From bringing lunch to work to making coffee at home, many of us try to economize from time to time. At the family-office level, the scale may be different, but the principle is the same: Waste and inefficiencies are luxuries no one can afford.
But where to look when the solution isn’t as simple as cutting back on those daily lattes?
“There’s no tool or process for efficiency that will work unless the family members feel heard, respected and informed that they’re included and that their voice is valued,” says Ottawa-based Lucy Ryan, a director with Cole & Associates in Vancouver.
Ryan names two kinds of cost savings for single-family offices, the first being economies of scale, such as shared insurance policies, consolidated reporting platforms and cyber-protection. A multi-family office, on the other hand, may offer cost-sharing among families in nearly every aspect, from office space to specialist consultants.
Without that education piece, the decision-making process moves at the pace of the person who is least knowledgeable or least confident.
Lucy Ryan, director with Cole & Associates
The second type of efficiency results from a family operating at their optimum level of performance, “and ideally those go hand-in-hand,” Ryan says.
For instance, families can create economies of scale by inviting more members to participate and by educating them on succession, sound decision-making, estate planning and investment.
“Without that education piece, the decision-making process moves at the pace of the person who is least knowledgeable or least confident,” Ryan says.
Benefits also accrue from alignment with the family wealth strategy, a shared vision of success and the establishment of clear processes and well-structured investment committees.
Another area is communication, says Ryan.
“Families thrive and operate efficiently when they communicate effectively. We use a tool called the Kolbe Assessment to identify how each family member uniquely takes action.” This tool sets the family up for success and minimizes wasted time, misunderstandings and potential triggers for conflict.
‘We constantly do training’
In family advising, “we’re always trying to create scale but never, ever lose sight of the need to provide personalized and customized reporting and intentional advice specific to their objectives and needs,” says Sloan Levett, partner and practice lead of the family office group at Fuller Landau LLP in Toronto.
Strategic staffing offers potential for finding efficiencies while supporting each client’s needs and objectives, Levett says: “The more we can bring in-house, the more we can provide operational efficiencies and allow for more effective and efficient outcomes for our clients, who are looking for a one-stop-shop solution.”
Building strong in-house talent is only partly a hiring function. Consistent attention to staff education is an essential component of developing deeper, broader internal teams.
“We’ve been successful because we’ve been able to grow and develop our team internally and maintain continuity with client relationships,” Levett says.
To accommodate clients’ growth without expanding the team, Fuller Landau prioritizes training. “Internally, we constantly do training both at the firm and team level. There is a formal designation path that we like our team to have completed,” he says.
The biggest barrier is human nature. Every family is its own ecosystem.
Leah Boyd, president, First Avenue Investment Counsel Inc.
For example, members of Fuller Landau’s family office team are expected at a minimum to obtain both CFP (Certified Financial Planner) and TEP (Trust and Estate Practitioner) designations. Some, like Levett, also hold the FEA (Family Enterprise Advisor).
The plethora of emerging tech tools is another source of potential efficiencies.
“We are constantly searching for ways to build a better tool,” says Levett. Unsatisfied with available off-the-shelf solutions for data aggregation, the firm has leveraged a blend of varied tools to automate reporting. “We continue to get better and more efficient in completing our reports,” he says.
AI can streamline some functions like investment management research, Levett says. “We add a commentary at the front of every report; AI has definitely helped us to gather data in a more efficient fashion.”
Ryan says she can be “a bit wary of AI.” She points out the risks and privacy concerns: “I try to ensure that any family we’re working with is aware of the risks, but if they’re using it in a secure way I think it can be useful for summarizing long documents or generating transcripts of meetings.”
Ryan says she appreciates being able to summarize a two-hour meeting into a two-page document for family members, “and they can still watch the recording or talk to family members about anything they’ve missed.”
‘Strategy should be personal’
At first glance, “scale and customization seem at odds,” says Leah Boyd, president of First Avenue Investment Counsel Inc. in Toronto. But, although each client is unique, “not everything needs to be reinvented for each family.”
Strategy should be personal, she points out, but infrastructure doesn’t always need to be. She lists areas where even a single-family office can find considerable efficiencies: “Trading platforms, custody relationships, reporting systems, risk tools and operational due diligence can be centralized and strengthened across a broader base.”
In addition, research offers opportunities for efficiency. “Macroeconomic analysis, asset allocation frameworks, manager due diligence and private market underwriting require meaningful investment to build well. But that intellectual capital can support multiple families effectively and efficiently,” she says, adding that technology like data aggregation tools can also appropriately be shared.
Even the investment side offers potential.
“In public markets, a centralized multi-asset platform allows for coordinated portfolio construction, efficient trading and consistent risk management,” Boyd says. Expertise in security selection can be deployed broadly, while portfolio allocations are “calibrated to each family’s objectives and constraints.”
The nature of the family office does present some barriers, however. For instance, says Boyd, “family situations are often complex, with cross-border tax structures, operating businesses, concentrated holdings, philanthropic commitments and estate planning considerations. These factors demand bespoke precision, and efficiency can’t come at the expense of getting it right.”
Ultimately, she says, the biggest barrier is human nature. “Every family is its own ecosystem, and that individuality has to remain central to the relationship and advisory work.”
To a certain extent, Boyd says, she believes that family offices can also work together to streamline costs and maximize results on behalf of their families. When done thoughtfully, “research sharing is a natural starting point. Exchanging due diligence findings, thematic research, ESG analysis and manager monitoring insights reduces duplication and raises quality.” At their best, “the strongest collaborative models preserve independence while expanding capability.”
In the end, says Boyd, scale shouldn’t dilute intimacy. It should enhance stability, access and depth of insight.
“The objective isn’t simply to lower costs; it’s to expand capability, all in furtherance of delivering the best possible advice and experience to the families we serve.”
Sarah B. Hood is a Toronto-based writer and book author. She has served as editor of three national magazines and written weekly columns for the National Post. She also serves on the editorial board of Spacing magazine. She writes frequently on business, urban affairs and culture. As a food writer, her work has been translated into Japanese and Arabic. She has taught writing at George Brown College for more than 20 years.
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