How family offices can leverage technology to become the choice of multi-generational family clients

By Nathalie Zeghmouli on Monday 14 February 2022

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Digitalisation is the key for family offices to stand out from the competition, writes Nathalie Zeghmouli, Director of Sales- Europe, Contemi Solutions.

How family offices can leverage technology to become the choice of multi-generational family clients
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The great wealth transfer and digitalisation poses an interesting challenge for family offices- how to manage operations to meet the expectations of sophisticated, multigeneration families, where each stakeholder might have vastly different expectations. 

A recent survey found that - 

• 37 per cent of family offices said managing the multi-generation family clients is one of their biggest issues and challenges 

• and 21 per cent cited technology, IT, and cybersecurity as key challenges this year and the next 

The next generation i.e., millennials are on their way to taking over their family wealth. It’s no secret that we all live in a hyper-connected world and hence have high expectations for a personalised experience. 

The industry is also seeing fiercer competition every year. According to EY, almost half of the estimated 10,000 single family offices around the world have been formed in the last 15 years. It’s also now a trend amongst ultra-high net worth individuals to set up a family office, which means we can only expect to see the number growing over time. 

With competition increasing, if family offices, single or multi, want to retain and efficiently serve multi-generational clients, they need to be ready to meet the families’ evolving needs and remain relevant in an ever-changing world. 

Here we explore five key areas where technology can help family offices to stay ahead in their game. 

1. Accounting & Reporting 

It’s no secret that family offices need to provide timely and accurate information on accounting, taxation & performance reporting to establish transparency and build trust with their clients. 

However, the increasingly stringent tax regulatory criteria, diversified portfolios, complex family ownership structures, and traditional reporting methods become a very consuming and demanding task and operational risk. 

Some family offices may have built proprietary systems, but they cannot easily adapt to the proliferation of investment portfolios. The best way to handle this level of complexity is to have one integrated, customisable dashboard or application consolidating all activities across net wealth, tax & compliance reporting, asset exposure, financial reporting for multiple entities. 

Family offices can automate data aggregation from multiple sources, data reconciliation, report preparation, internal and external integrations. It enables them to offer on-demand information with complete security and audit trail. 

Simply put, automating the entire reporting process, reduces operational risks and the total cost of ownership for family offices. 

2. Client Relationship Management 

Family Offices’ client structure is quite complex, and it can be overwhelming to keep tabs on the multitude of relationships that span multiple generations. A Customer Relationship Management (CRM) system enables to take a lot of the friction out of managing client relationships. 

As a single source of truth, it manages all the information related to family members and external stakeholders in one central location, including deal opportunities and more in one dashboard. When it comes to communication and engagement, the channels vastly differ for family members. 

The younger generation has grown up with customer-centric applications like Instagram, Amazon and Netflix, and carry over those expectations for on-demand access to information at their fingertips. They prefer interactive omnichannel experience, ad-hoc and real-time access via video calls, live chats, social media, WhatsApp etc. 

This can clash with older generations, who might prefer emails, face-to-face meetings. Thus, to ensure that family offices services are accessible to each member on their preferred mode of communication, integrating the CRM system with client communication tools, such as client portal/app, can help cater to both generations equally well. 

3. Trading & Portfolio Management 

Many family offices manage large and complex multi-asset portfolios including real estate, direct private equity and hedge fund assets, spanning global markets. This makes the investment management process subject to numerous complexities and complications, despite devoting significant time and highly skilled resources. 

Family Offices can benefit from adopting technology to automate portfolio creation, analysis and rebalancing, trade compliance, trade order generation and trade processing, cash and liquidity management, and streamline their investment process. An advanced trading and portfolio management system with powerful analytics and configurable, fully integrated reporting and dashboards give full control of investments. 

4. Data Security 

The world’s super rich gives most importance to their privacy and security. They expect the same from their advisors. However, in today’s hyperconnected world it becomes a major challenge. Considering the amount of confidential information and wealth family offices control, they are increasingly targets of hackers. 

Therefore, it becomes highly imperative to have a technology architecture around information protection. Cloud migration can help with increased computing power, data storage and IT requirements, as well as provide the ability to have more secure, open communication with family members. 

Partnering with a reliable cloud-based solutions partner is a must to get the most out of the cloud technology and make the migration seamless. With the future-gen cloud-first approach, family offices can unlock value and get tangible results to propel business growth in this highly competitive digital landscape. 

5. Business Intelligence 

To keep pace with the changing market dynamics, family offices need tools that identify red flags across the firm with easy-to-set-up and easy-to-understand reports and notifications. Having one single, centralised, user-friendly dashboard or application managing all activities across client’s data, portfolio performance, risk calculations, staff performance, market research data, risk and compliance, performance evaluations against industry indexes and benchmarks, give that leverage to family offices. 

Conclusion 

Digitalisation is the key for family offices to stand out from the competition, cater across generations and scale business growth. The Family Offices that are thriving today are the ones that are capitalising on technology to fuel their growth. As per the latest survey, 95 per cent of family offices where third-generation members are involved are already implementing automation.

This article was provided by Contemi and does not necessarily reflect the views of AltFi.

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