December, 2024
The conversation around artificial intelligence (AI) in financial services often gravitates toward Wall Street, hedge funds, and algorithmic trading. But behind the scenes, a quieter yet equally profound AI revolution is unfolding in family offices. During a recent panel discussion featuring experts and practitioners, the focus was on how AI is streamlining operations, improving decision-making, and reshaping workflows in family offices—without replacing the human touch.
This discussion took place at the FOTechHub 2024 Virtual Conference and was moderated by Dr Tania Neild, CTO and Owner of InfoGrate Wealth. Some quotes have been paraphrased for readability.
AI in Family Offices: Hype vs. Reality
While AI has been around for decades, the explosion of Generative AI (GenAI) and Large Language Models (LLMs) in the last two years has reignited interest. Yet, despite the futuristic headlines, the real impact of AI in family offices today is far more practical: automating tedious, manual tasks and improving efficiency.
Panelist Yoni Malchi, an AI specialist working with financial institutions, explained the fundamental shift: “Most family offices have been using traditional machine learning for years in performance reporting and data analysis. What’s new is the ability of AI to process unstructured data—statements, contracts, meeting notes—in a way that was previously impossible.”
But AI adoption in family offices isn’t as straightforward as it is in larger financial institutions. These firms handle highly sensitive data, value discretion, and are naturally risk-averse when it comes to new technologies. So, how are they making AI work for them?
Real-World AI Use Cases in Family Offices
1. Investment Research & Internal Knowledge Management
Larger family offices are leveraging AI to organize and retrieve research insights. “We built an internal research hub where our investment teams can query past analyses on private and public investments instantly,” explained Neil D'Anniballe, Principal at Brown Advisory. “Instead of calling analysts with repetitive questions, our advisors can now pull up relevant reports in seconds.”
By using AI-powered search and retrieval tools, teams can access structured investment opinions, equity research, and private deal evaluations without manually sifting through documents.
2. Automating Statement Processing
One of the biggest AI wins in family offices is automating custodial and alternative investment statements.
Tim Macherone, COO at Shade Tree Advisors, explained their transformation: “We were manually extracting key financial details from 1,500-2,000 monthly statements. AI reduced processing time per document from 8 minutes to under 1.5 minutes, with 96% accuracy.”
This automation not only saves hours of manual work but also reduces human error, ensuring more accurate financial data.
3. Legal & Trust Document Review
For family offices managing complex estate planning structures, AI is proving invaluable in document review. Instead of analysts spending hours summarizing trusts, wills, and legal agreements, AI can extract key details such as beneficiaries, dispositive provisions, and execution dates in seconds.
“Our AI tool indexes and organizes estate planning documents,” Macherone added. “It ensures we have the right data when advising clients, eliminating the need for hours of manual review.”
4. AI-Powered Bill Payments & Financial Operations
AI is also helping streamline financial operations, including bill payments. Amy Freidinger, COO at Tao Capital Partners, described their approach: “Instead of manually processing invoices and approvals, our AI tool categorizes expenses, assigns codes, and routes them for approval—eliminating hours of repetitive work.”
The team’s goal is to integrate AI-driven payments directly with banking systems, minimizing manual intervention while maintaining oversight.
5. Project Management & Document Migration
AI’s role isn’t just in financial data—it’s also enhancing operational efficiency. D'Anniballe’s family office recently migrated millions of documents to a new system using AI-powered tagging. “We couldn’t have done it manually,” he said. “AI classified and linked documents in Salesforce, reducing workload and making search and retrieval seamless.”
Additionally, Microsoft Co-Pilot is being used to summarize meetings and create action lists, allowing teams to focus on decision-making rather than note-taking.
Overcoming Adoption Challenges: Security & Change Management
Despite these advances, AI implementation in family offices isn’t without challenges. The panelists highlighted two major concerns:
- Accuracy & Validation: AI is effective but requires human oversight (e.g., AI accuracy at 96%, but diminishing returns beyond that).
- Change Management: Resistance exists, especially among staff performing manual tasks, but involvement in AI adoption helps ease the transition.
- Security & Privacy: Sensitive financial data requires careful handling, with best practices including private cloud storage and permission-based access.
The Future of AI in Family Offices
While AI is already delivering significant efficiency gains, its role in family offices will continue to evolve. Expect to see:
- Improved AI Accuracy for Financial Statements: As LLMs become better at reading tables and financial data, adoption in investment reporting and accounting will grow.
- Deeper Integration with Banking & Payments: AI-assisted wire transfers and cash flow management will become more seamless.
- More Secure, On-Prem AI Solutions: To mitigate privacy concerns, family offices will likely move towards AI models that operate within their own controlled environments.
- Greater Use in Estate Planning & Compliance: AI-driven analysis of legal documents will become a standard part of wealth structuring and regulatory compliance.
Final Thought: AI as an Enabler, Not a Replacement
For family offices, AI isn’t about replacing human decision-making—it’s about removing inefficiencies. Whether it’s streamlining data extraction, improving investment research, or enhancing compliance processes, AI is proving to be a valuable assistant.
As Freidinger put it, “The goal is progress, not perfection. We’re using AI to eliminate bottlenecks so we can focus on what really matters—strategic decision-making and serving our families better.”
The message from the panel was clear: AI isn’t a future concept—it’s happening now, and family offices that embrace it strategically will gain a significant competitive advantage.