Technology and the Family Office

One Success - Services

Family Office Exchange

· Membership services include educational webinars, conference calls, and other advisory services for family members and family office employees.

· THE clearinghouse for discreet and confidential communication and networking services between family office executives.

· Operates a confidential list-serve system to which family members and executives can pose anonymous questions ranging from international security protection services to the best restaurant in Dubai.

(http://www.foxexchange.com/public/fox/welcome/index.asp)

The Status Quo – Software Installation

The common technological solution for family offices has been a general ledger, financial, tax, and/or investment reporting software solution. These systems are generally desktop or internal server based programs created to track and report data while offering limited cross-functional capabilities and even less in the way of strategic planning and communication.

Limited Ideas – Attempts at a Solution

· Rock IT - The Rockefeller family office built a proprietary system to integrate all of their reporting systems

o Reporting is top-notch

o Antiquated customer-use system – all inputs must be submitted by telephone to a Rock IT rep, who then inputs the information into the Rock IT system

o Price is extremely prohibitive, even for HNW clients

· Northern Rock - a well-regarded system at a respected price point

o System does not handle accounts with other custodians requiring all accounts to be housed at Northern Rock

§ HNW clients generally have many different accounts and alternative investments with many different custodians

· Fidelity Family Office Services – attempting to the be the “white knight” of the industry

o An attempt to consolidate all of the different Fidelity services and outside custodian accounts into one package

o After three arduous years and continuous delays, this has proved to be much more difficult than initially expected

o https://www.fidelityprime.com/aboutUs.html

The Challenge – Web 2.0

Web 2.0 will likely create the largest security concern for family offices outside the protection of financial information. Twitter updates, Facebook profiles, and Flikr photos contain mountains of personal information, email addresses, photos of the family’s private aircraft, and location references that could be the nightmare of HNW families. Many children in these families have easily learned the benefits of the amassed wealth they enjoy but very few see the downside of “connecting with friends.” The security concerns engendered by Web 2.0 cannot be underestimated.

Family Office Cloud – THE BIG IDEA

· No one firm in the family office industry has over 4% market share in a market that is growing.

· The desire to build proprietary, internally-hosted or installed systems has been the innovation killer.

· Movement toward Cloud computing, collaboration, and Software as a Service (SaaS) is the direction the industry must turn. Integration of the current silos of information and adoption across custodians are major hurdles, but it can be done.

· Security and the protection of private and personal information is the major challenge

· Innovation of this kind could revolutionize the industry and eliminate the problems and limitations of the current, near-sighted technological solutions.

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