Family offices must capitalize on AI opportunities to enhance their legacy and future-proof their operations.
AI technology can help family offices boost efficiency, speed, accuracy, and accuracy, and make better decisions.
To implement AI in family offices, create a roadmap, establish governance, and secure top partners.
The future is here
While AI may seem futuristic to some family offices, most are already using it. The ongoing digital transformation and “virtualization” of the family office, a trend accelerated by the pandemic, means most operational infrastructure sits in the cloud. Meanwhile, across industries, the pandemic has also accelerated a complementary trend: rapid AI adoption. With vast amounts of data available to many of the large adopters, like major professional and financial services firms, AI has been fed the requisite quantities of information to be more effective for many tasks. Together, these trends add up to a significant AI opportunity for family offices.
Productivity gains
Family offices can capitalize on the increased sophistication of their partners’ AI. Each version honed and trained by the exponential amounts of data at these companies’ fingertips. Using AI, family offices can boost efficiency, speed, accuracy, and decision-making. AI can help build capabilities in managing the daily flood of unstructured data, investment decision-making, and protecting the office from cybersecurity attacks.
Mission critical
AI technology implementation must be a board-level concern. The family office should designate one person to be in charge of AI technology expansion, including overseeing privacy and security. Before implementing any new technology, family offices should first review the family’s objectives and map them to where the business is and where it needs to go. The last step is securing partners. Engage only top partners and service providers who use AI trained on large volumes of data.
Automating administration
Family offices must aggregate and analyze huge amounts of research, data, and analytics. AI can detect when invoices arrive in the inbox, employ optical character recognition and analyze billing information. It can determine if the information is complete and incorporate it into the general ledger system, generating entries and validating whether payment is acceptable. It cues up the entire process, saving administrators time so they can focus on critical “human in the loop” activities, such as the review, authorization, and release of payments. Another use for AI is tax transparency, scanning Schedule K-1s and synthesizing their information faster than any human can.
The future
As financial systems get more intelligent, they’ll be able to make action-based recommendations based on the data. For instance, they’ll be able to help family offices predict cash flow over a given time period and recommend actions to take to correct potential shortfalls. AI and machine learning will automate tasks, speed calculations, and provide easier and faster access to richer information.
The impact of AI and machine learning on family offices is profound. The technology is still in its early stages. But artificial intelligence will inevitably provide family offices with more efficient and effective ways to meet their performance goals. Family office professionals that lead the charge, and take advantage of AI, will have more time to focus on the strategic aspects of the business. This in turn will deliver more value to their clients.