Family office insights this week:

• A deep dive into family office software

• Two cautionary tales about Excel

• A tweet that had 900k views this week

• How high-frequency trading software revolutionized Wall Street

• A podcast diving into the most pressing family office issues

The 5-Minute Guide To Family Office Software

A brief guide to the growing world of family office software

Family offices are changing the way they operate.

The days of relying on the patriarch for oversight and managing investments in Excel are coming to an end.

Today, Single Family Offices hold a complex assortment of assets, held across various jurisdictions and in multiple currencies. 

Large Multi-Family Offices have evolved into outright institutions themselves.

The level of involvement and complexity has increased everywhere: family offices need to actively manage investments and consistently support family needs.

And as the next generation gets involved, they expect real-time information at their fingertips.

With more diverse portfolios, an increasingly global footprint and higher expectations from owners, new software solutions are vital.

Powerful software solutions are available, but with often overlapping features, the family office software industry can be confusing.

Today it’s a brief overview to help make sense of things:

• what’s driving the need for tech

• the risks of implementing new tech

• the risks of not implementing new tech

• some market-leading software providers

• how to choose the right tech

What’s driving the demand for technology

Financial management and reporting

Family offices spread their investments across asset classes, with global family office reports noting alternatives now make up approximately 45% of family office investments.

Collecting and aggregating this data from multiple sources is both time-consuming and complex, and done manually leaves room for error and poor decisions made from incorrect data.

Manually compiling practical reports from live and historical data is itself a big challenge that requires resources.

Accounting and compliance

Nowhere is accuracy more important than accounting, and with complex portfolios there is an added time burden of manually processing transactions.

Adding regulatory compliance across multiple jurisdictions just intensifies the challenge.

Having access to a real-time unified general ledger can be a strategic tool for family offices, but it isn’t possible without modern software.

Governance

As the recent 5-Minute Guide To Family Office Governance noted, this isn’t the most exciting aspect of family offices but it’s one of the most important. 

Effective governance ensures accountability and transparency for family offices, and enables better decision-making. 

And with succession planning a critical element to long-term wealth preservation, having the right structures and documentation in place and made accessible to the right people makes all the difference.

Just ask those families where Bitcoin private keys worth millions went to the grave.

Risk management 

As family offices gain more influence and new transparency laws come into play, the industry is stepping into the spotlight.

With this comes the risk of criminal elements looking to take advantage: from old school burglary to sophisticated cyber attacks and ransom.

The risks extend beyond financial too, with reputation damage through leaked information another concern. 

Risks of implementing new tech

Business disruption

Implementing new technology can be time-consuming and distract teams from their core objectives, particularly if it becomes a drawn-out process.

Add to this the risk of incorrect implementation, which can lead to financial loss.

Family offices often have unique software needs, and there’s a risk of selecting and implementing solutions that don’t fully align with their business requirements.

Change resistance 

Family office teams need to be involved early, prepared in advance and given a thorough onboarding process, or lack of commitment and disinterest will derail the implementation. Buy in from all key stakeholders is key.

Cost spirals

Software fees can be based on fixed monthly or annual costs, variable costs based on AUM, number of users, or even data requirements depending on the complexity of the family office.

Unless correctly planned and budgeted for, new software operating costs together with maintenance unexpected upgrades can lead to costs spiraling out of control.

This is particularly a risk when pursuing customized software solutions. 

Risks of not implementing new tech 

Business and investment risk

It’s no secret that family offices mostly run on spreadsheets and manual data entry, despite known prevalence of human error. 

Bad data can lead to poor decisions, and bad investments.

Cybersecurity 

The recent Dentons survey showed 25% of family offices surveyed suffered a cyberattack in the last year. 

Protection from data hacks, ransomware and financial blackmail are just a few reasons to consider a more robust technology framework. 

Reputational 

Family offices are unique in their direct relationship to wealth owners, and the human risk is ever present. 

Personal disagreements, family feuds and contested legal contracts are common, making the governance capabilities of new technology more appealing.

Missed opportunities

Not having real-time visibility on assets and financial performance can mean losing the ability to exploit opportunities that present themselves. 

Costs

Simply put, certain software solutions can do the work of multiple employees at a fraction of the cost.

This is only increasing with the influence of artificial intelligence, which almost all family office software solutions are integrating.

Notable Software Solutions

There are numerous areas where new technology can enhance family office functionality.

Software can support areas as diverse as health, well-being and philanthropy through to investment and real estate management. 

This guide gives an overview of current family office software solutions solving challenges in key areas…

Continue reading the 5-Minute Guide to Family Office Software here

This week’s newsletter is sponsored by FundCount

FundCount is the pathway to less time consuming, more effective Family Office operations.

Delivering a unified Portfolio Management, Partnership/Ownership Management, Data Aggregation, Reporting, Tax and General Ledger tool sat on a single software, FundCount generates tangible benefits: from a +95% reduction in General Ledger entries; a +98% reduction in account reconciliation effort and time; a +60% reduction in reporting times; and a 100% improvement in productivity, all according to FundCount clients.

Serving Family Offices in thirty countries for over twenty years, FundCount’s mature but continuously improving cutting edge technology delivers reliability and future proofing. See fundcount.com for more.

𝕏 highlights

The alternative to family office software is Excel… here’s a cautionary tale.

900k+ people read this thread on non-exec family office pay this week.

 💼 where to work

Three notable family office job opportunities currently open…

Investment Director - Private Family Office (Massachusetts / Single Family Office)

Accounting Manager - Roch Capital (Pennsylvania / Single Family Office)

Executive Lifestyle Coordinator - Private Family Office (Toronto / Single Family Office)

📚 what to read

Why would you build a $300 million fiber optic cable between Chicago and New York to shave milliseconds off transmission times?

In Flash Boys: A Wall Street Revolt, the great Michael Lewis investigates how high-frequency trading and software revolutionized Wall Street and made billions for its pioneers.

📻 what to listen to

The FOXCast explores a range of family office and family business topics including family dynamics, philanthropy, governance and investing.

📺 what to watch

A three-minute video on how a graduate student discovered an Excel mistake in the influential Reinhart-Rogoff paper. An error that led to flawed conclusions supporting global austerity measures.

And finally…

I’d love to hear your feedback on family office software. What are you using, are you happy with it? What do you think family office software could do better?

I would love to include some case studies on family office software in future editions.

In other news, Mr Family Office went past 35k followers on X this week, with more than 4.5 million views in the last 28 days! 🎉🍾 

Thank you for the ongoing support - it’s great seeing this family office community grow! If you haven’t already, come and say hello on 𝕏 or LinkedIn..

Family Office Buzz will be back on Monday (here’s the last edition if you missed it) with more of the best content on family offices and beyond.

Until next week.

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