Don’t Serve Your UHNW Clients Like It’s 1985

When searching for a new solution, advisors hear a common pitch from software providers: “Our technology frees you to focus on what you do best, managing relationships and growing your business.”

Many players in the fintech ecosystem tout the ease, simplicity and scalability of their technologies, allowing advisors to spend less time wrangling data and more time serving existing clients and looking for new ones.

But for advisors serving ultra-high-net-worth families, the promise of an easy button to manage the complex needs of multi-generational, taxable investors rings hollow.

Despite the incredible growth of sophisticated fintech software-as-a-service solutions, advisors are still commonly doing complex and custom work for UHNW families in Microsoft Excel, which was released in 1985. 

When we launched Callan Family Office, which serves more than 40 multi-generational families with an average portfolio of $100 million, we recognized that we had an opportunity to bridge  the ultra-high-net-worth technology gap. 

From a tech perspective, ultra-high-net-worth families are different from affluent or high-net-worth investors in two important ways.

First, they have ownership structures that span multiple generations, multiple investment managers and multiple custodians.

Second, they require individualized advice and implementation to ensure that investment and financial plans are coordinated to maximize outcomes on an after-tax basis. 

Clients’ Struggle

Software firms struggle to build profitable technology when the requirements vary so widely for each client, especially when the number of ultra-high-net-worth-focused firms like Callan Family Office is modest compared with the number of firms serving affluent and high-net-worth investors. 

One consequence of the UHNW technology gap is that clients struggle to get a clear view of their total investment portfolio in the context of their estate plan. The families we serve own public and private market assets, but also operating companies with shared ownership.

Much of this data must be integrated from disparate sources, including from the client or their family office staff. This requires a maze of operational workflows to collect, clean and connect client data in a secure and compliant way.

Without holistic and timely data, advisors can’t coordinate investment advice with estate planning, risk management, philanthropy, banking, family governance and other client objectives. Assets end up being managed in silos, and highly taxed clients may experience wash sales, short-term capital gains and other sources of tax drag during implementation.

Finding Solutions

Once client data is fully integrated, specialized tools sit on top of this foundation to crunch numbers, glean insights, fuel recommendations and report outcomes.