIs to be more in control of their wealth. However, transitioning from tradition to innovation demands more than technological prowess; it requires strategic planning, effective change management, and a culture of creativity. Overcoming resistance to change is crucial in harnessing the full potential of technology for the benefit of family offices and their stakeholders.
In today’s dynamic financial landscape, embracing technology isn’t just an option—it’s imperative for family offices seeking to thrive and adapt. As demands for simplicity and control rise among clients and partners, the adoption of advanced technology becomes not just a strategic move but a fundamental requirement for success.
In conclusion, the transformative power of technology offers family offices the means to navigate challenges and meet evolving client needs. By embracing cutting-edge solutions, they can streamline operations, enhance collaboration, and ensure compliance, ultimately driving efficiency and effective management of assets in an ever-changing world.
