The Family Office Operational Excellence Report 2024: Is now the time for older family offices to upgrade their tech?
As technological advances continue to unravel at an astonishing pace, any business structure should be required to keep up or potentially lose out. As revealed by the Family Office Operational Excellence Report 2024 from Campden Wealth and AlTi Tiedemann Global, however, not every family office feels the need to constantly upgrade.
While technology investment ranks high among single family offices’ [SFOs] priorities, the report found that just 26 percent of respondents have employed leading-edge solutions for investment and operations technology.
It appears that in many cases, technology investment is tied to the decade the family office was created, which means many older firms have technology that is inefficient or sub-optimal.
Looking at technology adoption in relation to the vintage of the family office, the report uncovers an important trend where older family offices (those founded before 2009) are most likely to be using older technology. In contrast, this percentage drops dramatically for those family offices established more recently (2010 and onwards).
“I think this is down to older family offices’ comfort with what works for them,” says second-gen investor and family office principal Skylar O’Neal. “New technology can be overwhelming and if what you have is currently working, often there is not a sense of need to innovate.”
“In all older family offices where I have worked or consulted, the technology isn’t wildly out of sync with the relevant industry,” says experienced family office professional Giles Graves. “Maybe this is more relevant to the older small family offices. If so, then some degree of keeping up with things is necessary but not to the extent that you are always changing systems.”
The report, which is based on a statistical analysis of 98 survey responses from mainly North America-based single family offices, did however find that SFOs in that part of the world are increasingly embracing the foundational new technological platforms of cloud-based data storage, automated payroll systems and mobile data access; with adoption levels in excess of 60 percent. The use of customisable accounting software, automated investment reporting and financial market information is somewhat lower but nonetheless well established.
“I think technology is adopted as needed,” says Giles Graves “If there were errors being made, then a solution is sought, maybe with training or hiring and this often means a new technology is embraced. Those selling technological solutions are best off coming at it from an educational / continuous career development perspective.”
“I have found that process-oriented people like to have personal control over outputs,” says Skylar O’Neal. “Efficiency oriented products can often time lead to the feeling of losing that control.”
Any hesitation with technology adoption may be attributed to cost considerations, lack of access to reliable IT talent or lack of knowledge about new solutions. Given the rapid pace of IT innovation there may also be a temptation to continuously defer purchases with the anticipation that something even better will be coming soon. That said, the report found that it may prove short-sighted not to consider the long-term benefits and efficiencies that these new solutions can offer to improve family office operations or ignore the importance of regularly investing in tech upgrades, as well as in the integration of new solutions into the family office operations.
Given the rapid pace of IT innovation, there is a feeling that SFOs may be tempted to continuously defer purchases with the anticipation that something even better will come along soon.
“Without question,” agrees O’Neal “So many of the products are so expensive that it feels heavy to purchase something that may be outdated within a year.”
“It took me a while for my first employer to replace my IBM laptop and fiddly Blackberry with some decent Apple products but I haven’t looked back since,” says Graves anecdotally. “All my work is in the cloud and often my meetings are by video conference as I’m constantly travelling. It all works great and they are mostly freely available apps. I don’t need the latest greatest Apple product to survive. Same goes for any technology anyone is considering using.”
The low level of adoption of some advanced technological solutions suggests that many family offices are still working with older, probably less efficient, systems and processes. For example, rather than implementing automated investment reporting, many SFOs are still manually entering data on spreadsheets.
“Manually entering data or writing out things helps me infinitely to absorb the information,” says Graves. “It’s important to keep an eye on technology as it develops but we mustn’t lose our cognitive and analytical skills and rely on machines.”
The report found that only one out of four family offices claim to have leading-edge technology for both investments and operations. Perhaps more alarming, 42 percent indicate that they have neither leading-edge investment nor operational technology.
“Updating technology in established family offices is not just about keeping up with the times; it's a strategic move towards ensuring longevity and prosperity for generations to come,” says family office entrepreneur and investor Brian C. Adams. “It’s crucial to reframe tech adoption as a strategic asset rather than a challenge.
“My advice is to begin by thoroughly assessing your current systems, then pinpoint areas where upgrades will have an immediate impact and phase in modern technologies thoughtfully. Leadership is key – ensure that you have executives who not only understand the importance of the latest digital tools but know how to integrate them effectively into existing practices.
“In today’s rapidly evolving digital landscape, combining new technology with visionary leaders is more crucial than ever.”
