Study Finds Security and Integration among Top Technology Concerns

Systems security and finding a software solution that integrates financial data across multiple functions rank as family offices' top technology concerns, according to new research from the Family Office Exchange (FOX), a global network of wealth owners and their advisors.
 
The study, 2013 FOX Family Office Benchmarking: Technology in the Family Office, surveyed single and multifamily offices on their technology practices, including software selection, security, budgeting, staffing, and use of Cloud computing.
 
Survey participants named security as one of their top two technology challenges. Their sensitivity to security applies to both the data itself and communication of the data, with most participants (71 percent) opting to not send financial information to clients' mobile devices. In spite of these concerns, 56 percent of respondents expressed confidence in their security practices.
 

Three Ways to Keep Client Data Secure

Jim Bourke, CPA, CITP, CFF, partner in charge of firm technology for CPA and consulting firm WithumSmith+Brown, PC, offers these three tips on how family offices can successfully secure private and confidential data.
 
1. Never e-mail or send unsecure attachments to your clients without proper encryption: "In fact, I would recommend the use of a secure portal for this purpose over encryption of file attachments. This is one of the primary ways that personal and private information becomes compromised."
 
2. Utilization of a common database is an absolute must: "The more places that private and confidential data exist, the higher the likelihood of a breach. Using a common database helps to ensure that data are not compromised during transfer from accounting to tax, and so forth."
 
3. Do your homework: "If utilizing the Cloud for servicing family office clients, just do your homework. Make sure the service provider has a service organization control (SOC) report available. SOC reporting replaced the previous SAS 70 reporting models for service providers that store confidential and private information. Often, a Cloud-based system will bring with it security, redundancy, and controls that are much tighter than those that would exist within a traditional office."
 
The survey also found that the desire for a reporting solution that aggregates data across such key functions as investments, tax, accounting, and philanthropy remains a key challenge for family offices. Most (88 percent) still rely on Excel to serve as the bridge between software packages.
 
"Integration remains the holy grail for family offices," says FOX Senior Consultant Jane Flanagan. "The need for a single software solution that can aggregate data across investments, tax, accounting, and the family foundation is a challenge that we've heard consistently in our benchmarking over the years. This year's study marks the emergence of data security as a top technology priority for family offices."
 
Other key findings:
  • In spite of security concerns, 46 percent of family offices currently use Cloud technology.
  • In the wake of Hurricane Sandy, 97 percent have or are in the midst of developing a process for disaster recovery and/or business continuity.
  • Just 21 percent of family office participants have a dedicated IT professional on staff.
  • Technology consumes 5 percent of the average family office budget.
About the study:
Technology in the Family Office is the second in a series of benchmarking studies that FOX is conducting this year. It follows the 2013 Investment Survey released in April. A third study on Family Office Compensation and Benefits is due out in the fall.
 
Related articles:
Source: Family Office Exchange
 

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