It appears that the world is on the cusp of a fourth industrial revolution if you’re to believe the sages at the World Economic Forum at Davos this year. But what does it mean? Here’s a go at trying to decipher it from the perspective of a family office in the business of managing assets.
These are the good points first...
- Efficiencies. Technology is making it easier for family offices to run effectively. Whether the application of technology to compliance procedures, or client reporting, technology has made these tasks easier and cheaper, and will continue to do so;
- The cloud. Technology linked to the cloud means that family offices can cut down on cumbersome and expensive bespoke technology applications. This is highlighted in a recent report from the US group Family Office Exchange.
...but here’s the not so good points about the revolution
- Cyber crime. Technology can be exploited by cyber criminals and cost family offices dearly, which Family Capital highlighted recently. Of course, technology in itself isn’t a reason why cyber criminals can infiltrate family offices, but unprotected technology is. Family offices need to get wise to the threat.
- Jargon. Technology comes with a considerable amount of jargon and this can be confusing and daunting to those without a technology background. Family Capital challenges anyone without a technology background to explain what blockchain and distributed ledger technologies mean. You better know, because these technologies, so the experts say, are going to make a huge difference to the management of assets in the future. You can also rest assured that when you know what these terms mean, other new technology terminology will have arisen, equally important to your business, and you will have to start the learning process all over again.
- Chief technology officer. This follows on from the above point - a chief technology officer will become more important than a chief investment officer. If the management of assets increasingly is done better by artificial intelligence, as the fourth industrial revolution suggests, then why employ a CIO? Better to ditch the CIO and hire a CTO, or morph the CIO into a CTO - if that’s not too confusing. The CTO can also help you understand the jargon.