Capabilities to Capitalize: AI Comes to Family Offices and Alternative Investing
Financial markets are wavering due to the threat of a recession, causing many ultra-high-net-worth individuals (UHNWI) to seek safer investment strategies. Increasingly, they’re leaning on family offices and alternative investing. In fact, according to research by Knight Frank, there was a seven-fold increase in the number of family offices between 2017 and 2022, and a nearly 30% rise in UHNWI is anticipated by 2026.
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This boom offers family offices future-defining potential if they have the capabilities to capitalize. The problem is that many firms have a difficult time keeping up with existing workloads, never mind trying to do more. This is due to statements and notices often arriving in unstructured document formats via email and portals, making data management tedious and time consuming. In turn, this constrains a family office’s ability to leverage data for more accurate and effective client reporting, risk management and decision making.
On the bright side, a new approach is enabling family offices to harness machine learning (ML) and artificial intelligence (AI). By combining two distinct technologies – data workflow automation and portfolio management and accounting software – collection and management processes can be automated. This can enable family offices to do more with less and seize opportunities, paving their way to a lucrative future instead of being left in the dust by competitors.
A tale of two platforms
What’s needed first is a platform purpose built for family offices that can manage diverse portfolios, while combining accounting, investment and entity ownership books of records. This enables staff to capture and reconcile their data only once. Advanced algorithms can also be used in such platforms to assign a measure of confidence to the underlying data. In this way, the exorbitant amount of time needed to assure data quality is removed, while valuable new portfolio, financial and ownership information is surfaced.
The other component is a workflow automation platform capable of creating a data action layer that can turn real-world unstructured details into action. This is done technologically by automating data processing in documents, emails and files with no-code intelligence. The right platform will employ AI and ML to automatically identify, capture and structure vital data from capital and financial statements, notice and confirms, K-1s, partnership agreements and more.
By integrating these platforms, mission-critical data is unearthed, which is immediately available in the portfolio management solution. Easily accessible by portfolio managers, the data can be used for advanced modeling, performance and analytics. This includes important areas such as transactions and market values, exposure data and fee and liquidity terms. Moreover, the approach further enables workflow automation in key areas from inbox integration to source data acquisition.
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Into the future with Artificial Intelligence
For family offices, the benefits of such joint solutions are endless. They can automate data collection and management processes, streamline workflows and lower overhead. Powered by AI and ML, they can drive greater investment performance and analytics. Furthermore, clients can be onboarded much more quickly and receive an enhanced digital experience that eclipses traditional technologies.
As this market boom rolls out over the upcoming years, family offices will not only be able to capitalize now, they can be assured they’ll have the capabilities in place to perform and succeed in the future as well.
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