The Challenges of Adopting Technological Solutions in Family Offices
It is expected that by 2030, Millennials will become the wealthiest generation in American history, as they will inherit more than $68 trillion from previous generations. This Great Wealth Transfer offers both new challenges and possibilities. It is essential to comprehend Millennials’ investment desires and tech inclinations to make the most of the transition. This shift in generations will notably impact how money is invested, used, and spread.
The pandemic has forced us to become more comfortable with digital platforms that enable us to work from home. Unfortunately, family offices have, in many cases, been slow to adopt the latest tech solutions. Until recently, that has been okay.
New generation; new needs
While many of the “mothers and fathers” of UHNW families are still getting used to the digital age, Millennials have never known a world without the internet. With mobile devices and connectivity at their fingertips, they’re seen as the fastest to adapt to digital adoption.
Until now, family offices have gotten by with lower adoption of technology partly because of a client base (family members and the advisors that guide them) comfortable with traditional office management. However, this has started to change, especially during quarantine when access to offices has been denied.
Family offices are typically run at a slower pace due in part to the lack of visibility into funds that have taken away investors' control. However, family offices can become more transparent with their clients by providing digital access to funds and centralized information on asset allocation, sector exposure, and liquidity between managers and investors.
The cost to run a family office is typically a million dollars a year burn. This wealth management is unsustainable for many UHNW families and unattainable for the rest.
Finally, moving from paper reports and face-to-face operations to digital platforms will benefit UHNW families by creating efficiencies and clear communication and making family office management accessible to anyone who seeks it.
Disclaimer: This blog is for informative purposes only and should not replace the professional advice of tax, legal, financial, or investment advisors. The opinions expressed here are merely observations of industry trends and should not be taken as stock or sector recommendations.