Key Considerations for Your Family Office Technology Strategy
In the early 90s, legitimate family office software was, by all accounts, a unicorn.
At the time, there were only a handful of software platforms even partially suitable for family offices. The number of software platforms actually equipped to handle the complexities of managing and reporting on significant wealth was even fewer. Not surprisingly, family offices had limited potential when it came to digitizing and streamlining routine operations.
So for years, family offices and financial institutions serving high-net-worth clients had two options: buy ill-fitting technology for a makeshift solution or build a proprietary technology network for the sole use of their own family office.
The problem with both options was that neither offered a sound, long-term solution.
As wealthtech advanced and high-net-worth individuals began demanding access to modern family office reporting, the age-old debate of buy versus build shifted. Then, in the 2010s, the debate took on a wholly new form: buy an integrated family office platform or build a technology stack that utilized multiple best of breed family office solutions.
Fast forward to today, family offices of all sizes are actively scrutinizing their technology strategies and weighing the benefits of implementing comprehensive technology stacks that replace legacy systems with purpose-built family office technology solutions.
While some of the largest family offices have opted to engage consultants or deploy teams of resources to construct a long-term, multi-faceted solution, others have found it difficult to know where to start.
To help you get your footing, here are a few tips to consider as you jump into this lengthy, but ultimately rewarding, process:
1. Know the requirements of your family office staff and end-clients
You wouldn’t build a house without a blueprint, so why would you build a technology stack without a requirements assessment?
Before you start snapping up a platform—or multiple platforms—you should have pointed conversations with your internal accountants, investment professionals, reporting analysts and family members to understand what they hope to accomplish with modern wealthtech. Equally important, you should take time to understand your team’s capacity and expertise to manage and maintain a technology solution, particularly if you plan to interlink multiple systems.
To help begin this assessment, we’ve put together a list of 50+ evaluation criteria focusing on key decision points related to technology and staffing infrastructure, data collection, functionality and reporting to help you think through your wealthtech strategy.
2. Ask other family office professionals what tools they’re using
The wealthtech landscape has grown rapidly in recent years, but not all family office technology is created equally. Take the time to reach out to your peers in the family office community, attend conferences with other wealth management professionals and chat with industry consultants to learn not only what solutions are out there, but which ones can deliver on their promises and be a trusted, reliable resource for your organization for years to come.
If you’re interested in joining a family office network, check out our blog containing a short list of family office networking and educational resources.
3. Don’t be afraid to implement your family office’s technology strategy in phases
It can be tempting to try to solve all of your problems at once, but we recommend prioritizing the most pressing issues and building out from there.
Think about it this way: if you’re primary goal is to replace your accounting software and automate investment data aggregation, it probably doesn’t make sense to prioritize implementing a client portal, particularly if there’s no data to feed it. Instead, focus on finding a solution—or a combination of solutions—that can meet your accounting, investment and client reporting demands over time.
For instance, when implementing the Archway Platform℠, we suggest that our clients configure their chart of accounts first. From there, we can work alongside the family office to set account balances, build out entity structures, activate automated data feeds and begin the process of creating internal and external reports. Once the family office staff has met their accounting and investment data requirements, and has established consistency in their daily processes, we can revisit how to set up the Archway Client Portal so that they can begin sharing digital reporting with their end-clients.
By phasing the implementation across multiple stages, we are able to help clients focus on maintaining the integrity of the data and provide proper training on how to use the solution for existing and future needs.
4. Create an evaluation process and follow it
Whether you plan to partner with a technology consultant, create an internal task force or perform your due diligence independently, it’s important to have a process. Establish priorities, curate a list of questions to help you compare potential vendors, create technology proofs of concepts and set realistic timelines for implementing new tools in your family office or financial institution.
By understanding your organization’s requirements and how to properly vet viable solutions, you can better manage expectations around the selection process, technology implementation and the long-term vision for your wealthtech strategy.
Ready to begin strategizing and planning your family office’s wealthtech stack?
Download our short wealthtech strategy evaluation to begin assessing feasibility, needs and outputs to help you add efficiency to your internal family office operations and deliver a more insightful client reporting experience.
Product Solutions Manager – SEI Family Office Services
Paul Francis is currently a member of the SEI Family Office Services team serving as the first point of contact for prospective clients interested in the firm's software and service solutions. He is responsible for conducting initial product demonstrations to professionals within financial institutions as well as collecting industry feedback and trends to further SEI’s product development and innovation. Prior to this role, Paul was a member of the Client Relations team where he was the subject matter expert on data integrations resulting in streamlined internal processes for monitoring data feeds and improved efficiency in addressing integration-related inquiries.
Paul holds a Bachelor of Science in Finance and Entrepreneurship from Ball State University. Outside of work, he enjoys spending time on the lake and traveling with his wife and their two dogs.