This article emphasizes how inefficiencies in managing great wealth can divert attention from wealth maximization, leading to missed opportunities and a backward-looking focus on risk mitigation.
The reliance on networks of advisers and disjointed technology tools often hinders collaboration, resulting in confusion and costly mistakes. The solution lies in developing a collaboration ecosystem that enables wealth holders and advisers to streamline workflows, reduce problem-solving efforts, and focus on value maximization, ultimately unlocking the full potential of family wealth and contributing to growth and innovation in the broader economy.
Great wealth holds great promise. But all too often, the potential of that wealth is not fully realized. This isn’t due to a lack of ambition or will, but it is the result of inefficient processes and procedures that - unintentionally - divert attention away from wealth maximization.
In my recent article, Hostages of Great Fortunes, I explained how the business of complex wealth creates a reliance on networks of advisers, on technology tools that aren’t designed to speak to each other, and on workflows that promote siloed practices rather than collaboration. Each, in turn, reduces the level of control and oversight the family has over its wealth.
The consequences of this lack of control can be far-reaching: confusion, costly mistakes, and - in some cases - grievances between family members. Many family offices have developed a backward-looking culture of risk mitigation rather than a forward-looking focus on wealth maximization to avoid this insecurity.
But this approach has consequences, too. Families are missing out on tomorrow's opportunities by focusing on problem-solving today. These opportunities lost impact the family and society more broadly by undermining the growth, innovation, and jobs that family wealth can support when allocated with ambition, tenacity, and purpose.
A typical example and illustration of this issue comes from private market investments. These often require a degree of engagement or stewardship. Yet, the idiosyncratic nature of these opportunities means that time and resources are often spent trying to chase and collate information on the investment rather than contributing to its success. An opportunity lost to add value and build a great business, along with the benefits it would bring to the family and the economy as a whole.
Although opportunities lost are an unquantifiable issue, families are all too aware of the challenge. However, many assume it to be an unavoidable byproduct of managing complex wealth, a level of inefficiency that is inevitable between the family and the family office.
I disagree. Opportunity loss is an outcome of inefficient ways of working. If family offices change how they operate, they can overcome the challenge.
The solution lies in the development of a collaboration ecosystem. A platform that sits above reporting and allows operational knowledge to be captured, shared, and evolved in a single, secure space. Here, at the collaboration level, wealth holders and their advisers can work together to build workflows and processes that reduce the need for problem-solving, instead freeing up time and resources to focus on value maximization.
In doing so, families can pivot from generations past to the generations still to come, unlocking the full potential of their wealth and the associated benefits it can bring.
Across the broader knowledge economy, technology is changing ways of working, relieving professionals of the burden of functional tasks and freeing them to add value to their clients and businesses. When it comes to the management of complex wealth, families should expect the same. They now have an opportunity to change how they work for the better, an opportunity that must not be lost.
Credit - Jill Creager - President & CEO iPaladin
2022, Brad S., MFO Founder/CEO
2022, Susan L., Principal Accounting Advisor
2021, Tebbi P., SFO Office Leader
2019, Scott W. SFO Executive
2021, James K., Partner MFO Business Leader