Adriana Zalucka, co-founder of FOTechHub: Family Office Tech & Ops Resource, speaks frequently with family office leaders about the challenges of adopting technology for family office operations. She talks about the issues they face:
In your group’s recent rebranding, why did you include operations in your group’s new name?
We wanted to communicate that the operations piece is really important. That’s why we’re called a “Family Office Tech & Ops Resource.”
A lot of the pain points that we’re hearing about have to do with operations and workflows: how you connect the different systems and how the data flows between them. Now with AI coming in, there are some emerging tools that are helping with these problems to make things more efficient. But that connective tissue between the different systems is going to become a really interesting area.
How do you see family offices approaching technology?
Speaking to different family offices, they are really very different. Some will have very little technology — the scenario of having QuickBooks for accounting and then a combination of Excel spreadsheets is very popular. Obviously, there are a lot of inefficiencies there, and opportunities for errors.
On the other hand, you have family offices that will have a pretty comprehensive system, but they’ve put in on top of that a reporting package because it wasn’t enough. This is something I didn’t see a few years ago: Now you have these family offices that have spent on technology, and they don’t want to compromise. So if they have a system that’s still missing something, they will just plug in something else. They end up with quite a big tech stack.
What are the operational challenges family offices have that are tied to technology?
One of the of the workflows that come up as a big pain point is expense management. Bill payment is very, very labor intensive. Reconciliation is another one: reconciling your bank statements, reconciling your data for correct reporting.
Also there’s the whole workflow around private investments: capital calls, and then tax documents like K-1s. That workflow is very disjointed, and there’s quite a bit of inefficiency there. With the increasing allocations to private investments, that’s a big problem.
How have family offices been handling these issues up until now?
I think a lot of them are done basically manually, with manual data entry and manual reconciliation processes. So you need people and accountants. I think that also ties into the shortage of accountants and accounting professionals, especially those qualified to handle a high net worth client. Some offices outsource these processes to service providers, but that is often a tricky decision with loss of control and concerns over privacy and data security.
How should operational issues inform family offices’ decisions about technology?
One of the considerations in selecting systems and integrating systems is: How do you integrate the systems so that they’re efficient and they can talk to each other, and you’re actually saving in the long run, as opposed to making it more complicated?
This goes back to a strategic decision: Do you choose an all-in-one system that can do a lot of different types of accounting, for example, or do you go with a number of best-of-breed systems? Some systems are not very good at plugging into others.
There’s no perfect system: You’re always sacrificing something. There’s always a trade-off.
If you go for a more integrated system versus integrating different systems, that’s a choice in itself, and it has consequences. There are different pros and cons to that. And then every system within the different categories has strengths and weaknesses.
How do you see family offices approaching AI?
I think there’s a general sense of inevitability that it’s here. But a lot of people in family offices are just not ready to engage with it. And there’s a lot of concern about privacy, although there are ways of overcoming that with private instances of AI. There is also a fear of losing skills: If I use now AI tools to do the work that we used to do, will we forget how to do the actual work — so the thing that made the person valuable in the first place is lost?
There is also the other end of the spectrum: family offices that are on the front lines of adopting AI.
What are some other trends and challenges are you seeing?
Integration is a big trend: integrating different systems and data and reducing your inefficiencies. It’s always applicable. Even if you’re a very tech forward, well-run family office, you can always make it better.
The other trend we’ve seen is in nonfinancial tech: a household management system or a life management system. They’re not accounting systems or portfolio systems – they’re for these other parts of a wealthy family’s life. It’s structured around things like properties, boats, art collections. Also, tools that support family governance, education, philanthropy and security. These are the things that are closer to the family. It’s not just dry finance. There’s a lot of need there, too, for families with multiple properties on different continents and different staffs to manage. You can end up with some real communication problems and things falling through the cracks.
