How Multi-Family Offices create more efficient operating models

Traditionally, Multi-Family Office (MFO) operations have relied on highly skilled staff to deliver services to family office clients. The move to hybrid work environments highlighted operational inefficiencies, from heavy reliance on excel spreadsheets to processing transactions manually, and span functions across client relations, portfolio management, compliance, trade support and accounting.

Given the complex investment profile of wealthy families, with an increasing percentage of their portfolios now including private markets, direct private equity and hedge fund assets, Multi-Family Offices are experiencing pressure to adopt an operating model that centers on streamlined technology, and processes. The benefits enable MFOs to:  

• Manage both private and public investments on a unified platform
• Provide holistic views of client portfolios including tax positions across all asset classes
• Deliver seamless cash and liquidity management
• Leverage highly skilled asset management staff to optimize their clients’ investment opportunities and portfolio results rather than performing manual operations

Multi-Family Offices that have committed to this change see immediate benefits, delivering higher service levels, even while their teams are operating in a hybrid mode. They are better positioned for long-term cost savings, operational risk reduction and improved profitability.

MFOs launch this transitional journey by conducting a thorough review of their current-state technology operations and processes ─ the key activities, data flows, and touch points with internal and external systems. With that review in hand, they can next determine their optimal operating environment. Once they have a vision of that future-state, they commit resources to drive the transition through a formal project. 

An optimized Multi-Family Office technology environment includes:

• Automated processes for streamlining key functions – cash and liquidity management, portfolio analysis and portfolio rebalancing, trade compliance, trade order generation and trade processing, accounting
• A complete audit trail of all data changes and transactions across the operating environment
• Integrated data across all systems – CRM, trade order management, accounting, custodian and broker systems, and market data providers
• Secure, remote system access to on-premise, private cloud or public cloud deployed applications

Given the focus and resources required to execute on a transformative project of this type, it is often not practical for a Multi-Family Office to implement this transition on their own. Partnering with a firm that understands the workflows, data and technology components of MFO operations as well as a firms’ business drivers, is often a prudent approach to delivering the project correctly and accelerating the project’s time-to-value. A good partner will leverage best practices and position the Multi-Family Office to thrive, efficiently and accurately delivering superior results to their clients for the long term.

About the author, Bob Moitoso

Bob Moitoso is the Head of Asset Management, North America at Linedata.