Executives from Archway Technology Partners, EY, Citi Private Bank and Advance Publications recently discussed issues family offices face when it comes to technology selection and implementation.

Here is a summary of the key takeaways from the first panel session at Family Wealth Report’s inaugural Family Office Fintech Summit, which took place in New York City on March 13.
 
The panel, sponsored by Archway Technology Partners, was called Technology Selection and Implementation for Family Offices and featured: Jason Brown, chief executive at Archway; Gamal Maklad, head of IT and technology at Advance Publications, a privately-held media company; and Bill Woodson, managing director at Citi Private Bank.
 
It was chaired by Jon Carroll, a member of the family office services advisory team at EY.
 
Kicking off the discussion, Carroll asked the panelists what factors they consider during the technology search and selection process, in response to which Maklad cited functionality, data integration and security. Carroll then asked Brown of Archway to explain how, as a provider of technology, his firm responds to those needs.
 
Brown said developing a strong understanding of a client’s requirements is the most important aspect - across each of the silos Maklad referenced. And once their objectives have been clearly established, remaining disciplined is key to successful technology platform planning and implementation.
 
“This industry is complicated; it can be very difficult to avoid being enamored with something that looks exciting as opposed to focusing on products that actually serves the needs…of what each of the constituents in this audience is trying to accomplish,” Brown said. “Once your requirements are defined, it is important to focus on satisfying those requirements without being distracted along the way.”
 
Carroll then turned to Woodson of Citi Private Bank, asking him whether he thinks his clients are adequately focused on what their requirements are.
 
“They typically fall short,” Woodson said. “Newer family offices are often populated by people who didn’t necessarily come from family offices and don’t really have a sense for the real challenges associated with data aggregation, the different ways to get functionality and issues with respect to security.” Technology is indeed a major expenditure of time and money, but Woodson said he has seen “many family offices go down the wrong path.”
 
Another general observation he made is that families often perceive all the various messages conveyed by vendors in the same way, when in reality they are very distinct. “I don’t think that challenge is going to go away - we have the same challenge in the financial services world. They [family offices] need somebody who has an ear [on the ground] and the experience to help them navigate what vendors can do for them.”
 
Maklad, having recently entered the family office world from a corporate environment, acknowledged that “understanding the requirements of the family office from a process perspective” is challenging. “That was our first and most important step - going from knowing ‘we need to do something’ to ‘knowing what to do’,” he said.
 
“There is more to this than just systems; people and process are equally important,” Carroll said. He reinforced that recognizing the importance of improving productivity by better process and enhanced training of staffis crucial, as well as the role of family leadership, which sets the “tone at the top”  for the office.
 
Indeed “technology is just a catalyst,” Maklad said. “We enforce the change, but someone has to be willing to change and understand what the change means to them. I’m here to facilitate something, but, at the end of the day, I need to make sure that whomever I’m facilitating that for understands what they’re trying to accomplish. That is very important.”

Underpinning the role of human involvement in technology selection and implementation, Woodson noted that he’s not yet aware of a “push-button” solution for complex family offices where “you don’t need a person somewhere”– be it in-house or third party. “An important role for all of us who advise families is to manage their expectations regarding just how far technology can get them,” he said.
 
Carroll asked Brown what advice his firm gives to prospective family office clients who are just starting out. “We all need to understand that, in our industry, there is a lot of archaic technology,” he said. This technology is often the backbone of where a lot of data is originated and resides, and that brings a lot of challenges, he added. “The reality is that it is pretty ugly behind the curtains. We’re trying to help people understand that you need to have people supporting your business [during implementation and going forward].”
 
Certainly, there is a need for “serious, talented human resources,” Carroll said. “Even when you buy a system that is virtually complete end-to-end, you need talented people to take charge of that system as a 'super user' and internal subject matter expert.” He then asked Woodson to outline the practices his clients are adopting.
 
“The best practice I’ve seen are families that take the approach of trying to keep it simple,” Woodson said. “There are a lot of systems out there that are overkill for the needs of the family; when it comes to implementation they often spend more time trying to operate systems than getting the output they need from them.”
 
He added: “I’ve seen very successful family offices with simpler, more specific reporting solutions as opposed to broader, more complex and integrated solutions.” (That is not to suggest this is the right approach for all families, he noted.) But “there are some great solutions across all vendors that can be segmented around specific needs, and families who focus on those needs and the best vendors in light of this, generally, are the most successful.”
 
Carroll moved on to the sometimes-thorny subject of cost, with Woodson noting that the way some families perceive cost is indicative of how long they have had money. “Some, when they first come into it, focus a little bit too much on cost,” he said. “But over time they tend to learn that money is extremely well-spent on paying for a reporting vendor to solve the problem for them, as opposed to trying to build it in-house.”

Cost will of course always be a key consideration when making technology assessments, and determining ROI can be very challenging at best. “ROI is an interesting concept on the family office side,” Maklad said. “There is a lot of thought around what is being done for today versus what needs to happen over the next five to ten years.”
 
Clearly, technology will change over time, so the consensus was that it is important to put in place some groundwork that will allow the family to grow with technology, as it becomes available. “Cost is always going to be a factor,” MaKlad said, “but making sure you do it right, if you’re going to do it, is key.”