Some firms are broadening their offering to provide higher value add and greater efficiency to SFOs.  Fidelity Family Office Services joins the power and reach of its market leading broker dealer together with the personal service and access that SFOs need for trading desk, clearing and custody at a competitive price.

Some CPA firms, like Rothstein Kass and WTAS, that traditionally focused primarily on tax and audit services to SFOs have created and successfully grown practices providing planning, analysis, back office support, transactions and advice on investment services to SFOs.  

The top tier custodial banks have taken notice and responded.  Building on their dual strengths of data aggregation and custody processing, market leaders like BNY Mellon and Northern Trust offer enhanced performance reporting and investment analytics inside their technology platforms to SFOs with traditional and alternative investments.

21st Century SFOs are constantly looking for ways to reduce or re-engineer internal labor as they identify and integrate best in breed service providers.  Smart SFOs know that 'no one size fits all' and plan accordingly to buy, build and integrate the very best solutions based upon their business strategy and budget.

21st Century SFO Business Strategy
With so many existing players and new entrants offering services and solutions, SFOs have difficulty finding the most suitable providers. Additionally, SFOs have to determine the right mix of services and solutions delivered both internally and externally. Family Office Metrics is a leader in advising family offices on business strategy before selecting or deploying a technology or service solution.  What do successful SFOs do?

The successful family office will have a clear vision of the future and well defined scope of services, as well as a strategy for achieving its objectives.  Often, the mission of the SFO will include multiple objectives; the education and integration of younger family members, the preservation of the family legacy, cost controls, risk management or simply the provision of superior investment results.  It is these objectives that will dictate the principal services provided by the family office which will in turn determine how the office is organized, and appropriate staffing, operations and technology.

Business Models Impact Technology Selection
SFOs must consider the impact of their business strategy when selecting a technology platform.  There are several important factors that have an impact on the choice of business model and the selection of technology and other services.  

Figure 1 describes the SFO service needs and shows the hierarchy of family office service models.   At the bottom of the hierarchy, an SFO can be described as following a Compliance and Control business model, essentially providing a back office for the family.  In this case the SFO provides record keeping, reporting, trust and tax accounting.  The SFO may also provide bill paying and other personal services.

Further up the ladder is the typical investment based SFO, which provides investment management services in addition to the basic services of compliance and control. SFOs focused on investments will typically oversee investment policy, due diligence, manager search and selection, monitoring and reporting.

Finally, some SFOs provide a fully integrated and interdisciplinary approach incorporating financial, tax and investment planning as well as coordination of strategy.  In this approach, planning is the key to successful wealth transfer and the forward look by the SFO is the important service delivered to family clients.