At Simple, we continue to believe that family office software and technology are best viewed through archetypes.
Startup Family Office: Newly established family offices have the freedom to create an agile organisation at their point of origin. Today, many family offices are seen as a new beginning by their beneficial owners, possibly after successfully exiting a technology firm, a vantage point to the world and business that prioritises innovative thinking. Many bring their drive for creative disruption to their startup family offices. This approach extends from organisational structure to setting investment priorities. These offices might favour impact investing, with a focus on social issues and environmental sustainability, and alternative investments. The principal is often the beneficial owner who remains highly engaged in the family office’s strategies and is closely involved in day-to-day operations. Startup family offices may be organised into an operational business with a small team around a chairperson. They could also include artistic and nonprofit activities alongside venture capital interests. The keyword here is synergy in investing and operations.
Startup family offices often draw from the agile thinking of the tech world in creating their own technology stack. The dynamism of startup family offices makes clear that their future needs remain unknown and they have become accustomed to changing technology products. They value systems that provide them with open access to their data and that facilitate extending or migrating to other solutions at a later date. For this reason, they might be quicker to make an initial decision on off-the-shelf tools if it meets these requirements, while planning to further refine their tech stack in the future to create a data mesh and single source of truth.
Legacy Organisations: Many family offices have fulfilled their mission with success and diligence for decades. One of their hallmarks is direct investing, but this type of family office may diverge on their desire for discretion in their investing, operations, and personal lives. The size and scale of operations vary greatly in this category, running the range from a modest single family office to a large corporate conglomerate controlled by the interests of a single family.
Operations are well-established and routine but could use some modernisation. Perhaps, they are planning for a new generation to take the helm and have the desire to do things differently. Their technology use probably revolves around the broad use of Excel. When combined with a limited number of people holding crucial knowledge of the organisation, it creates a major operational and key-person risk. The opportunity is ripe to update practices that are currently not best-in-class and onboarding family office technology products for the first time can advance their interests. Accountants or tax consultants will likely take the lead in this transition within a longstanding organisation. Systemising investment management in a portfolio management system can help reduce risks as the staff are forced to track, manage, and report in structures that can be transferred to others in the future.
Best in Class: An elite selection of family offices is leading the way in organisational efficiency, management structure, and reach. They currently make use of technology to effectively manage their holdings and activities across a broad range of interests. Immediate business priorities often combine managing property and business ownership, the continuing investment of private wealth, seeking venture investing opportunities, and social and artistic concerns. These activities are organised around a set of guiding principles that seek to generate clear social benefits from their activities. Across the board, they are civic and economic leaders through their practices.
Technological advancements create an opportunity for further operational refinement. Better data could be used to benchmark operations against other family offices more effectively. Expanding the use of ESG data could further their broader mission. Technology is available to better structure and encourage collaboration in the organisation. It can also display the breadth of portfolios and generate reports to continue preserving the family legacy for future generations while facilitating the desired social impact.
Single to Multi-family Office: It is often said that a successful single family office begets a multi-family office. Processes and motivations vary. Some families combine their resources under a shared vision to maximise their impact, while other families wish to avoid the startup phase by joining an efficiently managed multi-family office. In both examples, joining forces brings together a wealth of knowledge. Expanding a single family office into a multi-family office requires scaling up operations and capacity that, if done effectively, can increase efficiency and productivity.
Technology that worked for a single family office needs to be returned and recalibrated to accommodate more key operators and partners with a broader range of interests and holdings. When families combine assets, it increases the potential for greater impact, but it also increases the number of stakeholders requiring timely information, accounting documents, and to include in decision-making.
From Banker to Multi-family Office: A new multi-family office is commonly created when a person with years of experience in managing private wealth within a bank steps clear, by themselves or with similarly experienced colleagues, to establish an independent family office. These experts sit at the top of the new private office’s organisational structure and might focus on niche services to meet market opportunities identified in their prior positions. They might combine their primary offerings with additional management solutions such as legal counsel or other bespoke services, but essentially they create clear value for their clients by simplifying their lives.
The technological case for this type of multi-family office requires bringing together accounting and coordination across a range of services to a broad set of clients. Technology should encourage better service to clients, making effective customer relationship management (CRM) of the utmost importance.
Commercial Multi-family Office: Commercial multi-family offices have a clear business incentive to attract new clients. High staff-to-client ratios are the norm and the quality of service is personal and bespoke. They offer a comprehensive range of offerings that often target the lower end of the ultra-wealthy management segment. Some large multi-family offices continue to grow, while others are acquired and merged with other multi-family offices.
Technology opportunities at commercial multi-family offices include prioritising CRM to maximise the effectiveness of relationships and operations. The largest multi-family offices require technology to streamline interactions with families while improving accounting and reporting for staff and advisors.