1. Your priorities
As mentioned, these are the priorities of the office, not your counterparties. We see suppliers such as wealth managers and advice firms view their technology infrastructure as the best for their clients purely because it’s already established. But as technology costs and efficacy have improved, there is an ability for the office to become the central hub that all others plug into, not the other way around.
All family offices are different, however in my experience there is homogeneity in the challenges and priority lists between clients have a lot of crossovers. Without going into the idiosyncratic differences for each, there will be three main aspects that need to be addressed for all offices:
Data comes in different formats, from a vast array of suppliers and it needs to be brought into one place accurately, timely and securely. This aggregation is paramount, and we see a lot of issues with incumbent solutions, primarily Excel, with cobbled together legacy platforms.
Where once the domain of custodians, banks and wealth managers, the modern family office is now the aggregator of their own data. From looking externally for firms to track investments, secure documents and sensitive data, the family office technology can now provide these functions that are customised and specific for each user.
This is the big one for a lot of clients, particularly those that have complex investments and a small staff. You hear about very good, highly credentialed staff leaving family offices and some of that can be attributed to the sheer volume of manual data entry.
There is such as huge risk for families relying on manual data aggregation, as accuracy and timeliness of reporting is hampered by these processes. With technology now allowing direct data feeds via APIs and other integrations, it is becoming less of an issue. That’s not to say that the problem has been solved for everyone, and the question of direct data feeds available with each platform should be front of mind when selecting.
When selecting a platform or new technology that requires data feeds, make sure they have them or commit to connections (or find a middleware alternative) as I have seen too many “soon to be connected counterparties” stay that way for a long time, in particularly in markets such as Australia which may not be a priority for global players.
We are seeing more and more need for analytics on the portfolio to be centralised with the office itself. There are still use cases for external counterparties to provide deep dives into the portfolio but there is a real push for improved day to day outputs for investment and finance teams to better manage the portfolio.
This can mean basic overviews of positions, with performance metrics that reflect a more top level viewpoint or sense check with some basic benchmarks.
For some families, the needs case is for deeper, more institutional grade portfolio analytics, especially as we see more CIOs coming from large asset owners such as pension and sovereign wealth funds. The portfolio constituents are also affecting this need, with private market and more opaque structures requiring increased governance, stress testing and risk metrics that cannot be provided outside the more sophisticated platforms.