Family offices prioritize stability over innovation and rely on trusted human relationships to operate skillfully and cautiously. Their highly customized structures demand compliance and security, complicating large-scale digitization efforts.
Privacy concerns, generational divides, and the complexity of managing unique challenges like legacy planning, philanthropy, and illiquid assets–further slow any technological adoption.
Why family offices hesitate to adopt AI
It’s fascinating that, while family offices are investing in AI companies, they’re hesitant to use AI in their own operations. Many family offices hesitate to trust AI systems because they lack transparency or fail to align with the nuanced, bespoke nature of family offices. Without explainability and bias control, AI risks being seen as a disruption rather than a solution.
“Family offices we work with frequently invest in venture funds and do direct deals that are AI-focused. I find it ironic that family offices are still using manual and Excel-based processes for their administrative work, even though they are investing in AI. We hear all the time they’re still printing checks, stuffing envelopes and relying on Excel to manage billion-dollar portfolios.” – Founder and CEO of Asseta, Dean Palmiter.
But, the landscape is evolving and the ROI of AI may soon be too hard to ignore.
The next step in family office digitisation
A new wave of AI innovation, led by autonomous AI agents, could reshape how family offices view technology. Unlike static automation tools, AI agents are dynamic decision-making systems that can monitor portfolios, conduct real-time risk assessments, suggest rebalancing strategies, identify opportunities for tax optimization, reconcile accounts, and even close the books.
These agents are not designed to replace human advisors but to work alongside them, continuously learning, building context and providing insights that free up teams to focus on high-level strategic decisions.
“In this new paradigm, humans make the decisions, and agents do the work.”– Founder and CEO of Asseta, Dean Palmiter.
Family offices that fail to digitize may struggle to compete with more tech-savvy peers. They may also find it harder to attract, onboard and retain next-gen family members who expect modern tools and interfaces.
As younger generations take on leadership roles, they are bringing a more technology-forward mindset to family offices. With a hunger for better, more efficient ways of doing things, the next logical evolution for younger family office leaders is to leverage AI to enhance dynamic portfolio management, assess risk across diverse asset classes, and measure the impact of investments aligned with family values.
The most successful family offices will not simply adopt AI for efficiency. They will combine AI with first-principles thinking, questioning legacy strategies and adapting intelligently to new market conditions. By leveraging this technology as trusted collaborators, family offices can achieve a competitive advantage in preserving and growing wealth across generations.
What does “digitization” mean in the context of family offices?
Digitization isn’t just about replacing Excel spreadsheets with modern software. It encompasses the entire technology stack, from back-office functions like accounting, reporting, and compliance to front-office tasks like investment decision-making and client interaction.
In practice, this includes:
- Portfolio analytics tools for real-time tracking of performance.
- Finance & accounting software for unifying wealth management.
- Smart credit card and bill pay transaction automation.
- Document management systems to centralize sensitive data.
- Generative AI tools to automate repetitive tasks such as preparing financial reports or compliance checks.
- Investment analysis to quickly identify strong opportunities in traditional and alternative markets for ROI.
Family offices prioritize privacy and discretion when handling sensitive financial and personal information, making them hesitant to adopt new technologies. This aversion to risk can make them hesitant to adopt any new software tools, especially LLMs, outside of their established and secure systems.
The first step to AI adoption for family offices is to understand the power and efficiency gains of leveraging modern, purpose-built software. By centralizing data, LLMs can provide AI Agents with the necessary information, context, and tasks to significantly enhance the speed and effectiveness of decision-making.
What exactly are family offices using AI for today?
Simple’s “2024 Family Office Software & Technology” reported surveyed Family Offices and uncovered their current use of AI is often limited to operational and administrative tasks:
- 43% of family offices reported that they are not currently using AI (S1).
- 29% are using AI to automate administrative tasks (S2), such as compliance checks and document management.
- 21% are utilizing AI to enhance operational efficiency (S3) by streamlining internal workflows and optimizing processes.
- Only 7% are using AI for investment analysis and decision-making (S4), reflecting hesitation in applying AI to high-stakes financial decisions.
Family offices are currently using AI primarily for operational and administrative purposes (e.g., compliance and workflow optimization) but remain cautious about applying it to high-stakes investment decisions due to concerns about trust, risk, and explainability. The current AI adoption pattern reflects a conservative, low-risk mindset, but early adopters who succeed with AI in investment decision-making could trigger broader acceptance across the sector.
The future of AI in family offices
But there’s an upside to this data: it shows opportunity. The 7% of those using AI for investment decisions are early adopters. If they see measurable success, more family offices will likely follow suit to remain competitive and not get left behind by their peers. Once AI proves itself reliable in generating returns–whether through time, cost or alpha enhancements–the adoption rate could skyrocket.
The bottom line is that family offices are cautiously experimenting with AI, but they’re keeping it confined to operational tasks for now. The real unlock will come when AI can bridge the trust gap and demonstrate consistent value in investment decisions without sacrificing the personalized touch family offices pride themselves on.
