Notes

How wealth management firms can prepare to face turbulent times [Farnoush Farsiar]
Generational changes. Global mobility. Technology transformation. Farnoush Farsiar , EU Today writes that these are just one of the many major changes that have impacted family offices, and in the end threatened their operational structures and practices.

Family offices cater to a younger, tech-savvy, and mobile generation more frequently. Every client, no matter their age, have become attracted, regardless of their financial situation in managing their personal investment portfolios. This means that they are looking for more information and involvement , not just an investment manager to manage.

These changes, which come at a time of unparalleled economic and political turmoil will bring the end of the traditional family office model that is based on fees. Offices that try to preserve their existing methods will soon be demolished by the clients they were established to advise. They need to adapt to a more entrepreneurial approach in investment management in order to offer UHNWIs a true value proposition.

Although the scope and size of family offices can be different, it's important that they focus on flexibility and streamlining over being experts in every aspect. The best customer service will be offered by a smaller group of advisors who are able to swiftly implement new technologies and also bring in external experts as needed. These changes will require the blurring of the line between family offices and private banking The most successful companies will be those that can maintain the loyalty and level of trust of a family office while remaining ahead of the curve in the sourcing of deals and embracing technology.

It is important to be able to draw on the traditional, network-based and reputation-based strategies for deal sourcing. Online tools can be used to identify opportunities and deals. Online deal sourcing platforms can be easily installed by wealth managers as well as agile private offices, in contrast to large banks which are weighed down by bureaucracy. These platforms allow dealmakers to examine and review a vast amount of deals at a time - a substantial saving of time and money.

Other online services that are changing the way family offices communicate with their clients include dashboards, like Wealthica which instantly consolidates the investments of a variety of sources, bringing customers into daily contact with their investments. This is a far cry from the days when wealth managers offered only periodic updates on the state of their clients' funds.

These tools are not the only method wealth managers can boost effectiveness and speed of their operations. The primary factor is the investment strategy they employ. Again, the edge will come from bringing together traditional and modern - continuing to search for deals in real estate and other areas while also considering investments in fields that were previously unexplored like climate science or food security. Impact investing is definitely "arrived" within the realm of family office - UBS Global Family Office Report 2018 found that a third of family offices were engaged in impact investing. Many expect to be more involved in the future. There are many hurdles with this particular area including the measurement of the impact and conducting due diligence next generation HNWIs/UHNWIs will expect their family offices to determine and secure these kinds of investments. Plato Capital, my own boutique investment bank, draws on the experiences of its founders from large banks as well as the technology industry to offer investment advice that is entrepreneurial direction. Our local expertise and network allows our clients to effectively manage risk and achieve optimal return on their capital.

Through blending the traditional with the new, adapting to the needs of the young generation, and preparing to be risk-averse with their own structures and techniques Wealth managers of all kinds can remain relevant and thrive in challenging times.
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