When the Family Office Becomes an Institution

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28 September 2016
Jay Wolstenholme and William Trout

Today’s Complex Holdings Demand Up-To-Date Technical Horsepower


Celent has released a new report titled When the Family Office Becomes an Institution: Today’s Complex Holdings Demand Up-To-Date Technical Horsepower. The report was written by Will Trout and Jay Wolstenholme, senior analysts in Celent’s Securities & Investments practice.

Family offices can range in size from $50 million to more than $5 billion in assets under management. They may support a single family or develop into a multi-family (MFO) entity. In all cases, the increasing complexity of their businesses mandates greater operational capacity. Indeed, new security and regulatory requirements and the need for risk analytics, as well as the demands of managing a multiasset portfolio, will often necessitate a technology refresh outright.

In the go-go 1990s and first decade of this century, fat margins led many family offices to reconstitute themselves as hedge funds. Expanding the universe of clients beyond the immediate family or families allowed greater access to capital and alternative assets, as well as the ability to diffuse administrative costs across a larger organization.

“As family offices reconcile their need for technological sophistication and growth with their innate distaste for capital expenditure, sourcing options come into play,” says Trout.

Many family offices now have institutional operational requirements, demanding sophisticated trading and portfolio management operations according to investment strategies and timeframes.

“Large multifamily offices are requiring much more advanced and sophisticated technical portfolio management systems in order to meet functional requirements for investing as well as satisfying family client reporting requests. Advanced family offices are even moving into real-time OMS and PMS applications,” comments Wolstenholme.

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