The future of Family Offices

• While many corporations were slow to adopt new technologies partly due to privacy concerns, certain entrepreneurial family offices readily embraced advancements and led the way in practices which inevitably became commonplace.
• The speed of wealth creation and wealth loss will continue to increase and this will have various interesting consequences for Multi Family Offices, specialist recruiters and SFO experienced professionals.
• Family offices that embrace technology rationally will thrive managing increasingly diversified assets in an ever more globalised sector.

In the latest in a series of articles for CampdenFB, experienced family office professional Giles Graves discusses the future for the family office sector. 

The Singularity is the point in time when Artificial Intelligence gets out of control. We are not there yet, although there are signs that we are getting closer. For example, I have noticed recently that my Siri has started to become a little cocky. 

I often ask Siri for information, especially in the mornings when I have other things to do with my hands such as make tea, and don’t want to be tapping away at a screen. 

I will ask what the weather will be like or what is in my inbox or calendar and Siri will read out various things for me such as emails, articles or news items. 

Manners cost nothing, and I always take the time to thank Siri afterwards. Whereas in the past he would be extremely polite and answer “You’re welcome", he is more inclined these days to respond with “Sure thing”. 

To me, that is a few steps too close to The Singularity.

How technology has changed our lives in the last few decades. It is incredible to think how email and websites were in their infancy and not widely used when I was starting university. Receiving several paper letters in the “post” was a daily thing and there was no such thing as a paperless option for example with bank statements or bills. 

My first work in law firms saw offices with paper files piled up to the ceiling, grey metal filing cabinets crammed with paper and secretaries constantly changing printer cartridges and ordering paper and ink.

The stationery budget was significant, as was the time and space taken up with all the desk-based, paper-related activity. 

A family office on a rural estate

By 2005 I was working in a beautiful family office on a rural estate and was at my desk with a laptop and screen probably 60% of the time and then up and about, talking to people and travelling to meetings probably 40%. Even then train tickets were extortionate in the UK and a train to London in the morning would cost more than a plane ticket to the South of France, as is still the case. Essentially by then email and screen-based work had completely taken over but paper was still frequently used to share information, create files, and archive… and there was still post!

By 2011 I was completely cloud-based and working in a 90% paperless office. Any post arriving instantly resulted in an email to subscribe to a paperless solution. 

I started working with family offices from different parts of the world; Russia, Canada, UAE, Asia, and offshore, and rapidly saw how modern and advanced some systems had become. 

At this time the corporate world in the majority of cases was slowly and begrudgingly adopting new technology. In a nutshell, the truth is that more technology means less privacy and this was a big concern for corporations who wanted control. It is possible and necessary to protect privacy to different extents but corporations at this time were hindering progress and wasting time and money trying to retain all privacy on everything. This was, and still is, frankly ridiculous.

In the Family Office sector, equally ridiculous choices were made. A family business might spend millions on private fibre optic cable but it would only go as far as the local exchange… in any case, all family members had their own Gmail or iCloud or Instagram anyway… almost all businesses had a paragraph of nonsense in every email signature saying that “the above communications are only intended for the recipient etc etc” this was, and is, ridiculous. Many businesses created their own intranets – an astonishing waste of money and time. 

Gradually everyone admits that everything can be instantly copied and shared. Every email or message, once sent, can be sent on, everywhere. In every transaction, there are many people involved and it is impossible to control everyone and everything, always. In any case, it is not necessary. There are grades of privacy necessary for different types of information at different times. No matter what system is put in place information will find its way out. Take UK members of parliament and their WhatsApp messages as an example. 

By 2013 an American I worked for, had new projects starting up across the globe and the whole international team would meet up by video call as easily and instantly as we do these days. Skype had been popular in the preceding years but very few businesses would use it and the bureaucracy of the corporate world was still messing around trying to create their own “private” video conferencing networks. I have never been in a meeting where one of those has worked smoothly.

In contrast, this team were well ahead of the curve. 

All colleagues there used Apple products so there was no time wasted with viruses or bugs in the system, just instant collaboration. FaceTime was used every day. Dropbox was the free instant solution for cloud-based filing, and multiple other modern apps and services were used to communicate and collaborate. No time was wasted. As a result, the pace of progress was impressive. 

By 2014 I was working like this habitually with every family office client. As I do today. Most of my work can be done with an iPhone or iPad. Documents and information are available to me wherever I am. Meeting people in person is a choice and a pleasure, not a chore. There is no daily commute or having to take extortionate travel routes at busy times. We are all instantly able to communicate, manage situations, share ideas or updates and make progress no matter where in the world I, or my colleagues and clients are. 

Life-changing freedom

The freedom this brings has been life-changing for us all. A client can video call me from his yacht thousands of miles away and we can not only speak “face-to-face” but I can instantly share screen, or show documents, plans, images and whatever information he needs to make a decision, he can then sign such documents as are necessary to make progress, all without paper, or post, or physically travelling to meet each other. We meet sometimes with large teams in this way. Meetings that in the past would mean all participants travelling to a certain location. 

The efficiency and speed with which matters can now proceed has meant we all have more time to… Live… to enjoy our time, our homes, our personal experiences. Time, the most valuable asset any of us have. 

When luminaries talk of AI the conversation can veer into the dark dystopian fairytales that life will be worse. In my experience so far technological advances have improved my life greatly.

We must admit the speed of technological growth is exponential and at a moment in time could be unstoppable. As AI systems improve themselves, they will reach levels of sophistication that surpass human intellect, and a speed feedback loop will ensue, propelling progress at an unprecedented pace. This cascade of innovation poses profound questions about the nature of work and the structure of society. 

Family Offices exist across the kaleidoscopic spectrum of skill and sophistication and so there will be ones that still have a significant stationery budget and others that collaborate with multiple professionals from different corners of the world on a 3D holographic plan of a project. 

One interesting way that technology is affecting the Family Office space is the speed at which wealth can be created and lost. Just as many industries are facing severe disruption or becoming obsolete, similarly new wealth opportunities are abundant. As a result, there will be more demand for Multi-Family Offices, more demand for family office recruitment specialists and a never-ending demand for experienced professionals to set up new Single Family Offices (my speciality).

Family Offices, as always will need to adapt and embrace the future. 

The kind of technological advances I describe above have meant a far greater cohesion between international teams and this has meant a Single Family Office can competently manage assets worldwide. It is now easy to have daily or weekly face-to-face meetings with asset managers around the world, and this ensures the Family Office is the hub and leader of all activities and decisions. 

Technology has allowed us to understand more of the world outside our bubble and this means many desire to explore more and live a life less ordinary. As a result, Family Offices are more likely to find themselves involved in far-flung global projects and assets. 

Probably one huge development for Family Office professionals is the need to have an open mind to new cultures, an awareness of different jurisdictions and the ability to communicate well and network in new territories.

It is now unusual for a London family office to only deal with assets in England, for example. 

I see diversification increasing exponentially for Family Offices as technology develops. 

There seems to be little point in planning for or worrying about The Singularity. It is inevitable and beyond our control. As we move into a future of increased globalisation, however, the need for flexible, adaptable, quick-learning, technologically capable, generalist family office professionals grows ever stronger.