Family offices have always traditionally followed a private and closed investment strategy; however, one of the things they all have in common is wanting to know what the other families are doing and investing in.
The Economist published a story last year laying out The Rise of the Family Office and it makes clear that some of the families are becoming investment Titans.
So what are the trends that we are seeing in the industry and how do you keep up and take advantage of these. The winners within these funds have demonstrated an ability to become agile, proactive and garner a thorough understanding of the emerging trends, risks and opportunities.
What separates the winners from the losers ?
1. Investment Focus & Active Participation
Data is the considered the new crude oil and one of the demanding challenges that all companies face is a need for reliable data and knowledge. In order to provide this advantage family offices have been teaming with other families to participate in co-investment deals in order to not only negate risks but to also provide access to allow minority investment stakes that can bring in needed expertise.
2. Consolidated Analysis And Reporting
Quick and agile decision making is the key to success, however, with the pace of change in the business environment, efficient access to data allows this decision-making to become a crucial driver of performance. Creating a dynamic reporting and real time view to your investments and their operation is a way of addressing problems early and addressing them efficiently.
Anonymity does not equate to security. Cybercrime statistics show that twenty-eight percent of international families, family offices and family businesses have already been victims of cyber-attacks, and according to recent studies this trend is expected to escalate going forward, unless family offices draw up the necessary cybersecurity policies and governance structures and address underinvestment in the required information technology systems.
4. Ethics & Culture
Consumers, investors, business are all facing the challenge of an undeniable socio-cultural mindset shift towards ethical social and environmental practices. Organizations, who follow instead of leading in this space are facing an ever increasing backlash from both consumers and employees. Companies who create an ethical and balance culture, seen to enjoy sustained support from people who purchase their products, especially millennials. This is seen as a vast growing trend that will increase to over $50 trillion in investment over the next decade.
5. Transparency & Reputation
The next generations need to share information and have view ability and transparency of operations is a cultural shift that the millennial generation is driving. Traditionally private family offices deciding to operate more publicly and this is now seen as a strength and requirement. A lack of historical brand and operational background is now seen as a huge reputation risk for an investment. Transparency can lead to greater knowledge sharing and from this development of better benchmarks to move families forward.
Perhaps the largest issue with any family office, just like transparency you need a plan and an ability to be agile and change.
7. Controlling Costs & Digitization
At Bay Capital Exchange we provide tools and technology to assist with the outsourcing of services to improve cost-efficiencies. Controlling costs and maintaining a lean operating environment is key to success.
It’s exciting time for family offices and if you want to know how Bay Capital Exchange can help please register here>