Next Generation Family Office Executives Need Technology to Gain Real-time Insights to Reduce Financial Risks

There is no denying that we are moving toward more personal accountability and empowerment with regard to wealth management. While one can point to these uncertain times as a reason for the shift, the truth is that the current situation is merely shining a light on a centuries-old problem, that being the relatively short life of even the largest family fortunes.  As the ancient Chinese saying goes, Fu bu guo san dai – literally, “Wealth does not pass three generations.”  The solution for this may very well lie in the utilization of digital tools that facilitate not only the management of wealth, but the education of our children about how to maintain it.   

No matter who created your family’s wealth, it was likely done, not only through a lot of hard work but by taking complete responsibility for knowing about and managing all aspects of the company and/or investments. As the years passed, you may have become less diligent and more reliant on your team of advisors to provide you with information and make financial decisions. Your children are probably even further removed from the decision-making process. For them, the company, family office, et cetera is a well-oiled machine that has always been there and, they assume, always will be. Therein lies the risk that they will not be equipped to maintain that wealth moving forward.  

Wealth management apps such as Private Wealth Systems and EstateSpace, address several issues that high net-worth families face around the management of complex wealth.  

  1. First, these apps allow you to easily access and update information about your financial and real-property assets.
  2. Second, and just as important, they make it easier to share information with family members, particularly millennials and members of Generation Z who cannot conceive of wading through financial documents as you and your parents did.
  3. You can also communicate securely within the apps, which keeps them engaged and connected with the assets they will one day be charged with managing.

Such tools also facilitate transparency among you and your loved ones. As we have seen with social media, technology is the great equalizer when it comes to communication – it knows no generational or cultural boundaries.  It is also inclusive. You simply give your children and/or other stakeholders appropriate permissions on the app, then get into the habit of using it to share information. This keeps everyone in the loop and decreases the sort of conflict that arises, for example, from off-the-cuff conversations with a “favored child.”  

That said, fintech is not a replacement for or a reason to get rid of your advisors; in fact, it’s quite the opposite. When you have real-time information about your assets at your fingertips, you utilize their expertise more efficiently. More importantly, you will be in the position to educate your loved ones and ensure that they are prepared to take the reins when necessary. Remember, no matter how skilled and professional your advisors are, they will never be as invested in your preserving your legacy as you are. 

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