Improving Family Office Efficiency With Technology

Introducing new technology is an opportunity for a family office to refine its procedures and streamline operations.

Mary Timmons, Chief Operating Officer for Global Family and Private Investment Offices (GFO) at Northern Trust, sat down with Jane Flanagan, Director of Family Office Advisory, to discuss family office technology and some of the ways to gain operational efficiency.

Jane Flanagan: We know that the remote work environment has many GFO clients looking for ways to securely automate their manual processes. How can GFO help with this?

Mary Timmons: An uptick in fraud attempts, combined with working from home, has made moving money in a secure and automated way top of mind for family offices. We’ve seen many families revisit their manual processes and adopt secure, online solutions.

We are continually looking for ways to help clients automate their processes. Many clients use Money Movement, which comes with a soft token and is available on desktop or as a mobile app. Clients can use Money Movement to approve money transfers, trades and capital activity in partnerships, in addition to depositing checks into custody, fiduciary and banking accounts. In December 2020, we implemented same-day ACH, and in 2021 the timing of ACH processing will allow clients more time to process their payments during the day, eliminating the need for manual check processing.

In 2020, we also made it possible to add a client’s chart of accounts into Money Movement, so that it can tag its outgoing transactions to feed into its general ledger via automated transmission. More updates are on the way, including the ability to tag incoming funds and vendor payments for 1099 reporting and other reporting — for example, general ledger, Anchor Analytics for performance reporting, or partnership accounting with SS&C. We are also seeing more clients use Anchor Analytics to automate their reporting which allows the family office team to focus on analyzing the data rather than re-entering it.

The other trend we see is that family members — especially those in the next generation — want immediate access to their financial data. With Anchor Analytics, clients have everything from standard desktop reporting to a mobile app that provides 24/7 access to data. Finally, we’re seeing more clients moving away from paper statements and using electronic documents or automated data feeds to their reporting tools.

JF: Similarly, many families are revisiting their processes to gain operational efficiencies. Can you tell us about some of the Business Process Review (BPR) work you’ve done with clients?

MT: We started offering BPRs a few years ago to help clients streamline manual operations and reduce risk. At the outset of a BPR, we interview the office staff to understand their processes and consult with their GFO client service team to determine what we can automate in the family office and at Northern Trust. It’s a very collaborative process that benefits all parties. The outcome gives the family office team time in their day to focus on value-added work. They arrive each day to data waiting for their review, rather than having to manually pull it together. This BPR process is also an opportunity for the family office to refine its procedures and streamline reporting.

JF: As we’ve discussed, cybersecurity is a real concern for family offices. Can you share some best practices for our readers to keep in mind?

MT: We continue to provide an enhanced, client-driven security experience for users which incorporates strong multifactor authentication. This allows clients the option of choosing which authentication methods they want to use, such as soft tokens, security questions, strong passwords and more. Another best practice is to regularly review access levels and permissions for various software programs, to ensure the appropriate people in the office have the access they need, and to limit any unnecessary access.

Training — of the family and family office — on proper cyber hygiene is critical and needs to be continuous; we see clients talking about cybersecurity at family meetings and investing in software to train and test the staff. In a similar vein, more clients are using family office domains, such as jsmith@smithfamilyoffice.com instead of jsmith@gmail.com for email communications and secure report delivery. Finally, we have several stringent controls around manual money movement to protect clients. While we still accept standard forms for money transfers, we encourage clients to use the secure, online processes available instead.

JF: Thank you so much, Mary, for your advice. We invite readers to review the following resources to learn more:

1. How Northern Trust Protects Your Data
2. Northern Trust Family Office Technology Solutions Guide

To learn more about how Northern Trust’s Global Family and Private Investment Office can help your family office with operational and technology efficiency, please contact an advisor.