The "digital shift" refers to the transformation of various aspects of life, work, and communication from traditional methods to digital technologies. In the context of a family office preparing for the digital shift involves adopting and leveraging digital tools to enhance efficiency, security, and communication.

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According to PwC's 2023 Global Asset and Wealth Management Survey and 2027 projections, the current landscape will be disrupted by changing investor expectations. As per the survey report, by 2027, 16% of existing asset and wealth management (AWM) organisations will have been swallowed up or have fallen by the wayside—twice the historical rate of turnover.

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A historically large wealth transfer from baby boomers to millennials and Generation Z is taking place, as a result Family Office’s must intensify their efforts to comprehend the behavior of this new wave of investors. Understanding their preferences for products and finding effective ways to meet their evolving needs and expectations is crucial. Here are some ways you and your family office can prepare for the digital shift:

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Develop a Digital Transformation Strategy That Actually Works:

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Technology is transforming consumer expectations and how wealth managers are approaching the market. It's estimated 90% of investors think that using technologies, such as blockchain, artificial intelligence, and big data, will improve portfolio returns and outcomes.

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Moving towards a digital shift while having cost restrictions doesn’t have to be hard. Start by focusing on high-impact digital solutions that can bring immediate efficiency gains. This could include automating routine tasks, implementing secure document management systems, or adopting cloud-based solutions for data storage. Consider partnering with emerging software start-ups, as these smaller companies often provide cost-effective solutions in the form of subscriptions and are more collaborative in terms of training and implementation.

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Meet New Investor Expectations:

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The primary source of High Net-Worth Opportunities is expected to emerge from Millennials and Gen Z. Numerous statistics indicate that these emerging investors will reassess their choice of Wealth Manager, placing priority on accessibility to a diverse range of products and services. There is a large movement towards ESG, Crypto/Digital, and Private Market investments, and traditional wealth management might not be equipped to meet the expectations that managing them comes with.

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Adopting a digital software plays a crucial role in incorporating Environmental, Social, and Governance (ESG). A digital software allows wealth managers to aggregate and analyze vast amounts of data from diverse sources. Digital tools also enable automated screening and filtering of investment options based on predefined ESG parameters, which enhances transparency in portfolio management.

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Cryptocurrency is now the most held asset amongst Millennials and Gen Z investors. Family offices have a better chance of surviving if they can adapt to these changing investments. The biggest concern with Cryptocurrencies is that they are susceptible to hacking and fraud. Implementing strong cybersecurity measures to safeguard digital assets, which include multi-level security will help increase trust between investors and wealth managers.

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These new waves of investors are seeing investment opportunities that offer the potential for higher returns. Private markets, including private equity and venture capital, have historically provided returns that can outperform traditional public markets. Wealth managers equipped with a deep understanding of these unique preferences, coupled with the ability to craft tailored solutions readily available through digital solutions, stand a greater chance of retaining their clients.

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Deliver a Transparent Experience to Investors:

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Family Offices will have to work towards ways of making investment information readily accessible. Investors now want real-time information readily available. 40% of investors say digital access has become a greater priority, and 9 out of 10 say that mobile will be their preferred channel in the future. In fact, digital is no longer just the domain of millennial customers; it is now preferred by older and richer investors.

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Looking ahead, we expect family offices will need to continuously adapt to meet the evolving needs of investors and market trends. Right now more than ever it’s important to address the growing demand for personalised technology driven solutions. Family offices that can effectively use technology to build relationships with both existing investors while delivering unique client experiences will be well positioned to succeed in this era of digital transformation.