Technology- The Next Global UHNI Wealth Management Trend

Authored By: Mark Rogozinski, Chief Executive Office, Asset Vantage

Within the next decade, over 20 trillion dollars of family wealth will be transferred from one generation to the next. In many cases, the younger generation has been educated and prepared for the effect of their inheritance and it may not create a significant change in their lifestyle.

This next generation, however, will place new and challenging demands on their wealth managers and the wealth management industry in general. The younger generation has seen more technological advances than several previous generations combined. Their ability to access information, in terms of ease, convenience and speed of access, will undoubtedly influence the way they expect to receive information from their wealth advisors.

That, in turn, will influence the rapid adoption and acceleration of technology in family offices across the globe. In the present scenario, a majority of large and small family offices use a patchwork of retail accounting software along with spreadsheets to account for, consolidate data and prepare reports.

They routinely struggle to handle the quantum of data and the complexity of merging complex investments, like alternatives and partnerships, with marketable securities and personal assets. This produces a system that is tedious, time-consuming, not scalable and prone to human error. By the time the work is complete and the reports are generated, it is time to start the process all over again.

Consequently, this does not help with investment decision making. With such a system, adding people is not a solution, it is simply a temporary patch to manage data rather than optimally manage wealth. Despite the existing challenges, resistance to change is well entrenched in most family offices and consequently, they are not proactively seeking new technology.
Over several decades in the wealth management industry I have observed that change tends to be initiated by one of these three factors:

• Repeated issues with data/reporting with current systems
• A new professional, either CIO or CFO, coming into the office
• A change in generational wealth ownership

Although all of the above factors will impact system and process changes, I believe the upcoming generational wealth transfer will be the major driver in new technology investments. Next-gen wealth owners expect ease of access to information; anywhere, anytime and on demand. They are not satisfied with periodic spreadsheets or pdf reports of historical data that are likely to be obsolete before they view them.

Specialized technology for the ultra-high-net-worth market is in a comparatively nascent phase. But it’s existence and worth are invaluable. Next-gen family offices across the United States are actively seeking comprehensive wealth management technology and reaching out to firms which combine accounting and portfolio reporting into a unified platform.

The future lies in technology that has the scope to consolidate all asset class types, integrate the accounting function, produce performance results, as well as generate accurate, customizable reports. The head of a mid-west family office summed it up perfectly when he said that they would sign a ten-year technology deal with us because of their goal
matched ours; a long-term technology solution for wealth management.