Building An Effective Family Office Stack. A Guide For Buying Technology Products

BUILDING AN EFFECTIVE FAMILY OFFICE TECH STACK. A GUIDE FOR BUYING TECHNOLOGY PRODUCTS

Technology adoption varies greatly among family offices and institutions that work with them. Many organizations still rely on spreadsheets for pretty much everything they do; others have wholeheartedly embraced innovative tools to accomplish all manner of mission-critical tasks, including data reporting, investment analysis, and integrated planning.

However, based on numerous conversations with organizations across the spectrum, many decision makers in the wealth management ecosystem face a common challenge when considering new technology: they often don’t have a clear understanding of the problems they’re solving for and how to go about the evaluation process.

Unfortunately, this lack of clarity can be quite costly. In a Wall Street Journal report titled, “The Many Ways Companies Waste Money With Technology Spending”, James Anderson, a research vice president at Gartner, explained why the inefficient spending has only amplified in recent years: “With Covid, everyone’s seeing digital acceleration, but very few organizations are tracking what they’re getting in terms of business outcomes. They’re not using business metrics to influence investment. They’re doing what people tell them to do”.

This article is designed to help you avoid the missteps that come from not understanding your organization’s problems and needs or using data points to inform your choices. Members of the Masttro team have sat on both sides of the table, having worked for family offices and related institutions before joining the leading provider of wealth data technology solutions. For this reason, we believe we are uniquely positioned to outline the smartest approach to building a tech stack.

1. STATUS ASSESSMENT

Use the following questions to gain a genuine understanding of your current situation. You’re painting a broad sketch that you can subsequently fill in with more detail, with the intention of identifying what information you need to gather as you move forward:

What are your primary problems/needs/issues? What are the secondary concerns? What specific pain points is your organization experiencing around these problems/issues/needs? What technology are you currently using to handle the task(s)? What type of service does the vendor provide? What problem does the vendor not currently solve? What do you want/need the new technology to do? Who will the users be? Who will use the new technology to perform their task? Who will receive the work product? What is your budget? What is your go-to-market strategy across users and stakeholders?

2. SCOPE DETERMINATION

The purpose here is to clearly identify which elements of your business and operations you want the new technology to solve. Start with the pain points you identified in the first step, then use that list to guide conversations with various vendors.

As you speak with different representatives, you’ll gain information about what is possible (perhaps there are products that address them all) and what is not (perhaps you will find that the best solution requires multiple products). In these conversations and others, you will want to include people in multiple roles throughout your organization, as they will each bring distinct knowledge of their area of interest.

It is important to include, along with the decision makers, additional thought leaders such as accountants, investments advisors, the operations team, an IT person, and others to take part. You would use these elements to ascertain the scope:

Asset classes: Which asset classes do you want incorporated now and which might you want in the future? Seek input from your investment manager and/or advisors.

Documents and contracts: In many family offices, you need to access documents or contracts from a dozen years ago, but the document is MIA and the person involved is long gone. Some tools can archive documents so that they are easily retrieved, others, less so.

Contacts: People move or die, trustees change. If you find yourself always searching for emails and phone numbers, you may want an operating system that organizes them.

Access: Which brings us to which of your third-party providers would ideally have access to the platform: Accountants? Attorneys? Landlords? The leader of a yacht cleaning crew?

3. GOAL IDENTIFICATION

Here, too, you can start this process at the same time you are developing your situational assessment. The intention is to delineate exactly what you are hoping to achieve by integrating a new technology, what problems it will solve, and why these specific goals are a priority. This step is often daunting for organizations, especially if you haven’t previously evaluated technology. It will be valuable to ask yourself and various team members what is currently working and could be better. You might expand outwards to people in other departments or even a few select end users for input.

If you’ve had initial conversations with potential vendors, use what they have shared about what is and isn’t possible to achieve, as well as where they expect the solution might fit into your operations.

4. VENDOR EVALUATION

You want to find a vendor that offers both an outstanding product and dependable support. As such, you’ll want to determine:

Who are their clients? What types of organizations currently use their product? Single family offices? Multi-family offices? Wealth Advisors? Asset Managers? Institutions? All the above? Are any of their existing clients like your organization?

The answer to the above will provide insight into whether they already have the tools and solutions that organizations such as yours require. To illustrate, let’s return to our spreadsheet-reliant organization. Potential vendor-specific questions include:

Is there a dedicated individual who knows your business or a rotating team of customer support specialists? Is there a dedicated individual who knows your business or a rotating team of customer support specialists? Do you call a named person or send in a “ticket?” How solvent is this company and what are its near and long-term goals? Where does the vendor sit in the marketplace? Do they want to stay in a niche space? Are they positioned to be acquired by a larger company? Are they in search of another round of investors? (If it’s the latter, they may be highly focused on client acquisition to grow their figures.)

Take those provided by any vendor with a grain of salt. After all, when was the last time you provided a reference that couldn’t be classified as biased?

A note about referrals: Take those provided by any vendor with a grain of salt. After all, when was the last time you provided a reference that couldn’t be classified as biased? That said, you can learn a lot by asking three pointed questions:

What do you wish the solution could do that it doesn’t? What do you wish you had known then that you know now? What is one roadblock you can help us avoid?

CONCLUSION

In an ever more complex world, where family offices and institutions regularly deal with disruptions and challenges, any new technology should simplify your operations, providing additional visibility and ease. Finding the right technology partner can feel overwhelming, but with advanced thought, the right questions, and an inclusive approach, you will be well-positioned to make the best choice. And benefit with the award of a well-designed tech stack.

About Masttro

Masttro provides a single source of full-picture data to give you control, transparency, and peace of mind to make informed financial decisions in near real-time. With end-to-end encryption, data security protocols and easy permissioning to allow access to the right views, Masttro is an all-in-one software platform to manage your total balance sheet for individuals and families.

If you’d like to learn how Masttro can help you, don’t hesitate to reach out: contact@masttro.com