Family offices (FO) are moving more into the spotlight. Firstly, their involvement in high-profile investments is increasing, but their number is also growing. For illustration, Singapore alone has registered over 600 new family offices during each of the last two years.
Digital FO as a Solution
The costs of running a single-family office aren’t always low, especially when significant assets are to be managed. The desire for ongoing control combined with growing estate, philanthropic, and lifestyle management means high expenditures. Thus, either a new single-family office is born or a multi-family office is sought as a solution.
But in recent decades, new alternatives have started to emerge. One of these is the virtual family office, made up of specialised professionals. They offer a holistic family office solution as independent service providers. Being outsourced means they are not a dedicated resource at hand, and if only used as needed, this can greatly reduce overhead.
Another alternative is a digital family office. This possibility has become more and more popular in recent years. This FO can combine tech-enabled high-touch service delivery with an offering seen in popular wealth management platforms and sometimes proprietary investment technology to offer a relevant solution.
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Fintech Tools are helpful
The digital family office aims to manage sophisticated finance through technology. Its platform allows members to aggregate assets, control their investment allocations, access expert services, and take a line of credit. The popular Arta, a brainchild of a former Google executive and backed by some of the most well-known venture capital firms, is accessing investment opportunities through an automated AI-managed portfolio.
A dashboard where they can track investments, plan cash flow, and simulate taxes is part of the solution that digital FO is offering. It can also include direct advice from a group of committed financial, tax, and investment advisors. Thus, the gap between traditional financial management offerings and the vast number of new wealth owners from tech companies is filled.
Future-focused Wealth Management
The digital FO offers a compelling option for wealth owners and provides family office-like capabilities. Still, they are easily accessible and have affordable monthly fees. Perhaps one more advantage over a traditional family office setup where teams often operate without much outside exposure: these all involve a diverse client base from which they can accumulate broader strategic insights to improve their overall knowledge.
With the rise of fintech, it is much easier to find a technology-based solution to manage your wealth as an individual. But these digital alternatives do, however, push future-focused family offices to evolve, to provide a combination of high-touch services and technology-enabled capabilities that go beyond wealth management to manage wellness, estate planning, lifestyle, philanthropy, and all the other needs that make a family office different from just a regular company.
