Investing Billions - E218: How the Rothschilds, Rockefellers, and Fords Built Enduring Legacies

Episode Date: September 26, 2025

How can families preserve wealth and well-being across five or more generations? In this episode, I dive deep into a conversation with James E. “Jay” Hughes, Jr., legendary family wealth advisor and author of five influential books including Family Wealth. Jay shares stories from advising families for over 50 years—why flourishing, not just financial returns, is the real measure of wealth; how families like the Rothschilds and Fords illustrate both triumph and tragedy; and why choosing trustees wisely may be the single most important decision for multi-generational continuity. We explore governance, purpose, philanthropy, Aristotle’s philosophy of flourishing societies, and Jay’s own midlife realization that the true professional question is not “what do you need?” but “how can I help?”

Myrothschild was a Jewish man in the ghetto in Frankfurt in the middle of the 18th century. He was a brilliant banker. He had a bunch of children, five sons and daughters. And he thought, what could I do with my five sons to create a great family? And he said to them, I'm going to send four of you, one to London, one to Paris, one to Vienna, one to Naples. I'm going to keep one here in Frankfurt. I'm going to give you each a loan, start a bank in that city. I'm going to charge you interest, but less than I charge our clients, because you're

family. I give you a better deal. But he said, I'm going to ask something that you may feel as an imposition, but it's part of the deal. That is that once a week you will write me a letter and tell me what is going on in London, Paris, Vienna, Naples, and Frankfurt. And I will disseminate that information among you. Eventually, two of the branches collapsed.

They didn't produce errors, and the issues in the communities they were parts of, did not work. And during the Holocaust, there were deaths. What is so important is that with the diversification of his human capital, the diversification of the family's intellectual capital, the diversification of its social capital, inspired by the flourishing Gia, the family still exists today, and it's still good to be a Rothschild. Today, I'm speaking with legendary James E. Hughes Jr., who's been advising some of the most prolific family offices for over 50 years. James is widely recognized for his pioneering thought leadership on family governance, wealth preservation, and family dynamics.

James is the author of several landmark books, including family wealth, keeping in the family. James has shaped how family offices across the entire globe approach stewardship, purpose, and legacy. For those that may not know you, Jay, you've been in the family office space for quite a while. You've written five books on it, including family wealth, which is a best seller. Tell me about how you got in the space of family offices. I started out as a trust and estates lawyer in a large law firm in New York City, and I spent my first years of a pupilage, as you do as a young associate in a major law firm, learning how to administer estates, probate wills, do tax returns, and gradually write documents. I had been in that work for about six months, and I thought I would leave the law, even though I'm the sixth generation lawyer in my family. until I realized that the one area that young lawyers actually have clients is in the private

client work. And I realized I really found the clients fascinating and families fascinating. So I decided to stay in the law and devote myself to the question of family flourishing. And that was 58 years ago. I understand that the very successful entrepreneurs, the billionaires, many of which you work with, are abnormal. and maybe even difficult people. But why are they so poor at joint decision-making and joint governance when it comes to their wealth?

A man named Zixiex, wrote a book quite some years ago on creativity. He was perhaps the greatest psychologist of the 20th century in some ways, post-Young and post-Froid. He wrote the great book, Flow, that is one of the greatest books of our lives. What does it mean to be in Flow?

After writing that book and having incredible conversations as a result of flow, he thought, I wonder what creative people are like because they're in flow, aren't they, almost by definition. So he went and decided he would write a book on creative people. And he talked to his friends. And they said, oh, please, you're such a nice man. Those are not nice people. You're going to have a terrible time. And he said, but they're creative.

They're doing remarkable things in the arts, not just the businesses, arts and sciences and entertainment and all kinds of areas. So he said, you know, I'm going to do this anyway. So David, he wrote this remarkable book, which most people did not read this book by him, but I found it fascinating. He went out and began to interview, I think it's 36 or 40 people. I can't remember now. And this is what he said. He said, the first 10 minutes of the interview, they were absolutely incredibly uninteresting people. until I got them to start talking about the act of creation.

And then they became the most fascinating people I've ever met. So he said, one has to be interested in what they are interested in. And then they become fascinating. I think an investor way to say that is that the average investor is an uninteresting investor except in the place where they have alpha or competitive advantage. Somebody might be a early stage venture investor and might be an average or maybe even worse than the average public investor, but once you get them into their early stage venture, they're worth less. Yes, and I think that makes all the sense in the world, and that's Zixin Mahi's wonderful wisdom of his book. Tell me about Mayor Rothschild, the patriarch of the Rothschild family.

Meyer Rothschild was a Jewish man in the ghetto in Frankfurt in the middle of the 18th century. he was a brilliant banker. And he basically banked one of the crown heads of Europe who had a successful war. So he had a success. Rothschild was successful. The war came out well and so he got paid back. And Rothschild was also, Rothschild had a fortune. He made money, created money out of his banking efforts.

What is much more interesting about Rothschild, is that he had a bunch of children. Five sons and daughters, but five sons. And he thought, what could I do with my five sons to create a great family, great in the sense of a flourishing family and a long-term family? So he decided, David, to sit his five sons down,

happened to be quite smart, in good genetics, I would say. And he said to them, banking could be a very good business for us as a family. Do you agree? Yes, Papa, we agree. He said, so here's what we're going to do. I'm going to send four of you, one to London, one to Paris, one to Vienna, one to Naples.

I'm going to keep one here in Frankfurt. I'm going to give you each a loan to start a bank in that city. I'm going to charge you interest, but less than I charge our clients because your family. I give you a better deal. But he said, I'm going to ask something that you may feel as an imposition, but it's part of the deal. That is that once a week you will write me a letter and tell me what is going on in London, Paris, Vienna, Naples, and Frankfurt. And I will disseminate that information among you. So we will diversify our risk from Frankfurt in the ghetto. We will

diversify our risk to four more places. Diversity of investment is a very useful thing. So if you have great human capital at which he did and great intellectual capital of which he did, he created social capital. You feel that? A learning system. He created the world's first great learning, sharing business system,

all by his aspiration that his family should flourish and it inspired them. well what happened well what happened is we all know it's still good to be a Rothschild it's still good to be a Rothschild now David one of the sad parts of the Rothschild story and yet it is part

of his foresight what a remarkably far-sighted man he was eventually two of the branches collapsed they didn't produce errors and the issues in the communities they were parts of, did not work, and during the Holocaust, there were deaths. What is so important is that with the diversification of his human capital, the diversification

of the family's intellectual capital, the diversification of its social capital, inspired by the flourishing idea, the family still exists today, and it's still good to be a Rothschild. what wisdom from the day right when I started so I think they're in their seventh generation today tell me about how the one decision on who your trustee is can either sustain or destroy a family's fortune within a few generations in the lawyer's office the choice of the trustee often lasts 10 minutes, and yet it is the most powerful question of continuity imaginable. So I create a trust for 200 years, and I choose a trustee that will be dead in 10 years. Is that the height of absurdity?

Yes. Height of absurdity. If I'm going to put the lives of my future generations in trust, it's one of wonderful pun, then shouldn't I consider the question of the trustee as perhaps the most important decision I will ever make? Yes, it's that important. Because I am consigning, consigning, just like a consignment shop, my children and grandchildren and great-grandchildren into the hands of that person or persons. The great question of the trustee you're consigning your children and grandchildren to is, will he or she or it enhance their lives? Will the trust enhance their

lives rather make them dependent, entitled, remittance addicted? The trustee has that job of accountability. Tell me the story of Henry Ford and the Ford family. Some of our listeners went to their photographic AI systems, and they looked for a picture of Henry Ford. They would see a man, a thin man, austere man, who lived, I believe, into his 90s, an overwhelming personality. If there was ever a man certain of everything, it was Henry Ford. Doubt was not his highest calling. He was not a philosopher. He was a man who was an engineer and who had to build things, the things that people wanted. He had one son whose name was Edsel, E-D-S-E-L.

If you see pictures of Edsel as a young boy, he was a round boy, nice tummy, nice round cheeks. He died looking like a Holocaust survivor. He was destroyed by his father. He ate him up. He asked him to do things in the business for which he was not incapable, but he had other things in his life he wanted to do. No choice. He had to relive his father's life because that's what his father required. And he died very early and very sadly. And for people who are of a

certain age, they might remember that the Ford Motor Company created a car called the Edsel, which was one of the greatest failures of an automobile ever created. life follows life the edsel was a disaster and for the fort family if henry ford second hadn't had real capacity as a human being

and as a mind the family it would have it would have fallen apart Henry Ford's second was able to regain and restore the Ford Company, had a good life. But I remain tremendously saddened by the life of his father and Henry Ford's son, Edsel. Look at the physical manifestation of what the father did to the son. How did Henry Ford's second change his own future when Edsel, his father, had suffered such a tragic end? I really don't know.

I just know that he was, during my lifetime, he was a very serious businessman, very serious philanthropist, had, I think, a successful family. The Ford family is still very important in Michigan and in America, intermarried with other of the great families. I do know that he had some very complicated relationships with Lee Ayacocca, who was one of the great executives of the Ford company, until he began to tell Mr. Henry Ford second what Henry Ford second ought to do. and Mr. Ford reminded him of the name that was on the company, Ford, and Iacocca left and made Chrysler a successful company for a while. But I really don't know, David, much more about the Henry Ford Second. I would also say that he must have been deeply affected by his father's life. Must have been deeply affected by his father's life. From a dollars and sense aspect, how is it that having?

this purpose or having these foundations help preserve the family wealth. Obviously, you say wealth as well-being, but in terms of financially, is it just that it gave the family office a reason to exist? It gave resources to the family offices. Connect those two dots. How does the purpose of the family help actually increase the wealth of family? On how I invest, we spend a lot of time talking about smart investments. And while most of those are financial, some of the best investments are the ones you make in yourself. That's why I'm a fan of Joe's jeans. Their new kinetic 2.0 denim looks rugged and timeless

but feels nothing like stiff traditional denim. With modern four-way stretch, it's comfortable, resilient, and built with intention, so it moves with you wherever the day takes you. What sets it apart is versatility. These genes seamlessly transition from work to dinner to the weekend all while holding up in style and comfort. And because they're crafted from premium materials

with every detail designed to last, this isn't just another pair of jeans, It's denim elevated, a true wardrobe investment. Two standouts, the Asher and Doheny, and the Brickston and Nod. Upgrade your denim strategy today. Go to joe's jeans.com and use code invest at checkout to get 20% of your first purchase. That's J-O-E-S-J-E-A-N-S.com, code invests for 20% off. Your smart move starts here.

Aristotle in the 4th century BC wrote a book called The Politics. It is the foundation of all books on political science. Political science is no more than the science of joint decision-making. That's the way it works. Aristotle said the following. You cannot have a flourishing society if the families that are its building blocks are not flourishing themselves. And vice versa.

If the families of a society are not flourishing, you cannot have a flourishing society. Great families who flourish, with the names that we've been using today, see their well-being as the flourishing of the societies at which they are apart. Of course they do. Aristotle was absolutely right, wasn't he? You can't have a flourishing society. If the families that make it up, the first building block of joint decision-making are those two people who form a family and make decisions

for the first time. That's the building block of a society. So it is natural for great families, those who are flourishing, to seek to help others flourish, too. It is natural. Now, somebody says, well, aren't you spending the family wealth? No, you're growing the family wealth by growing human beings who are flourishing by understanding how to flourish and help other people flourish. that's your biggest asset because that leads to intellectual capital that leads to better joint decision making it leads to aspiration

and here's the marvelous thing if you are a flourishing human being you will be a good steward of the family's financial capital because you will learn how to do that so that it enables you to fulfill your aspirations you're not going to spend it

thoughtlessly and you're not going to not invest it carefully. So what do we know? We know that the great families are the bedrock of our capital investment system, right? And they have the greatest investment in the well-being of our society. Because if they're living in a society that is not experiencing well-being, then they will be destroyed. Look at what happened in Europe. when the best families no longer supported a great society after World War I.

Some of the most horrific human disasters, the families didn't flourish. The societies didn't flourish. And the worst of human nature came out. Who has the greatest, just not to come up to say it, ask yourself this question. Whose financial capital has the greatest desire for a flourishing society, the wealthiest financial families in it? Of course they do. And it's altruism. It's giving back. It's sharing reciprocally so you get the flourishing society. So another way, the giving builds the purpose and the self-esteem of the people that give, which has two effects.

One is it motivates them to be a better steward of their capital and to invest it wisely. And also, it keeps them from living this kind of meaningless life that requires them to constantly stimulate themselves and through reckless spending. it allows them to be focused and professional, grow their self-esteem and grow the communities around them, which kind of fuels them with the love that they need to kind of continue growing and continue being a good member of society. You've been advising families on this very topic for 50 years. So you've seen this play out. Is that how it plays out? Yes.

Yes. And my father did it for 50 years before me. Well, we overlap for 10. Yes. I see how it comes out. And both versions of that, which is the families that don't give end up on this hedonic, treadmill of more cars, more yachts. They go away. Now, there may still be wealthy financial members, but there's no family. I might have a purpose of helping puppies. My sister might have a purpose

of helping homeless people. Why does it all have to be a joint purpose? Well, here's the peculiar thing if we came to money for a moment. Let's leave beside the spiritual purpose that we want to be a family that's flourishing and we want to be part of a flourishing society. Let's assume for the moment, David, that we're all only interested in ourselves. By definition, there isn't a family. We are not about enhancing each other's journeys of happiness, which is the core measurement for Jay Hughes of whether you have a family. So if I'm interested in this and you're interested in that, we can know each other, but we're not a family. We're not about enhancing each other's journey of happiness. Now, the interesting thing, however, is we might still have an office and we

might still invest together. But I would challenge the definition you said there as to whether you're a family in any way I'm defining that is other than genealogy. There's nothing wrong with it. Let me be very clear that I've said throughout all my whole life and my dad before me, these are conscious choices and a choice to live your life individually and independently is a very legitimate choice. I'm not in favor of one choice or another. What I am in favor of is that those families that have an aspiration like the Iroquois to flourish for five generations and be parts of a flourishing society have advisors who are interested

in helping them with that problem. that's my goal in my own life. There's a famous billionaire's pledge, Bill Gates, Warren Buffett, Elon Musk, Larry Ellison, many prominent people have signed this billionaire's pledge. What do you think about this billionaire's giving pledge? Like all ideas, there's a kernel of goodness in it because there is a kernel of altruism minute. That is, we have prospered. We should share our prosperity. Sharing the prosperity is part of a flourishing society. So the billionaire pledge in of itself, I believe, is an

act of altruism and therefore should lead in some way toward a more flourishing society. what I would say, David, is where I am skeptical, not cynical, by the way, I'm not cynical about it. Where I'm skeptical is we don't have enough data yet as to whether that pledge will be redeemed. But it's not being spent. It's being cumulated as another way of accumulating. Yes, it's for philanthropy. me. So I'm skeptical in the sense that I don't feel we have enough data yet to know whether the billionaires who have made this pledge will redeem the pledge. We just don't know yet. We have to wait

and see. Conceptually, it's a beautiful idea. So you've been advising family offices for 50 years. What is one piece of advice you could have gone back when you started, given yourself that would help you? either accelerate your career or minimize mistakes. David, I wish I had known more as a middle-aged person rather than as a young person about how to get past the question of what does a client need to the much deeper philosophical question of how can I help. Without getting into testimonial, I will simply say to our audience with great candor, that in midlife, the age of 49, just like Dante and his great

poem, I found myself in a dark wood with no way out. This is the great statement of the midlife crisis. Perhaps no one has ever written about it more passionately and succinctly than Dante. And Dante essentially gives us a way to look at a very dark place and then ask ourselves one of the questions I need to address to come out of this place there were a number of questions I needed to address

one of them in my professional life was profound I knew that fulfilling needs which is what experts do was not fulfilling me and it didn't seem to be helping the families I was serving all over the world

so in that dark place as I contemplated the question of my professional life, I realized that the great question of a professional, what I call a person to confiance, rather than a person of affairs, a person of greatest confidence, to another human being is how can I help?

But not with a sense I could help, but with a sense that I had no idea if I could help, nor did I want them to feel helpless. Because one of the problems, David, of fulfilling needs, which is the professional system of doctors and lawyers and even ministers and high academics today is that we are taught as experts to fulfill needs and so the client or the patient or the student or the congregant is made to feel needy.

This is inhuman. So I gave up the question of what do you need and I devoted the rest of my life to the question of how can I help with an open heart and open mind, no expectation I could help. Saying to the person sitting next to me, do you feel there is some way that Jay Hughes could help you? Most of the time there isn't.

So you have a great conversation. You enjoy meeting each other. And then there are sometimes when the answer is from the client who leads that conversation, you know I need some help with us. The strange thing about this, David, is that most of the clients don't believe actually that you're there to help.

They think you're there to fulfill a need. And this self-limits the relationship, doesn't it? It destroys the possibility of the deeper relationship in which the professional through his or her help learns about him or herself, which is what I was trying to do. I was trying about who am I in this world of serving clients.

Now, the second part of that and my father, bless his part, many, many years from that, before that, had said something I will leave our audience with. If you are providing knowledge to clients, it's fungible. if you're providing courage, it's invaluable.

And my father said to me, Jay, in the profession of law in private client work, ask yourself whether you are prepared to provide courage because it is in that area that you earn your living. He was absolutely right. Knowledge is fungible. Courage is invaluable. Jay, this has been a masterclass on 50 years of advice and advising some of the most prominent families in the U.S. Thanks so much for jumping on the podcast and look forward to continuous conversation live soon. It's been a incredible privilege. And I thank you for the service that you're providing to society for opening up the possibility of families flourishing

and in turn being the building blocks of a flourishing society. That's David, as Aristotle said to us. Our great work. Thank you. Thanks for listening to My Conversation. If you enjoyed this episode, please share with a friend. This helps us grow. Also provides the very best feedback when we review the episode's analytics. Thank you for your support.