As we move into the third year of the Corona pandemic, several significant changes have happened in the wealth management ecosystem, particularly among family offices. This gives us a great chance to do some digital introspection. Each family office is right at the edge of this chance. So, here are six tips to help you take advantage of digital collaborative technology and automation tools to do well this year.

 

1. Remote collaboration

 

We’ve all had difficult times in the last two years. The COVID-19 has put the strength and commitment of family offices to the test. Family offices have been shown to be strong and flexible. They used technology for communication and decision-making so that their work could keep moving forward. The majority of families have had a good experience. Prior to the pandemic, a greater part of family office management was done at a few meetings (usually four times a year) that were set up in advance. With the rise of virtual collaboration, there is more asynchronous work happening to keep family and stakeholder management projects moving forward. Family office staff and family members who are helping with these projects are getting together more often, but from a distance, for brief meetings and later working on assignments individually.

 

Family offices with planned family and stakeholder management frameworks and processes will have to hold important meetings in person, where they make crucial decisions. But asynchronous collaboration will happen, and it is a key factor that pushes family office staff and family members. It will save time and money by making it easier to get work done. The cost of meetings will go down as families choose to have high-impact meetings in person less often and work together more virtually between in-person meetings.

 

2. Centralization of Critical Information

 

Since we are all more used to working from home, we think that in 2022, more time and money will be invested into making sure that family and stakeholder information is all in one place.

 

Since fewer people will be attending meetings in person, all the data that used to be stored and frequently updated in a single location like an office will be available online.

 

For example, a family office can invest in a digital “data room” to store family and stakeholder documents, policies, and personal data of family members. Different family members with different roles can explore this data storage framework as per their needs. This way of centralising family and stakeholder information has made the family office feel more open and transparent. Family members are well informed and equipped to make faster decisions as they have easier access to the documents they need to read and give feedback on.

 

The Ford Motor Company, which is owned by a family, says that its intranet is the reason it has become a digital business. Ford’s modern communications hub was created in 1996 as a personal online space for employees. Since then, it has become a key part of the company’s plan for all stakeholders to share information better and more efficiently.

 

3. The Enhancement of Data Security

 

From what we have seen, most families aren’t very good at using computers to keep track of family and stakeholder information. Many family offices don’t have clear and well-established policies for cybersecurity, so family and stakeholder information is managed in a haphazard fashion.

 

As virtual collaboration and asynchronous work grow, family offices will spend money on cybersecurity and highly secured data management systems to protect their data in the best way possible.

 

4. Increasing Participation

 

In family offices, the way a decision is made is often just as important as the decision itself. For long-term success and peace among stakeholders, you need a method for making decisions. When making decisions, it can be hard to find a good balance between being objective and making rapid decisions. This is especially true when dealing with uncertainty.

 

Automation tools and technology not only make it easier to do complex tasks, but they can also be used to make sure that a family office’s shareholders always have the most up-to-date information they need to understand and take part in making important decisions.

 

There are powerful digital automation tools that update, record, and report key metrics for family offices that need to communicate with a number of active and inactive family members. From filling out tax forms in finance to streamlining workflows in Human Resources (HR) and customer service, automated processes can save family offices a great deal of time, make it easier to analyse data, and help them make good decisions.

 

5. Enabling Education

 

If you don’t teach your family members the basics of business, it can lead to misunderstandings, bad decisions, and fights within the family. It is important for family members to understand the financial and business concepts that show how their organisation has done in the past, how healthy it is now, and how much it could grow in the future.

 

A cloud-based data repository is a good way for family offices to help family members understand these frameworks and make better business decisions.

 

By putting all the information in one place, family shareholders can look at past and present information to figure out how well their business is doing and what its potential is. Family offices can use digital tools to share information with directors, shareholders, and family members. This can help avoid misunderstandings, bad decisions, and possible fights that can happen when different people act on different data.

 

6. Promoting Accountability

 

Usually, the roles of the individuals in a family office become clear along with the growth of the business and the family. Having separate boards and committees makes it easier for people to share information and gives everyone a say in how decisions are made.

 

Digital tracking tools provide a cheap and real-time way for business owners, stakeholders, bankers, lawyers, and managers who work for family offices to collaborate together.

 

Whether it’s a single or multifamily office, there are now a lot of digital tools that help family office members stay accountable and take part in making crucial decisions.

 

Bottom Line 

 

The pandemic has been a very important reminder of what family offices can do, especially with the help of technology. In the past two years, digitalization has helped many businesses quickly change the way they operate. This has shown many family offices how important it is to keep investing in their Information Technology (IT) infrastructure.

 

Our message is simple: this is the turning point, and now is the time to act. Digitalized governance will become more common, and family offices that have already built up their digital capabilities will probably do better than those that are trying to catch up.

 

Justin Raj

 

Alpha Research Team