Optimizing the Family Office Tech Stack

In addition to managing the various functions they perform for the families they serve, family offices must also gather data from a wide variety of investments across an expanding range of asset types, including real estate, art and other collections.

They must then provide timely records and reporting for their clients, supporting their ongoing strategic and tactical planning. Making all these pieces fit together often requires a patchwork of off-the-shelf tools such as Excel and QuickBooks, combined with a set of manual processes to manage reporting, bookkeeping and performance tasks.

Because every family office is unique, a single solution rarely covers every function they perform. Changing regulations, complex reporting methods, and new asset classes complicate matters further. Many family offices are considering or currently using AI to support their needs. Before they can introduce automation into their operations, however, family offices will need to adopt new integrated technologies that can centralize data and streamline their workflows.

Adopting a well-integrated tech stack can help family offices:

• Make more efficient use of staff time and energy by reducing administrative workloads.
• Reduce potential for data inconsistencies or other mistakes caused by human error by minimizing or eliminating redundant data entry.
• Keep information more secure by storing it in fewer places.
• Reduce audit and compliance burdens by automating reporting processes.

Developing a comprehensive technology strategy is easier than you might think. Here are three ways to make it happen.

1. Think about what data you need and what you need to do with it

Before you purchase or replace any technology solution, it’s important to step back and understand what you need your systems to do. Consider your data sources: You might receive information from managed accounts, brokerage services, direct investments, bank accounts, limited partnerships, art and collectible holdings. All that information needs to feed into your systems for reporting, performance monitoring and accounting.

What comes out of the system matters, too. Family members may not need much more than periodic condensed reporting. If you have an in-house investment team, however, they may want more granular data access so they can conduct what-if analyses and stress-testing. Those needs can be particularly difficult to solve simultaneously when dealing with asset classes like private equity, where reporting tends to lag significantly (see “Conquering the Private Equity Reporting Challenge”). Understanding these requirements can help determine the minimum specifications you’ll need from any new solution.

2. Look at ways to integrate your tech stack

Working with vendors whose products are flexible enough to deal with the types of data you receive can help your systems handle data more efficiently and securely, while incorporating them more thoroughly into your existing systems. Alternatively, you can investigate systems like Northern Trust’s Front Office Solutions platform, which aggregates data from multiple sources into a single, secure reporting and performance engine suited to your needs.

Cloud-based systems are often designed to deal with data more flexibly than on-premise solutions and are much easier to scale. Cloud environments tailored to the financial services industry offer strict enough security to consider moving to these types of systems, which also can reduce IT overhead by eliminating the need to purchase servers and streamlining system updates.

3. Think strategically before choosing new or replacement technologies

Ultimately, your family office’s functional needs are more important than integration. Some platforms may offer seamless integration at the expense of key features available in specific products. The more flexible systems are in terms of importing and exporting data in standard formats, the better they are likely to work together in the end.

For family offices with complex operations or those who lack the resources to vet technology solutions on their own, third-party partners can be a valuable asset. Trusted financial service partners like Northern Trust can work with technology consultants to help family offices understand their technology needs and implement well-integrated solutions that can help them achieve greater efficiency without compromising on features or functionality.