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Moving the Line of Focus in a Family Office


February 8, 2023

Family offices have increasingly discovered that technology and strategy are inseparable. Technology has an inner logic that simply must be considered in strategic planning—the process of creating a concept of the business, identifying goals and objectives and the long-term approach to meet them, and formulating plans of action, can't be separated from a discussion of office technology. Technology is more than just functional nuts and bolts; it can set an office on a sustainable path for the future to empower it to work at that "higher level."

Technology advancements that facilitate family offices achieving these goals come with several business benefits, such as implementing best practices, efficient business processes, better service outcomes, and managing risk. However, the initial investment cost and the disruption that change brings have caused slower adoption rates than in other sectors.

Thinking about slower adoption rates must lead you to create a game plan to abandon the nonsense! A family office must maintain a fiduciary duty over the substantial sums of money it manages, and it has been tasked to do this in the most efficient, secure manner. This is the family office strategy, and if there is a technology approach that facilitates doing just this, then the ROI for adopting it is evident.

Technology Built for The Family Office

Until recently, the family office market used technology and software created primarily for adjacent markets, like hedge funds. This involved compromise from both the technology vendor and the family office. A real and recent change is that there are now technology platforms explicitly built for the family office. Still, an adequate evaluation of what they can do must focus on how the technology can change the status quo and positively impact operations throughout the office.

Strategic thought and focus are critical when assessing technology options, and some work must be done upfront in any software selection process to identify what business process changes can have the most significant impact on the "value" of the operations of the office. This upfront work speeds up the selection process and the realization of the benefits and value during implementation.

What are the typical areas of work in a family office that the right technology can impact to make the work more predictive rather than historical, more proactive, and not so reactive?  Disparate systems with their data silos, including spreadsheets, are core to the problems offices face in making their work more "valuable" and forward-thinking. These separate systems create challenges for every aspect of the family office, resulting in redundant work, outdated data, and an increased chance of errors.

This lack of integration impacts more than data gathering and reporting. Historical reporting is not a differentiator for a family office anymore. A modern technology platform should facilitate proactive investing, financial, estate, tax planning, and data-driven automated investment and planning strategies. Technology impacts remote access, risk, and cybersecurity, as well as the developing technologies of streaming information and AI as the information filter.

How Technology Improves Family Office Operations

All of this matters because of the challenges an office faces in managing the increased complexity of family financial lives, maintaining high service levels without increasing costs, and supporting generational change in family and staff.

At the most strategic level, an office can use the right technology platform to address its core requirements for the ongoing support of the family:

  • Knowledge sharing/transfer
  • Knowledge transparency
  • Resilience
  • Collaboration
  • Trust

These are critical objectives in elevating the value delivered by the family office to the next level.


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Ensuring the Success of a Family Office: Navigating Operational Risks

Educating individuals about the intricacies of a family office involves understanding its fundamental role in risk management. A member of a family office once experienced a revelatory "lightbulb" moment, recognizing that the core function of a family office is to manage risks effectively. The failure to do so can indeed lead to the downfall of a family office. While both investment and operational risks demand attention, it is the latter that poses the potential for catastrophic failure.

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