The latest UBS global family office report had one data point that stuck out, amongst a raft of information covering investment and impact. The costs of running a family office had risen in 2020, with most of the cause centered on staffing and IT costs, signifying more interest in family office technology. More than a third (39%) of family offices report significant or moderate upwards pressure on salaries, and a similar percentage (35%) do for IT.
These running cost increases aren’t necessarily a bad thing
They imply that offices with institutional-style investments and assets sizes are building staff and IT that is more institutional grade. If we relate this to our own client experience in APAC, the cost of staffing seems to be caused by the need for greater expertise in investments and operations that are outside the skill set of the family and current advisers. Mostly those that can provide due diligence on more idiosyncratic investments as they move away from public markets and coded funds into private equity, VC, and begin to focus on ESG/Impact.
The other cost is IT, which admittedly has been an expense that up until now has been put off rather than a symptom of change. As Excel is basically free, it’s no wonder that some say trillions of family office assets are tracked and analyzed using spreadsheets and pivot tables.