The chores of paying bills, keeping ledger records, reporting on investments, capital calls and other tasks may not make the blood race, but these tasks can make the difference between a family office that works and one that turns into a wreck. As tasks mount, so does the need for solutions. We talk to a firm operating in the space.

When people want a service or product, but no-one is providing it, some of the best business ideas stem from making it oneself. Consider craft beers made by enthusiasts who wanted something tastier. They ended up spawning a multi-billion sector.

With family offices, a similar development can be seen. An example in the sector is Rockit® Solutions, which came out of an internal technology development effort at the wealth management firm founded by the Rockefeller family – hence the “Rockit” name. In 2016, that entity became a wholly-owned subsidiary of Fi-Tek, and still serves family offices, among others. The trend of wealth management firms taking their own technology and business systems and selling or licencing the content to outsiders is not completely new, but the rise of organizations such as Rockit points to an interesting way ahead. These businesses are managed by people who have gotten their hands dirty trying to figure out their own firms’ needs before selling an idea to outside businesses. 

Another such firm is Eton Solutions, created from Eton Advisors, a multi-family office, as its own company in 2015. And in February this year, Eton Solutions launched AtlasFive 2.0. The new solution, its creators say, enables new levels of process efficiency, data accuracy and accessibility, and risk reduction for ultra-high net worth family wealth management offices.

AtlasFive 2.0 is an enterprise resource planning (ERP) system for managing the complexities of family offices and is the comprehensive technology platform that seamlessly connects all data, services, and stakeholders within family offices.

The process of handling the bills, ledgers, reports and other tasks has traditionally been highly labor-intensive; it has to be stored and such information has typically sat in different files and places in a firm. This also adds to the risks of making mistakes. He gave the case of what happens with a capital call – the whole process requires work on six or seven systems and, as more calls come in, the workload explodes.

“These are the kind of things where there has just got to be a better way….and that is what our system does,” Rob Mallernee, founder and chief executive of the MFO and Eton Solutions, told Family Wealth Report in an interview. Eton Advisors works with about 40 families in the US, many of them billionaire families. Mallernee started as a CPA working for Arthur Andersen and then headed for a North Carolina trust company. Mallernee wanted to build a business process and during the early 2000s went through a set of foundations, ending up at US Trust and UBS. 

Eton Solutions was created from the MFO as its own company in 2015. It moved to the Microsoft Azure cloud in 2020. The group has 28 clients and administers $450 billion of assets. It covers tasks such as ledgers, bill payments, financial reporting, and CRM systems This is a big, if not always particularly “glamorous” business.

From paper to pixels
And a driver of such business is family offices’ frustrations of handling paper-based processes, a task accentuated when such offices are jumping into complex areas such as private markets with their capital calls and idiosyncratic ways of reporting returns. Work piles up fast. 

Single family offices don’t exist to make a profit like a regular company, but they do want to deploy resources efficiently as any Fortune 500 company does. Increasing its operating leverage and margins means that stress and avoidable costs are removed, and families can focus more resources on what matters to them, Mallernee said. He thinks it is high time family offices enjoyed the kind of efficiency gains those operating businesses have taken as the norm for decades.

“In the past, business efficiencies had passed the family office sector by,” Mallernee said.

Inevitably, the subject of the pandemic came up. It has prompted a surge of interest in the Eton Solutions offerings due to the need to handle tasks digitally.

“Before all this, manila folder processes worked pretty well and that all changed. Things got painful pretty quickly,” Mallernee said. 

Eton Solutions has clients within and outside the US, such as in Canada Asia. Mallernee expects interest to continue internationally as well as domestically.

There is a “confluence of rising costs and qualified staff shortages,” he said, and this will force family offices to do “more with less.”

"The complexities offices face will continue to increase and the only way to overcome this will be to automate as much of the manual work as possible,” he said. 

“There are a growing number of companies offering point solutions to solve the `front’ and `middle’ office elements of private market investments like the new company Joe Lonsdale, the founder of Addepar, has started. But when you examine what these companies want to achieve, you see that they will become yet another data silo,” Mallernee said. 

“Eton Solutions and AtlasFive® was developed to solve the data silo problem for family offices and meet the demand for a true net worth view and growing reporting needs. Additionally, our services offerings have been extremely successful and we enjoy relieving our clients of back-office work so they can focus their resources on tasks that add value and optimize resources,” he said.

The business has used artificial intelligence-driven automation from the start of developing the Eton Solutions offering, he said. 

“This approach solved two of the biggest problems a family office faces: risk and costs (time and money). It is used in other workflows like automating reconciliations, transaction processing, and document management. Further maturing AI within AtlasFive is a significant piece on our product roadmap as AI will be central to the family office of the future,” he added.

With calls for more regulations on family offices – sometimes prompting strong pushback – the sector will also need to keep on top of those paper-based tasks for compliance, only accentuating the need for digital help. It appears that the growth potential of Eton Solutions, and others like it, is considerable.