PERSPECTIVE3-5 min to read

What will AI mean for family offices?

AI will help all of us deal with information overload and improve efficiency. There may be particular benefits for wealthy families and family offices.

sfos ai


Charlotte Filsell
Head of Family Office Services
Charlotte Wood
Head of Innovation and Fintech Alliances

Investors often feel overwhelmed by information. Annual reports can be hundreds of pages long and prospectuses for new stock and bond issues are usually even longer. Thankfully, artificial intelligence (AI) is making these documents, and many other sources of information, far more accessible. It promises to transform how investors get answers to the questions that are most relevant to them and share knowledge with colleagues and clients.

Wealthy families and family offices look particularly well-placed to benefit from these developments. They and their advisers are likely to find themselves working with complex information from a range of sources – including investment managers, lawyers and accountants. AI can help them to extract insights from this sea of data and share it in a way that can be easily understood.

We also expect AI-enabled tools to support wealthy families’ investment activities. They are more likely to have exposure to specialised fields, such as private markets and impact investing, where generating meaningful data can still be labour-intensive. AI can make the process easier, by helping to draw information from unstructured data such as sustainability reports, quickly and at scale. Their experience of private markets will also enable families to access the most exciting investment opportunities in AI.

To make sure they capture these benefits, families will need to think about their AI strategy. Exactly how they use it will depend on their approach. In some cases, relying on AI tools developed by advisers or other third parties may suffice. Larger family offices may have the expertise and appetite to develop bespoke applications. In either case, families will benefit from partnering with an organisation that is leading the way in adopting AI and ensuring that their use of AI is responsible, including consideration of data confidentiality.

Fine-tuning for family offices

Recent excitement about AI is centred on developments in large language models (LLMs). These models have been trained using huge amounts of text data from the internet and are excellent at human language problems – such as summarisation, writing and translation. We expect that all professional workplaces will soon benefit from LLMs, as technology providers release AI-enabled tools to support everyday tasks – such as taking meeting notes and summarising complex documents.

An important aspect of LLM models is their “foundational” property. This means that they are broad purpose models that have been developed by large technology firms, but can be fine-tuned to more specialised contexts. Importantly, this fine-tuning requires only a fraction of the resource used to develop the original models. It will allow for the development of tools tailored to the specific needs of high-net-worth families.

AI as an investment and communication tool...

Some of these tools will focus on research and risk management. Family office-style investors typically have exposure to a wide range of asset classes and work with many data sources. AI will help them navigate different databases and documents, allowing them to quickly understand their exposure to both emerging risks and longer-term themes. Eventually, an investor or their adviser should be able to ask a simple question such as “what is my exposure to commercial property?” and expect an answer that draws on a family’s entire asset base.

Other tools may support communication across large family groups, helping to foster a sense of trust and transparency. AI could be used to give family members access to financial reporting in the format best suited to their level of knowledge or interest, including written commentary, a presentation or a short email. It can help “translate” lengthy legal documents into simple language. And it can generate a usable draft of almost any kind of text – whether it’s a formal family charter or even a speech for a family gathering.

…and an investment opportunity

There has been a degree of cynicism about the stock market’s enthusiasm for AI. In our view, however, the excitement is not unjustified. Schroders’ Head of Global and Thematic Equities, Alex Tedder, recently suggested that AI could allow global companies to cut their wage bill by some $2 trillion per year as it takes on more of the work done by the world’s one billion knowledge workers. Some of these savings will turn into additional revenue for the largest technology companies, explaining the strength of their shares in 2023.

So far, the “picks and shovels companies” that provide chips and computing processing power have been the most obvious beneficiaries. However, we believe that we are still in the early stages of the AI revolution and that many other companies will do well. We see opportunities across the “technology stack,” including both hardware and software – and across both public and private markets. Over the past six months, Schroders Capital has made three significant investments in different areas of AI technology.

Many of our family office clients have the risk appetite and time horizon to allocate to venture capital and are well-placed to take advantage of these opportunities. Embracing AI within their own organisations may help them better understand the opportunity set.

The limits of technology

We see three key challenges for wealthy families and family offices thinking about AI.

1. Confidentiality and data security

Families must protect themselves by working only with trusted partners. They and their advisers should avoid putting confidential or personal information into public versions of AI, such as ChatGPT. Once data has been entered into these models, users lose control over what is done with it. It is possible it could resurface in response to queries by other users and so enter the public domain.

2. AI’s environmental and social footprint

The data centres that power AI are becoming more efficient and source much of their energy from renewables. However, renewable power capacity is limited and data centres’ usage may force others to turn to less sustainable sources. Water is also a concern. Schroders' analysts recently suggested that a single data centre may require around 350,000 litres of water per day, equivalent to the water consumed by 2,500 people. The social issues may be more balanced. This is not the first time automation has threatened jobs. History shows, however, that new technology also creates new areas of work and new jobs. Over time, it has helped societies become more prosperous, even if there is dislocation in the process.

3. What to expect from AI

It can use existing published material to generate incredibly convincing advice, but it doesn’t know you, your family or your circumstances. Depending on how AI is being used, you may not know whether information comes from a reliable source. It has been known to “hallucinate” and make things up. It also cannot replace human relationships and face-toface conversations around sensitive subjects such as estate planning or family business succession. So we are still a long way from AI being able to give trustworthy advice on the key strategic issues faced by wealthy families. However, as a tool for understanding and analysing complex information, sharing insights and communicating with stakeholders, we think it will be very valuable indeed.

If you would like to find out more about Schroders’ approach to artificial intelligence, or our Family Office Service, please do get in touch via your usual contact.


Charlotte Filsell
Head of Family Office Services
Charlotte Wood
Head of Innovation and Fintech Alliances


The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.