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Time is Money: Even in a Family Office

Published

September 8, 2022

In business, it's all about the bottom line. There are several factors that affect that bottom line, and an effective business leader will monitor them all. One of the most important measures is what's called the operational efficiency ratio, also known as the indicator of the health of the business. The operating efficiency ratio compares the expenses to any revenue generated and obviously the goal is to have as low a ratio as possible—to be able to generate revenue in the most efficient way.

If the ratio is rising, or already too high, then the course correction is to make changes to business processes and the toolset available to the business to improve operational efficiency. This is the situation many family offices find themselves in right now. Although single family offices may not be operating for a profit, optimizing efficiency, expenses, and other resources is of utmost importance to the family and office leaders.

Staffing is Expected to Drive Rise in Costs

Family offices foresee rising costs over the next three years, with the greatest increases in staffing, their greatest area of overhead. In a recent survey, as shown below, more than half of offices (54%) expect staff costs – including hiring, salaries, and bonuses – to rise. Regionally, US family offices appear to face the greatest staff costs, with 80% expecting increases. Roughly two-thirds of Swiss (67%) and Middle Eastern (63%) offices have similar expectations. By contrast, survey respondents in Asia-Pacific (44%) anticipate less upwards pressure, and Latin America (22%) seems far less concerned about rising staff costs for family offices.

 (UBS GFO Report June 2022)

The cost of operating a family office has risen significantly, driven by salaries and wages, forcing offices to take actions they have long delayed. How should family offices proceed? Below are key areas they need to assess:

  1. Efficiently collect, contextualize, and leverage financial data
  2. A single source of data will help create data insights to streamline internal controls and workflows.
  3. Practice principle prioritization
  4. How does the 80/20 rule (80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event) impact the office? Which 20% of the work really matters?
  5. Prioritization goes hand in hand with data collection and analysis, as a complete and clear picture can help you develop strategies to eliminate wasted time, effort, and talent. To streamline your workflows, implement continuous improvement methodologies, and analyze ongoing performance.
  6. Free-up resources and time to focus on things that produce maximum return on investment (ROI) for the family.
  7. Invest in technology
  8. Managing to capture, organize, and analyze your data, and then put the insights to good use, requires a robust set of tools.
  9. Implement a comprehensive family office software solution to give the office access to advanced data management and analytics, process automation, AI, and user experience.
  10. Gain full visibility into all your performance, compliance, spending, and other data generated by your business with a fully integrated, centralized, cloud-native solution.
  11. Eliminate disparate software environments to be able to work faster with more effective collaboration, communication, and strategic planning.
  12. Analyze data in real-time to generate fully customizable reports, forecasts, budgets, financial statements, etc.
  13. Streamline high-volume, low-value tasks through business process automation. This frees team members to apply their talents where they can generate the best return (while simultaneously boosting speed and enhancing performance and accuracy by eliminating human error).
  14. Integrate continuous improvement as part of an overarching digital transformation.
  15. Eliminate the expense and waste of paper-based, manual workflows, generating both immediate savings and long-term value.
  16. Establish, manage, and refine KPIs you can use in tandem with the operational efficiency ratio.

The approach outlined in the points above can significantly impact the ability of an office to efficiently and effectively manage the various processes, people, and systems that interact to deliver valued client outcomes.

They are also very interdependent, which is why operational efficiency changes are strategic and ongoing. Making change happen in a family office can be difficult and requires a catalyst. This is where choosing the right technology can automatically bring about the necessary changes around data and work prioritization.

Single family offices can fail. How an office structures and manages its operations is essential for delivering on the promise of a family office. A properly structured and maintained operational capability maximizes the client experience, in addition to realizing efficiencies and controlling costs.

Eton Solutions – The Family Office Software to Optimize Operating Efficiency

Eton Solutions built its AtlasFive® family office software specifically to address the complex needs of family offices and their clients. The solution integrates deep domain knowledge and best practices with best-in-class technology to better capture, manage and analyze data, automate time-consuming mundane tasks; eliminate errors and speed the time needed to generate accurate and trusted reports, forecasts, and budgets. It delivers true transparency, secure access to information, and greatly improved risk management. The result is greater productivity and better outcomes for the families that offices serve.

AtlasFive® is the right platform for family offices seeking to improve operational efficiency. It provides the only truly integrated platform for single and multi-family offices. It revolutionizes the efficiency of managing and operating these offices, and it meets and often exceeds the changing needs and expectations of the ultra-high-net-worth families being served.

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