Technology and the family office

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Family offices are using technology to optimise their operations and performance

Our research on Australian Family Offices, written in collaboration with The Table Club, looks at the role of Technology in the family office.

Family Offices have undergone a rapid evolution in recent years as they seek to adapt to the changing needs and expectations of their sponsor families and face new challenges and opportunities.

This report explores how family offices are using technology to optimise their operations and performance – from Excel to AI and everything in between.

Download the KPMG and Table Club report

Australian Family Office: the role of technology

From Excel to AI and everything in between.

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Business challenges

One of the key business challenges of family offices is the delivery of consistent, timely and accurate reporting that aggregates and reconciles multiple data sources however:

51%

of family offices lack skills, time, and resources for finding technology solutions.
36%

struggle to meet stakeholder needs.
28%

find it hard to understand the pros and cons of service providers.
25%

have internal resources for technology management.
56%

cite key person risk as a reason for outsourcing technology services.

Building scale

To compete effectively for talent and resources in the future Family Offices need to think strategically about their tech strategy but:

Most Family Offices have fewer than 5 employees.
33% are not measuring the financial benefits of technology use.
Only 8% have started to use AI within the Family Office, with 46% examining potential use cases.
Only 4% are using bespoke software; most rely on a combination of solutions.

Key learnings

Fit for purpose

Technology is essential for efficient and effective service delivery, but family offices need to take care to find the right fit for their problems.
Planning and strategy

The role of technology in family offices requires careful planning before acquisition and implementation to understand the needs of the family office.
Outsourcing

There is an increasing need for family office professionals to manage third-party outsourced service providers and to identify trusted independent advisers.
Innovation

The skill set that designed ERP systems for operating businesses does not necessarily correspond to successful outcomes inside the family office.
Partnerships and performance

The “professionalisation” of the family office sector requires a full understanding of the capacity and capability of technology to drive out-performance – and the need to identify skilled partners.

Use of technology

User audience

Technology utilisation and adoption is driven by those responsible for producing reports rather than those that use the data.
Efficiency achievements

Technology drives efficiency and productivity, with 84% of family offices now relying heavily on technology.
Increased use

The use of technology in family offices has increased five-fold in the past three years.
Cloud vs AI

Cloud-based data storage is now nearly universally applied, but only 8% of family offices have started using generative AI.

Key insights for Family Offices

No ‘silver bullet’

there is no single technology solution that would be capable of meeting the needs of all family offices or all of a family offices needs
Be flexible

Focus on what should be ‘insourced’ and ‘outsourced’ it pays to be flexible as to choices and remember to accept adaptation via the use of the Cloud
Planning

Make sure that all the users of technology, specifically the investment management team, are consulted as to their needs and the benefits they are looking to obtain
Ownership

Appoint an ‘internal’ owner of the technology project or ‘outsource’ to a third party
Technology benefits

Family offices must embrace the benefits of technology, including AI to bridge the gap between available resources and expertise.

Actions family offices can take

Project future technology needs and budget accordingly.
Invest in scalable solutions that can grow with the office’s needs.
Implement advanced software solutions that streamline operations and provide real-time insights.
Integrate technology platforms to improve data management and decision-making processes.

Take full account of the current costs of data aggregation and portfolio management reporting as a basis for understanding the potential benefits for the implementation of technology solutions,
Analyse current technology spend to identify areas for cost reduction, and
Ensure technology investments are aligned with the strategic goals and growth plans of the family office across all relevant functions both insourced and outsourced – remove the impact of ‘siloed’ reactions.

Review technology service provider fee structures to ensure they are competitive and reflective of the value provided.
Consider tiered fee arrangements that provide economies of scale as AUM grows and understand the fee structures of software providers.