How Artificial Intelligence and Machine Learning Can Help Family Offices Work Smarter

Date: Sep 27 2021


Sage Intacct is the only and preferred provider of the AIPCA for cloud financial management. Specializing in helping a variety of Financial Services firms — including family offices, asset management firms, lending institutions, insurance carriers, real estate companies, and credit unions —Sage Intacct streamlines investments, capital, and reporting, while delivering real-time visibility into the metrics that matter.


Many family offices have been taking steps over the past few years to modernize the internal technology systems they rely on to manage their business – often referred to as the “tech stack”. As families undertake this journey of digital transformation one of the questions that inevitably arises is around artificial intelligence (AI) and machine learning (ML) – specifically, can these technologies be utilized by a family office to improve how business is conducted today. The short answer to the question is an emphatic ‘Yes!’. There are now many applications that leverage AI and ML that can streamline office operations and an increasing number of forward-looking family offices are taking advantage of them.


Before we explore how AI and ML can benefit a family office, let’s first set the stage as to how these technologies work. In a nutshell, AI and ML take the automation of business processes to the next level by making software applications that are “smart.” To do this, artificial intelligence algorithms direct an application to perform certain tasks, and machine learning enables the algorithm to continually learn and get better at doing the job. Combined, these technologies can easily analyze vast quantities of data, predict patterns, spot anomalies, make recommendations, and learn and improve over time.


More than likely you are already using AI and ML every day. Google Maps and Waze navigation systems employ AI and ML to analyze traffic speed, obtain the best route to a destination, and offer notifications about construction and accidents along the way. Email spam filters use these technologies to aggregate and analyze different signals, such as specific words in the message, metadata (where it’s sent from, who sent it, etc.), and your own personal preferences to keep junk out of your inbox. And, when you deposit a check through a mobile app, AI and ML are working behind the scenes to decipher and convert handwriting on checks into text via optical character recognition (known as OCR).


The Impact of AI and ML on the Family Office

Accounting and finance are at the core of every family office and numbers are at the core of accounting. Accurate, comprehensive, and timely data provides family office finance professionals with the insights required to make decisions that yield the best outcomes. AI and ML puts more analytical power directly into the hands of these professionals and other decision makers.


While possible use cases are limited only by our imaginations, many practical examples of AI and ML are already surfacing within the finance function of family offices, such as:


  • Accounts payable and receivable: Embedding AI and ML into cloud-based accounting software can eliminate the manual effort involved with accounts payable and receivable. For instance, when AI and ML algorithms are integrated into the AP process, the application can read invoices, extract data, code the invoice to the right general ledger accounts, approve the process, and make the payment.
  • Monthly and quarterly close: Getting the right information as quickly and accurately as possible helps you make better decisions. Cloud-based financial systems infused with AI and ML can easily crunch through and analyze larger quantities of internal and external data to help close the books faster.
  • Better decision-making every day: The same capabilities that speed up the closing process also enable real-time reporting and queries. Data is updated in real-time, giving decision makers round-the-clock access to trustworthy and current information and reports. With this information at their fingertips every day, family office managers can easily track trends and take actions as needed to improve outcomes—instead of waiting for reports at the end of the month.
  • Recommendations: As financial systems get more intelligent, they’ll be able to make action-based recommendations based on the data. For instance, they’ll be able to help family offices predict cash flow over a given time period and recommend actions to take to correct potential shortfalls.


Looking Ahead

This means that it’s not a question of if – but when and how quickly – family offices will put AI and ML to work to eliminate routine accounting work, reduce costs, and improve their problem-solving and decision-making capabilities.


Although some worry that AI and ML will put accountants out of work, we disagree. Instead, we see these technologies as complementary to existing business processes. Artificial intelligence and machine learning will automate tasks, speed calculations and provide easier and faster access to richer information. But human beings will still need to analyze, interpret, and provide guidance regarding this information.


While the technology is still in its early stages, artificial intelligence and machine learning can provide family offices with more efficient and effective ways to ensure that they meet their performance goals. Family office professionals that lead the charge and help their firms take advantage of AI and ML will have more time to focus on the more strategic aspects of the business, thereby delivering more value to their organizations.