The role of AI in the future of family offices

Simon Ward, Amen Alonge and Charlotte Morrison, current trainee in the Corporate team, explore how family offices can leverage AI to enhance governance, improve accountability, and streamline operations, while addressing key considerations such as security and effective implementation.

No one family is the same; each has its own principles, purpose and needs. It is no surprise, then, that family offices are equally diverse, tailoring their strategies and structures to align with the interests and objectives of the families they look after. What is important across any family office, however, is ensuring there is a focus on governance and working with the family to define the family office’s strategic direction. This, in turn, brings certainty in decision-making, the setting of clear reporting obligations and defined accountability. This ultimately brings greater efficiency, stronger relationships between the family and the family office executives, and a clear and aligned focus on the protection and investment of the family’s capital.

A recent report from Citi Private Bank found that more than half (53%) of family offices surveyed have invested in generative AI technologies within their portfolios [1]. However, despite strong interest from an investment perspective, the number of family offices implementing AI for operational purposes remains relatively low: fewer than 15% of respondents reported deploying AI for tasks such as automation, presentation building, or forecasting.

This article explores how family offices can harness AI to enhance governance structures, outlining the potential benefits as well as key considerations.

1. Reporting and compliance

Family offices often manage assets across multiple jurisdictions, navigating a complex web of regulatory requirements. AI-powered compliance tools can streamline adherence to these requirements by:

• Automating compliance checks: AI-driven systems can continuously monitor transactions against regulatory frameworks, identifying potential breaches in real time.
• Real-time regulatory monitoring: AI can track legislative changes across different jurisdictions, ensuring compliance teams remain up to date.
• Predictive analytics: AI can analyse trends and historical data to anticipate regulatory changes or risks, allowing family offices to take proactive measures.

By leveraging these AI tools, family office executives can gain a clearer understanding of legal requirements, reducing the risk of regulatory breaches and associated penalties.

2. Accountability and decision-making

While ultimate decision-making authority rests with human leadership, AI can play a vital role in documenting governance processes and accountability. AI-powered tools can:

• Create an audit trail: AI could log key decisions, recording details such as the rationale, stakeholders involved, and expected outcomes.
• Enhance transparency through Natural Language Processing (NLP): NLP, a branch of AI that enables computers to interpret human language, can analyse meeting notes, emails, and other communications to extract key insights.

These capabilities enable family offices to maintain structured, well-documented decision-making processes, fostering trust and alignment among stakeholders.

3. Enhancing administrative efficiency

AI can significantly improve back-office operations by automating routine tasks such as:

• Document management and retrieval: AI-powered systems can centralise key documents, making them easily accessible for audits or meetings.
• Workflow automation: Repetitive tasks such as data entry, report generation, and financial reconciliation can be streamlined, to allow the focus to be on more strategic initiatives.

By adopting AI-driven automation, family offices can allocate more resources to investment analysis, client engagement, and other high-value activities.

Implementing AI: key considerations

Security and data protection

Given the highly sensitive financial and personal data managed by family offices, cybersecurity is a critical concern. AI systems, while enhancing efficiency, also introduce new risks. To safeguard against data breaches, family offices must implement robust cybersecurity measures, including:

• secure data encryption and storage;
• multi-layered authentication protocols; and
• regular AI system audits to detect vulnerabilities.

A well-structured security framework ensures that AI adoption does not compromise confidentiality or operational integrity.

Training and effective use

Users must be properly trained in its application. One critical aspect is understanding how to provide AI with the right instructions, or “prompts”. Effective prompts enhance AI’s ability to generate accurate, relevant outcomes. By investing in training, family offices can optimise AI adoption and ensure seamless integration into daily operations.

Looking ahead: AI and the next generation

AI adoption aligns with the expectations of the next generation of family office leaders. As younger family members step into leadership roles, integrating AI into governance and operations supports a smooth transition. AI-driven insights, automation, and enhanced reporting capabilities provide them with the tools necessary to manage complex family wealth structures effectively.

By embracing AI, family offices can strengthen governance, increase transparency, and improve operational efficiency, ensuring they remain agile and well-positioned for future challenges.

[1] https://www.privatebank.citibank.com/doc/family-office/global-family-office-2024-survey-insights.pdf.coredownload.inline.pdf; 61% in this report, The European Family Office Report 2024

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2025