3 Keys to Smooth Technology Evolution Inside Any Family Office

“May your choices reflect your hopes, not your fears.” – Nelson Mandela Every family office has choices to make.  Technology is only one of them, but its impact can have ramifications on the rest of the office that can last for years.  Technology choices for a family office are often influenced by many factors. These include when the office was founded, the personalities of the founders, and whether it was independent or part of a larger operating company.  These drivers then get mixed with a dose of happenstance to produce today’s organizational chart and technology ecosystem.   Taking the time to unravel them can lead to valuable insights and even hold the key to tomorrow’s successes. 

Which Came First, the Org Chart or the Technology?  

In many family offices, organizational structure drives technology choices.   For example, if the family office accounting group is part of an operating company, its technology will likely be driven by the operating company.  Whereas at an independent family office, the family office itself will probably handle both investments and general ledger accounting, which probably means two parallel systems (one for investments, another for accounting), both independent from the family operating company.  There are also matters of control and influence. In some family offices, the IT group chooses and manages the technology that’s used throughout the organization. In other offices, business divisions make those choices with IT taking a supporting role.  None of these scenarios are right or wrong, but it’s always helpful to look at the origins of how things got to be the way they are today. Being aware of tendencies within the family office is key to knowing how to best move forward. 

The Organic Technology Ecosystem 

Some family offices have grown their technology infrastructure organically. To visualize that process, imagine the grounds of an old estate. The “original” home might be surrounded by additions and wings that were built over the years to accommodate the growing family. Some of the newly constructed sections might blend artfully into the original structure. Other additions might stick out and look obviously “new”.   An organic technology ecosystem develops in the manner of that old estate. New services get added as the family discovers a need for them. New technology options become available. The family office connects and integrates those solutions as best they can, which may be easier or more challenging depending on the specifics of the technology choices.   In our experience, the probability that a family office has an organic technology growth model increases the longer the organization has been in existence, although there are exceptions to every rule.

The Intentional Technology Ecosystem 

Some newer family offices are taking a different approach to making technology choices.   To start, more technology options are available today than there were to previous generations. Newer family offices aren’t encumbered by deep roots or anchored to old technology choices. As a result, they often get to make their selections from a clean slate and a broad palette.   Then, there are the NextGen expectations of emerging family leaders, executive team members and staff. Given the options available today, it’s possible to strategically choose technology solutions that will work well together.   Staying with our analogy of an estate, imagine buying a large plot of land, hiring an architect to design the future home, and then building it from the foundation to the rafters. One plan, one style, with seamless connectivity.  

3 Keys to Smooth Technology Evolution  

The good news is that well-established offices aren’t automatically doomed to be stuck with old choices. On the flip side, new offices don’t always make the best decisions.  Successful technology evolution requires family office leadership to follow a specific decision blueprint. 

Step 1: Perform a Strategic Assessment of Your Current Tech Stack 

No matter when you selected your technology, it’s important to perform a reassessment every few years. The family office’s technology landscape changes quickly as legacy vendors work to upgrade their software and new players enter the space with innovative ideas. If you aren’t keeping up with the trends, you might miss out on a tool that could significantly improve your efficiency or add great new features.  It’s also important to look at how well your software choices work together.   Having many family office clients and a significant history within the industry, our team at Accusource has seen the majority of technology solutions in the market (as well as some home-grown ones). From our decades of experience, we know that there are pros and cons to every decision.  We recommend that you begin your assessment by asking how well the current tech stack meets the evolving needs of the family and the team that supports it.   Be sure to poll all relevant stakeholders from every level of the organization. If you discover strong opposing views across the family office, you may consider hiring an outside consultant. Be sure to choose a firm that has hands-on experience with family office technology and the expertise to guide you through a complete strategic assessment.  

Step 2: Don’t Just “Rip and Replace” Technology System Components 

When frustration levels with technology are high, it’s easy to argue for discontinuing the use of a legacy solution in favor of something new and exciting. However, you must tread carefully!  Changing systems without due diligence can do more harm than good.   One big mistake we see family offices making is not knowing what can be done within the constraints of their current technology stack. Technology change comes at a significant cost. There’s the expense of implementing new software, the frustration caused by the unavoidable learning curve, and the reality that any new software you pick will come with new quirks you won’t enjoy.   See also: The Devil You Know and the Accounting System You Don’t  All things being equal, it’s often better to explore ways to improve functionality and workflows rather than making dramatic changes. Explore all options first before you uproot your team and force the office into a disruptive and lengthy systems change process.  

Step 3: Choose Technology that Maximizes the Potential of Your Team  

Besides the technology audit, you should ensure that your people are doing the work that reflects their highest potential.   For example, if your accounting team is still doing manual data entry in the general ledger, it’s time to change that by implementing an outsource service like KnowLedger. KnowLedger can create new workflows that will result in seamless integration of investments and accounting without requiring any changes to the underlying systems.   This will free your accounting staff from tedious manual data entry. Rather than doing manual data entry, your accountant’s time is best used in evaluating tax structures of investments, evaluating entity structures, optimizing taxes and handling other mission-critical tasks that will lead to growing the family’s wealth.   See also: Family Office Resourcing — a Way Forward 

Technology Evolution: Next Steps for Your Family Office 

As the number of family offices grows around the world, there’s plenty of room for all types to thrive and deliver value. However, that outcome hinges on successful evolution of service offerings, tools and professional staff.   Whether the technology ecosystem in your family office evolved organically or intentionally, it’s important to do a periodic inventory of software and workflows, and to review emerging solutions. Be sure to involve all stakeholders, because professionals with director-level responsibility may not be aware of the day-to-day pain points that other members of the organization might experience. Be cautious about replacing any element of your technology stack without first exploring less disruptive solutions.   Finally, consider bringing in independent experts that can add value from their broad base of experience in the technology, wealth management, and family office industries.   If you are wondering about how to get the most out of your home office technology, reach out to our team at Accusource!