Michael Perez, managing director at professional services firm F2 Strategy, advises family offices on operations, reporting and technology. He discusses the technology-related challenges and opportunities he is seeing among his clients:
What are your family office clients concerned about these days?
We partner with family office clients to enhance their technology, streamline operations, ensure regulatory compliance and optimize service delivery models, all while adapting to their evolving needs and strategic objectives.
Administration is a hot topic, and so is compliance. Sometimes clients have a specific problem to solve, such as, ‘I am spending so much time with these private investments.’ That’s because they’re managing everything via spreadsheets, and they’re connecting on each one of those investment websites to collect information in a manual fashion. And we can introduce technology to help introduce operational efficiencies and mitigate risks.
What challenges do family offices face when it comes to technology?
Many need to refresh their technology stacks. In addition to requests to upgrade outdated general ledgers and partnership accounting systems, or to implement CRM and investment reporting solutions, I’ve been getting a lot of questions around cybersecurity.
Recently there has been a lot of interest in private investments, and the administration of those is quite different than for traditional assets: There are subscription agreements that need to be accounted for, there are valuations, there is the tracking of capital calls. Historically, there haven’t been a lot of tools out there, but now we’re seeing more in the marketplace.
As AI and other things are being introduced, folks are realizing that their tools and processes are really dated. When we dive into it, they have a lot of questions about how AI can help them.
How are you seeing family offices use AI?
Some technology providers are adding it or integrating it into workflow to help read through documents — like enhancing traditional OCR with intelligent document processing to extract, analyze and summarize information, reducing the need for manual review of statements, for example.
There are also tools now that are leveraging AI to help make predictions on investment data that’s being collected to provide deeper insights and foresight for decision-making.
These are two key areas where I see AI making an impact today, but its influence is rapidly expanding and will likely transform every family office in the near future.
What challenges do you see coming up?
I anticipate a continued growing and critical need for robust cybersecurity measures. We can expect increased scrutiny around AI, with more questions about how it can enhance office operations, software and procedures. Vendors are likely to incorporate AI as a standard feature in their offerings.
When you look at the wealth management technology paradigm, family office and trust
are typically at the bottom of the pyramid. It’s not the most glamorous place — we’re always kind of behind the technology curve.
But there are more and more family office service providers and software firms in the space offering innovative solution sets. A key part of my role is tracking vendors in the family office space, and I’m currently monitoring over 300 service and software providers offering tailored solutions.
What advice do you have for family offices who want to upgrade their technology?
Requirements, requirements, requirements: Clarify what you really need, both for running your day-to-day operations and for setting yourself up for future growth. What’s essential now, and what will help you scale down the road?
So, the two fundamentals are: have clear governance that is written down and communicate it. Talk about it frequently — make sure everybody knows what the rules of the road are. Wealth rarely gets destroyed with the wrong investments. It gets destroyed with bad communication.
