Family offices operate in volatile environments. But as the focus of the world has shifted from managing the Covid-19 pandemic to dealing with its economic aftershocks compounded by the threat of global conflict, the need for family offices to embed flexibility and agility at the core of their operations has never been more important.
To achieve this, family offices need to build operating models that focus on data, facilitate the integration of technologies from different providers and deliver accurate and timely analyses on which informed decisions can be made with confidence.
Technology has a large role to play in delivering this flexibility and agility, helping family offices navigate not only the immediate geopolitical factors that are focusing minds at the time of writing; but also, the challenges are thrown up by climate change, generational wealth transfer, the focus on ESG, crypto, and regulatory changes. These are just a few of the factors that need to be considered when choosing how to use tech in the modern family office.
To guide decisions surrounding the effective use of technology it is useful to consider three core elements - requirements, data, and integration.
First and foremost, investing time to understand a family office’s capability requirements is seldom wasted, but frequently overlooked. Start with strategic intent. What is the purpose of the family office, now and in the future? What activities does it need to conduct to achieve this intent? How are these activities currently conducted and where can efficiencies be introduced to execute these activities more effectively? Does technology have a role in introducing these efficiencies, or are there different ways of achieving a similar effect, such as through outsourcing or partnerships?
This is not an exhaustive list, but rather a guide to the types of analyses that can start to define the needs of the family office – some of which may be satisfied through the use of technology. In sum, technology is a means to an end, not the end in itself, it is a tool.
Second, data. It is all about the data. Data is the lifeblood of the technological tool kit that feeds from data, enhances and refines it, and reports on it. Above all data provides the raw material through which information is turned into actionable intelligence, to support fast, well-informed decision-making.
If data is not properly collected, organized, and secured, the performance of any technological ‘tool kit’ and ultimately the family office will be restricted. This is particularly true of investment data, where data feeds from multiple custodians, investment managers, direct investments, platforms, and alternative asset classes must be considered in the round. The challenge of creating a reliable ‘single source of investment truth’ is significant. But once achieved, the consolidated data set can be exploited through reporting, investment decision-making, and risk analysis tools with confidence.
Lastly, integration. An effective system exists where the whole is greater than the sum of the individual parts. New technologies – chosen once the requirements are identified as stated above - should integrate with existing tech already in place, the processes driving the family office, and the people the office has been set up to serve, the family members themselves. Integration should break down silos, avoid the need for manual activity and ensure data is shared between individual parts of the system. It should also be flexible, whereby the family office platform is futureproofed by ensuring technological components can be added or removed to satisfy changing needs over time.
At Point Group we provide investment managers, including family offices, with the data-first integration platform they need to build tailored and highly flexible investment operating systems.
Our platform sits at the center of our client’s operating models. It provides the unifying central point in an ecosystem typified by multiple data types and an ever-expanding universe of technologies and investment products and services. It acts as the data and technology keystone from which our clients can build flexible, agile, and customizable investment operating platforms that operate as one unified system.
The platform is based on five core elements; all centered around ‘getting the data right’:
• The first element focuses on the automated collection of our clients’ investment and market data from custodians, bank accounts, investment platforms and market data providers, amongst others.
• The second facilitates the integration of market-leading third-party technologies and services on a plug-and-play basis (including portfolio management systems, client onboarding platforms, AI/ML portfolio optimization tools, third-party investment products, and core banking platforms).
• Our third element is our data engine. This provides our clients with a ‘single source of truth’ and enables them to unlock value by exploiting aggregated, calculated investment data.
• The fourth element provides our clients with a set of tools to allow family offices to exploit their data and make decisions based on trusted, actionable intelligence.
• Finally, the fifth element focuses on engagement. A suite of engagement tools to support face-to-face communications with family office principals, internal users, and external partners such as accountants and advisers. Our engagement suite provides automated, consolidated digital reporting across multiple portfolios, accounts, and investments.
No two-family offices are identical. Each has specific requirements and different existing technology and service ‘stacks’. Our platform accommodates existing operating models and facilitates the transformation to new ones as the family office grows by integrating different data, technology, and service ‘mixes’ as required.
This article is from The Wealth Mosaic’s GFO WealthTech Landscape Report 2022. Access the full report here.
