The opening panel of the inaugural MyFoTech Family Office Tech & Ops Virtual Conference discussed the complexity of issues and the challenges facing family office executives, especially when it comes to technology and operations and the search, selection and implementation of new products. Out of the 500-strong audience attending the event, over 80% of respondents said they were currently engaged on a technology or business process improvement project, 70% were not satisfied with their current technology and systems, and north of 80% were considering new technology in the near term. View replays of the entire conference here.
But there are so many technology solutions and so many options available that it’s hard to know where to start and what steps to take.
Steps to avoiding the wrong decision
According to the panel moderator, Jon Carroll at Jon Carroll + Family, who spent decades consulting to SFOs and was most recently managing director of family office advisory serves for EY, “You make the right decision based upon your needs, you discuss and overcome the barriers to change that exist often within the family office, whether it be family members or leadership or staff, and finally, you do planning that would enable you to execute on the decisions that you’ve made.”
The next step is the selection process. In Jon’s experience, the heart of successful implementation projects lies in a comprehensive business requirements document. This document serves as a blueprint, ensuring that vendors gain a profound understanding of the specific business needs of the family office. “You can absolutely attach that business requirements document to the contract to make sure that what you required at the outset and what you agreed to, and what you thought you were getting when you signed that contract, is documented and can be reviewed in the future as needed.”
Other key elements in the selection process are due diligence and leaning on the expertise of consultants who can help ask the right questions. “One of the best due diligence you can do is to identify people who are similar to you in scope and scale and are using the sorts of systems that you’re considering, and then talk to them directly about their experience.”
Pain points driving new technology adoption
Asya Nagdimova, Managing Director of Melville Management Corporation (The Lauder family’s investment holding company) led the implementation of the SEI Archway Platform for the office a few years ago, and is now bringing Addepar to provide a better performance reporting overlay. She says that leadership buy-in is central to that process and that it can sometimes take a while. “When I came to the family office, the system was set up on the tax basis. The family members wanted to see market value changes from month to month. But it took a year or so to convince [them to invest in solutions] to present the information that the market value basis is what they’re looking for.”
Another important factor that drove the decision to implement the integrated Archway platform was the need to bring all the complex family information into one place in preparation for upcoming estate planning. “We wanted to be ready to address the questions of the family members within a few hours, not days.” The particular challenge that the new system solved was partnership accounting with its complexity for the different structures and pooled vehicles owned by the family. Asya explains: “You don’t want to keep tracking the partnership accounting in Excel files, which I used to do. You do want to process this in the system, which provides the proper partnership allocation with all attributes and its exceptions. You want to have a track record that you can just export and provide the information to the necessary parties. And we were able to gather information of 20+ years in the matter of 3-4 years of implementation.”
Elements of a successful implementation
Tania Wieck, an independent operations consultant currently engaged on several projects for Evolve Foundation (Shao family), underscores that laser focus on the principals’ key pain point increases their buy-in and also the odds of a successful implementation. “If you don’t get the principals’ buy-in on adopting software, it never goes anywhere. You can spend all of the money on the consultants, you can spend all of the money on the resources. But if the principal isn’t excited about it and doesn’t see the value of it, the adoption just won’t occur or it will occur halfway. And then you’ve lost that momentum and you end up doing more harm than good.”
Another golden piece of advice from Tania is to go for the low-hanging fruit first to build trust and support for larger projects, such as for example improving workflows to eliminate late fees. “If you start with something small and you can see an immediate result, you get more buy-in and you build more trust.” Solving the first problem successfully can be “like a light going on” leading to more improvements and achieving the ultimate goal of technology, which is “to reduce processing time and allow people to focus on their jobs and higher value work, and ultimately to improve the whole health of the organism.”
