The Derivative - Family Offices: an inside look on who runs them and how you get that seat, with Brian Adams of Mack International

Episode Date: July 10, 2025

Join Jeff Malec as he sits down with Brian Adams, partner at Mack International, for an illuminating conversation about the intricate world of family offices. Brian shares his unique journey from real estate entrepreneurship to talent search, offering insider insights into how ultra-high-net-worth families manage their wealth, navigate generational challenges, and recruit top talent. From the complexities of multi-generational wealth transfer to the evolving landscape of family office management, this episode provides a rare behind-the-scenes look at a typically opaque industry. Discover the strategies, challenges, and human dynamics that drive some of the most sophisticated wealth management operations in the United States. SEND IT!Chapters:00:00-00:46=Intro00:47-09:21=From Wall Street to Music City: Exploring Brian Adams' Professional Journey and Family Roots09:22-15:31= The Listening Tour: Navigating Career Transitions and Unlocking New Business Opportunities15:32-29:30=Family Offices Unveiled: Defining Structure, Services, and Strategic Decision-Making29:31-41:06= Talent Acquisition and Compensation: Insights into the Family Office Ecosystem41:06-48:06= Geographic Dispersion and the Evolution of Family Office Operations48:07-53:55= The Future of Family Offices: Embracing Technology, Talent, and Generational Challenges53:56-59:59= Busting Back in Time: Tracing the Birth of the Nation State and Finding the Right TalentFollow along with Brian on LinkedIn and be sure to check out Mack International's website mackinternational.com!Don't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and our host Jeff at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@AttainCap2⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, or⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ , and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-up for our blog digest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠

One of the trends we're seeing is geographic dispersion and co-location of family offices because the dispersion geographically of a lot of these families has increased dramatically where people are in the sunbelt even though the mother ships in Chicago. Welcome to The Derivative by RCM Alternatives. Send it. Hey, everyone. Brian Adams here, partner at Mac International. Here to talk about all things family office, talent,

and search on The Derivative. Hey, Brian. how are you? I'm good. How are you? Good. Where are you? Little nice family, family home office. Yeah, I'm home in Nashville where I live on a wazai creepy family compound with my in-laws and sisters-in-law so we have a unique setup down here in the middle Tennessee but yeah home today so what part of Nashville we live in a part of town called Oak Hill which is kind of the southwest corner of Davidson County before you tick over to Brentwood near Green Hills Bellamete area. So it's a little quiet

Sleepy residential area, but it's become kind of health care Mansion world over the last 20 years since I've been down here used to be horse country It's changed quite a bit like like the rest of Nashville. I know are you guys sick of all us Chicago folk moving down there, clogging up your roads? There's a lot of California tag G-Wags rolling around these days, but I think it's 90% positive. I spend a lot of time in cities that would kill for our problems and our growth.

So I'm thankful to be part of a dynamic growing city. We do have kind of big city challenges, but it's better than the alternative. This is for a whole nother podcast, but my pet theory is you can't have a no state tax state for very long because you'll have these problems and you'll need to tax in somewhere or the other, or it comes around in one form or the other. Right. So what form is that in Tennessee?

Or what do you think that's a problem? Oh, yeah, you know, the income tax, the state income tax is really the third rail of politics down here, you cannot touch it. It's invoatable. So it's kind of a non issue, frankly, because nobody will go near it. But yeah, listen, we suffer from poor infrastructure, really poor schooling. The saying down here is thank God for Mississippi and Arkansas, otherwise we'd be last in a lot of nationwide rankings. Health care is a real challenge.

So it's not without its drawbacks, but it's just a non non starter from a political perspective. And, you know, Nashville is a very liberal city amongst a very conservative state, which I think works relatively well because not much can get done, which is a good thing. I think government functions well when it doesn't do too much. And so I think we've hit a nice sweet spot. We have problems like everybody else, but I spend, I'm on the road pretty much every week

and I get the chance to go to almost every city in America. And on the kind of top 10 checkbox, I think we hit almost everything. You know, no state income tax, we have a balanced budget, AAA credit rating bonds, really pro business, four seasons, no imminent natural disaster challenges, no state income tax, Chicago argument without the state income tax. Like we have no natural disasters, it's a perfect place to live. Only human created disasters in Chicago. Yeah.

So are you born and raised down there? How did you get started? I'm from New York originally. I married a local. So my wife is a native Nashvillean. We met in school up in New England, and I've been here about 20 years. So an adopted son, and my wife's whole family is still here. So it's a weird compound on the quasi odd

90% of the time, it's great 10% things get weird. So end of the time it's great 10% things get weird so where was school I went to a small all boys military prep school in New York and then I went to Wesleyan University small liberal arts school in Connecticut where I met my wife so I know I was Union College small liberal arts in Schenect connected in New York so yeah I'm from Albany so there I've skated at the Union rink many times beautiful rank of a big ECAC hockey fan grown up you had a good buddy Krista Stefano that played defense there and big deal when they won the national championship a couple years ago it's great yeah what was that oh five ish maybe? Gosh, they're just putting in a new

rink, actually. Oh, nice. Yeah, I had some we had a pretty competitive hockey program. And I think I had one or two guys played there, certainly at RPI and Clarkson and some of those schools. And yeah, I don't get home that much. But Schenectady. It used to be an incredible place. And Union is an incredible like in 1930. You mean? Yeah. Yeah. When GE was a big presence there and the Tri cities were a were different place than they are today. My family's been in that part of the world since 1640. So a lot of history in the Hudson Valley and upstate area. Love it.

And then what's the work background before you got into working with Mac? I was an attorney. So practiced for a couple years and spent a lot of time as a real estate entrepreneur. So I was a fundless sponsor, syndicating capital, doing industrial value add core plus did some retail, some medical, glibbitt office, but that was a, that was a big part of my career before joining Linda as a partner couple years ago. And that was that led into you were calling a lot of on a lot of family offices for syndicating for getting capital

together. Unsuccessfully trying, yeah. As getting a lot of nos from people. Yeah, it was just kind of a odd circumstance, certain like serendipitous connections that got me, I actually knew Linda, my wife's family has a family office here in Nashville. I knew Linda through the community and, you know,

just she was everywhere. People just know Linda. But I never thought about Search. I never really spent much time talking to her directly, but through an odd series of connections and conversations led back to her and she was looking for a junior partner, timing was really good on my part and it's worked out really well. So the business is a terrific business and we're very busy these days. We'll dig into that in a sec.

But it's funny to hear you say unsuccessfully calling on the family offices, because to me, going in there to sell hedge funds and you have your nice monthly table and that would their eyes would gloss over and they're like No, just show me the multi unit and tell me the right IR and what I'm gonna make on this thing Like don't show me these sharp ratios and all that Yeah, so you in my opinion you had the better seat going in there with just hey We're putting up this multi unit in Franklin, Tennessee. It's gonna be great Yeah, you know, I think that the

challenge is, you know, I think, yeah, my efforts are at this point five plus years dated. You know, so many of these families already had allocations to real estate and many of them are vertically integrated themselves or have really trusted sponsor partnerships they work with for a long time and they become real estate and many of them are vertically integrated themselves or have really trusted sponsor partnerships they work with for a long time and they become quite savvy. And so, you know, my pitch for many of them was just a, that was a friction cost for them that they could execute on their own. And so it was, it was very hard to differentiate. It's a very crowded marketplace or it was at the time, it's probably even worse so now. And so it was very hard to differentiate. It's a very crowded marketplace, or it was at the time.

It's probably even worse so now. And so it's very difficult to differentiate my flavor of ice cream versus others. What was your flavor? Like I said, it was mostly kind of value-add, core plus, light industrial in the Southeast, which was a good plan. I wanted you to say like strawberry or something. Yeah.

Oh, no, something. Yeah. Oh, no, no. No. So a little unique. I don't think we've ever had a search firm on here. There's not many of us in the family office world. So. Yeah, there's tons that are right.

Usually it's kind of spammy, right? When you're dealing with a search group in the executive space or I get all these emails of like a seasoned real estate vet looking to run a portfolio, blah, blah, blah. So tell us, yeah, tell us why you took that jump. What's different about you guys? Um, I like I referenced that, you know, I have been doing real estate for a long time, had a great run. I thought heading into, so this would have been 2022, 2023, I thought structurally in

a world where we are entering into a persistently high interest rate environment with sticky inflation. I just had a lot of trouble structurally in a world where the 10 years going to hang around a five handle to make real estate work, unless you were doing development. I just didn't see how you could put together a cap stack that made sense as a common equity holder in that world. And, you know, I thought there'd also be a lot of pain on a lot of these refis and sales. And I'd seen two turns before and I didn't want to stick around for a third. And to sell into that market

that would be really challenging. When I turned 40, I also got sober and it changed a lot of how I just thought about the world and a lot of different conversations that had been happening that I just didn't really pay attention to suddenly I was paying attention to and had a lot of people, especially my YPO forum that recommended. I go on a listening tour. And I did, and one coffee meeting in Nashville turned to this meeting with Linda within six months, and it just really clicked right away. And a lot of people in And Linda has built this unbelievable business. So I was very fortunate to be able to kind of step alongside of her in that. Now you've piqued my interest. I haven't heard of a listening tour before. So what's what's a listening tour?

So there's the concept called informational interviewing, where most people when they have coffee with somebody, they've kind of, you know, use the usual, you know, tell me about yourself, what do you do? Where are you from, blah, blah, blah. And it's just kind of a very kind of preliminary conversation. Listening to her informational interviews are where instead of, you know, just doing the high level, you really dig into the pivot points, what we would refer to as a lifeline, why you made the three big decisions of your life professionally, the pros and cons of those decisions, if you were to autopsy them, what you think you

got right and wrong. And then really digging into what the person does today, what they like about it, what they don't like about it, how much they get paid, what comp looks like, and if their tail winds or headwinds in the industry. And so I just spent a lot of time and I had the fortune because of YPO and some other organizations, I had the opportunity to learn about a lot of different business models. And real estate's great from some perspectives, others it has real challenges, but search

was pretty much everything real estate wasn't. Really asset light, no debt, no capex, larger margins, bigger kind of pass through deductions. And again, pros and cons, but it just really given where I was was very appealing to me. Given what everything that I had learned. And so had the chance to speak with some really high end search professionals to understand the industry. And it just all science pointed to, to, you know, taking a taking a chance and moving forward with it.

I'm trying to talk my son is going into junior year to he's going to start a club at his high school that will be a podcast, hopefully, where they bring it is basically listening to our podcast, bringing these alums other, right. And it's like, hey, what's it really like to be a surgeon? How long were you in debt? When? Yeah, like, what do you regret about it? What? What's it like to be a policeman? What's it like to all these and hopefully get 50 different careers on there? Yeah, and we'll help him personally, but then also all his classmates. So similar talk, similar concept. Yeah. I think, um, you know, many of us, especially when we're young, you know, we don't even know how much our parents make. Uh, we don't know how much it costs to live our lifestyle. And so I, you know, in my forties, I had a pretty good sense of what I was good

at or what I wasn't good at, where I thought I could create real value. What would allow me to sleep really well at night, knowing I created value for others and that exchange of time Versus dollar right like what the market would bear and So it was really helpful for me to be able to talk to all these people and understand I mean, there's no perfect business, right?

But to know kind of what I type of business I want be in versus not, and the more on the not side, was hugely beneficial just from a time saving perspective, right? I think for your son, knowing like 90% of the market that you don't want to go into is more valuable than knowing maybe what you do want to do. My dad used to say the perfect business is a PO box people send money to. My dad used to say the perfect business is a PO box people send money to. Yeah. You've got to do something to get them to send the money. Yeah. Why family office search?

Talk a little bit about that. Um, I did a market mapping and, uh, talk to some people in the industry who I really respected some people that work with really big single family offices or work within a really large single family office. And, um, I said, what are your biggest challenges? Like what keeps you up at night? Where would you allocate resources? Where would you impart your value, time and money, in return for a solution?

And it was really talent and technology were the two themes that kept coming, recurring over and over again. So I thought, well, I don't really know much on the tech side and I feel like I'd be pretty far behind trying to be a tech person, but talent, I know how funnels work, I know how CRMs work. I've been a networker for 20 years

doing what I was doing on the syndication side. I built a platform for 5,000 accredited investors. And so I felt pretty good about that side of the world. And, um, and then it just became a function of who's really good in the space, like who's the best and Linda's name was everybody I asked. She was on everyone's list and she was first in everyone's list. So it's pretty much a no brainer from that perspective. Yeah.

We're the only, you're making me making that I don't have Linda on that. You should if you can get her. She's tough to she tough to nail down. She's still working really hard now. So let's back up a hair. What does family office mean to you? Or how do you guys define it? How big are they?

What give us some kind of the guardrails? What do you view as family office space? Yeah, so it's a term that gets thrown around a ton. It's become a marketing gimmick for a lot of people. So, you know, the way that I typically define it is a corpus of assets meant to maintain a certain quality of life over a long-term multi-generational time horizon for the benefit of a set of lineal descendants. Basically, a private wealth management firm for one family for the benefit and the clients are only family members. Beyond that, you can see all the different structures and iterations on that, but that's kind of see all different structures and iterations on that. But that's kind of legally, definitionally where you start. From there, the variations are kind of unending. So that's usually how I define it.

What about assets? It's like, all right, I've got 250k. I'm not thinking about starting a family office. Yeah, so where do you see them start to think about it? I think today it's a two or $3 million run rate, annual overhead, and about the same on a startup cost basis. So if you just kind of do, you know, if you're paying a, I don't think anyone pays 2% anymore, but 200 basis point asset management fee. The numbers start to make sense depending on what you're solving for at 250 to 500 million. I think to really have a full blown professional institutional setup, it's probably closer to a billion. Most of our families are north of a billion.

Just that's the world that we live in. Um, but it's definitely become more expensive. Um, yeah. Like, into that, what am I getting from my two to three million a year? Just staff or your, what else is there? So, um, the rationale and the why behind, you know, folks forming these entities is typically, um, customization, privacy, discretion and control. And so, you know, you can have a lesser amount of assets and still want to achieve those goals. And if you want the entity to be like a net loss proposition, that's totally fine. If those are what your overarching

goals are going to be. If you want it to be net neutral or revenue positive, it's going to be very challenging to do that. Unless you're really allocating pretty significant resources to it and you have a large amount of kind of liquid assets in my opinion. What was the second question? Yeah, like what do I get for that? That spend that annual spend. Yeah, so most it depends, you know, the three big pillars for this in terms of the startup is or the reevaluation. One would be who the clients are defining the clients themselves. Most of the time it's the lineal descendants of a certain matriarch or patriarch, but there are many families that say significant others are included

or potentially key stakeholders or constituents within an operating company that had a liquidity event. So a group of GPs or a group of owners, they could all be considered clients. You need to define your client cohort. The second piece would be the scope of services. So you could have a holistic full service family office that provides concierge travel, executive, administrative, investments, accounting, tax, tax prep, tax filing, investments across the board, or it could be limited. It could just be administrative back office, so just bill

pay and taxes, or it could just be an investment firm. Again, it doesn't really matter, but you need to define the client's scope of services. And then that really dictates what needs to be insourced versus outsourced. And that goes back to kind of what your value proposition is. If you really value taxes, then you should insource it. If you don't really care that much and you just want generally, like the taxes to be filed in a timely fashion, outsource it. Once you have those three kind of big decisions, then you can put together a

business plan for the family office with its own P and L budget. And then you can kind of go from there, but those are the three big decisions you need to come to before you can determine, Hey, what's the why here? And what does success look like? And do you, do you see that's the patriarch or matriarch typically making that decision for the, or it's been starting to get passed down and people are scrambling of like, Hey, this is too complex. We need to form a group to handle all this.

So usually, um, for a de novo newly created family office, the services are the acute pain points being addressed. Yeah. So, you know, I have a ton of liquidity. I need to allocate capital quickly. Let's start doing investments. Uh, I just had a liquidity event. I bought a bunch of houses and a plane and a boat.

I need somebody to manage this stuff for me. Cause it's overwhelming. My taxes are a mess. I just want somebody to take care of this. The operating company used to do all my bill pay. Now these people will do it. That's usually how it starts. That's where the reevaluation occurs in a multi-generational family or with a new startup,

you have the ability to blank slate it. But I think for some of these things, they should be reevaluated on a pretty consistent rolling RFP process. So bill pay, for instance, that technology changes pretty dramatically. It's probably a 12-month RFP. Investments, you probably want to stick with a manager more

than five years for attributable track records. So that's probably a 7 to 10 year RFP. But these things should be reevaluated. You should go to market. You should know what fees are and you should be looking at performance. Most people really struggle with doing that if you're a family member or a principal. That's one of the benefits of having a third party hired gun professional manage this for you is they can have an impassionate view of this. And they don't mind firing your

uncle from your country club, if they're not doing a good job. Right. And so that's that's the crux, right? Like, okay, we're spending all this money to hire this person when we could do it ourselves. But it just becomes too much. And it helps at a billion plus. You're like, Hey, this is seven days of interest payments or whatever. Like, of course, let's hire this guy or girl.

Yeah. I mean, I think you've seen this overall trend of professionalization, institutionalization of family offices in general. And I think it will continue. And I think it's twofold. One, the families are becoming much more complex with larger AUM. They've had a great run the last 20 years, generally, in the market. And so assets have increased pretty dramatically. But also the scope of services being requested by family clients has increased. And so it requires professional management.

so it requires professional management. Meanwhile, on the candidate side, you're seeing really sophisticated professionals now view families as a real industry onto itself. And it's becoming attractive place for talent to go. So it's kind of working in tandem in a lot of ways, which seems it would seem that the Goldman's and wealth management firms of the world would snap all these clients up.

And they would say, oh, you don't need to have in-house, we can handle all this. What's the balance there? Do they come out of those big shops? And in-house, where they use a mixture? From the candidate side, where we find folks? No, not where you find them, of just the family office in general.

Like when do they move in house versus using, you know, big wealth management firms? So, you know, the wealth management firm, the whole industry, it's become so cyclical, in terms of where they're allocating resources internally. Um, and they've managed to blow themselves up pretty consistently every three to five years. And so, um, it's really hard to find long duration relationships at these banks nowadays.

Um, the shops that you and I used to know 20 years ago, a lot of them aren't even around anymore. Um, and the ones that are around every three to five years, new management comes in and says, Hey, we're not going to cater to these ultra high net worth individuals anymore. They don't drive any revenue. Three to five years later, they say, Hey, this is a great cohort we should focus on because we can cross sell and upsell into them.

We're going to launch a family office platform. I go over and over again. And so what mostly happens is families will have three relationships with some of the bigger platforms. And it depends, right? If you're an operating company, embedded family office that has a very active business, you probably need balance sheet capability and capacity. So you're going to work with JP Morgan. Like it's very tough. Okay. If you need a corporate trustee and a custodian, you're're going to work with JP Morgan, like it's very tough. Okay. If you need a corporate trustee, and a custodian, you're probably going to work with Norwegian Trust.

If you want access to IPOs, and you need kind of investment banking expertise, you're going to work with Goldman. And so I think they pick and choose. And that's where this person or the team internally, is helping guide the family to know, okay, we need to work with this individual, this shop for this specific problem, but we're not gonna work with them on asset management because they're gonna tear our faces off

and the fees are ridiculous and performance is bad. And so we're gonna pick and choose who we work with. And we'll put some assets there to get access basically. Yeah, so I think it's kind of a case by case for most families, but, um, and frankly, once you get to be a certain size, there's only a handful of groups that have capacity. You know, and that's one of the interesting things about the business is, uh, you know, you look at the UBS, for instance, great platform, you know, they're digesting the credit Swiss deal. But they don't really have

balance sheet capacity in the domestic US. And so, you know, they're great for some things, not great for others. And having a professional that knows that space really well, for all kind of outsourced services is really helpful. Which is weird to hear you say the family offices are in need of balance sheet when usually they are the balance sheet. So what are some examples of what they're doing

with where they're needing some balance sheet? Oh gosh, no, I think they all have leverage needs. Certainly if they have operating companies, huge need for credit facilities and balance sheets. Many of them, if they're de novo startup, they still have probably massive stock concentration. So they need to hedge that but also be able to lever it to get further liquidity and diversification. So yeah, it just depends on the situation. But I think most of

these folks got to where they are through concentration and leverage and risk. And the ones that want to continue on, because from their perspective, it's a tough job. You've got, let's call it 3% inflation, even though you and I know it's more than that, especially for this cohort, when you're looking at private education, high end residential travel, it's probably more like five or 6%, maybe more. $700 breakfast at the four seasons. Yeah. Yeah.

Well, spend rates different, right? So inflation five or 6% spend rate, call it 4% plus the exponential growth of the family, you've got to be clocking north of 10% annualized returns to keep that going. It's challenging. annualized returns to keep that going. It's challenging. You mentioned the candidates. So let's get into that candidate side of who are these people? Are they coming out of those big firms?

Are they straight out of school? Like they need some experience, obviously. So where are you finding them and why are they interested in this space? Yeah, it's a mix. Where are you finding them and and why are they interested in this space? Yeah It's a mix. I mean we certainly recruit from kind of the groups that we just reference right the the JP Morgan's the world The Northern Trust of the world the banks Law firms, you know most families because at the end of the day Somewhere in the org chart. There's the taxable warm body That's filing a tax return. So tax drives a lot of the decisions and strategies.

So somebody with a public accounting background in tax or a law background in tax law with an LLM, those are really useful subject matter experts to bring in. So we certainly recruit from those kind of high end service providers that have private client teams. But then increasingly families want folks who have single family office experience, not only because it helps them know what great looks like, but also they're porting over their Rolodex with them. Increasingly families are looking to club up with others, you know, participate in syndicates, either lead or participate with other families to

get access to the best deals. And so, you know, it takes a long time to build those LP relationships and to be able to have somebody return your phone call or be first on the list for strategic capital. Um, and so increasingly folks are looking to bring in people from other family offices. And that's really, we have the breadth and depth of reach into that world. What, what's your view? You just got me thinking on the right, the,

I'm forgetting his name now, the famous endowment who run a, ran Yale, Peter Swanson. Yeah. But right there, was no, you weren't all this brilliant, you were getting access to all these deals that the rest of the market didn't get access to. But do you see that in family office returns? Like they're getting better access? And and thus better returns? I mean, it's a difficult question, because they're doing a million different things. But in general, do you see they're getting they definitely do get better access, more access. It's a great question. You know, I don't understand why families would adopt the endowment model because they're not endowments. I never understood the attractiveness. These are non-taxable entities that have a very small payout. They're different animals than families are. But I would say investment returns

within families is, to put it kindly, highly variable. I think it's really challenging. What you've seen most families pivot to is getting quote unquote cheap beta in the public markets. They've really been hammered by active management the last 20 years. That really has not worked well for them. And so they've kind of pivoted towards outsourcing or having an in-house person to do their public equity exposure. And then really picking and choose a high conviction private investments that they really want to go

deep on either because they have some kind of internal idiosyncratic leverage that they can use. Or they've just kind of built that an ecosystem where they feel like these GPS, these sponsors, these other families know what they're doing in the lower middle market CBG space. We have high conviction there, We're going to allocate 20% of the portfolio and that's where we're going to get our alpha from. That's how most families are thinking about it now. But it really depends on how much assets you have to allocate and how much liquidity you have. I think a big challenge for these families has been if you don't have an operating company giving you fresh dividends, it's really hard to recycle capital, especially in today's have an operating company giving you fresh dividends, it's really hard

to recycle capital, especially in today's environment. And unless you give fresh capital to the deal team, they're going to leave. All right, and back to the candidate side. So you're peeling them out of those groups. What else? How are their new? How did the new guys get into those groups? Right? Like, how does it keep refreshing? It doesn't seem there's enough family offices in the, I guess that's a great, let's step back. How many family offices in the US do you guys do go global? We don't do really any global work.

Linda did pre-COVID. She did some work in mainland China, mostly Hong Kong, Singapore, and then Western Europe. Since COVID, I haven't done any of that work. I know she really hasn't spent much time there. I have some connectivity to London, but I don't spend any time abroad, and we can get into why that is, but it's mostly domestic US. I think the number's higher than you think. You hear a lot of numbers turn around. I think it's, I think it's well north of 5,000, maybe near 8,000.

Of a billion and over? Yeah. Um, even still, so I guess that's enough, but they're, so they need to get you out. You're pulling from all those 5,000, how much turnover there's there between all those, because the family obviously wants someone for 20 years, right? They want that person in that seat forever. Yeah. They want longevity. A trusted member.

Yeah. Yeah. It's a big, big focus for them. Um, yeah. Um, what we've seen is more of an alignment around compensation. So more families are doing sophisticated structuring, much like private equity firms today to have kind of aligned incentives, but also retention

strategies. We always say it's really hard for us to, to poach a well compensated, happy professional from another family. It's difficult to do because they can be incredible jobs. Now the challenges structurally within a lot of these family offices, even the big ones that have big org charts, just because of the, because of the size and the nature, oftentimes you hit choke points. If the CEO is in his fifties and he's really happy and he's doing well, he might like to your point, you might stay 30 years. So you've got to go out to go up. And what do they typically need to relocate? Does family want them near home? Yes.

Yeah. I think that's the biggest disconnect in the marketplace today is candidates still think that they can work remotely or hybrid or commute even super commute and families for these type of roles that are big roles big positions Families expect them to be in the office five days a week If not seven and they really want them to get ingrained in the community And so they expect the whole family to move the kids to get into school you to join the country club participate in the local charities and nonprofits and

the whole shebang. That's a big focus for families and given where comp is, I think it's completely rational that families would want you to do that. And for these roles, they're also expecting leadership development. You can't really do that remotely. And that, right, we can get into some of the crazy. Like, do you hear about some of these families and like that's how they made their money? Unbelievable. Like I remember a family down in Georgia and the guy was taking the grease out of all the old fry shops and chicken shops and then making candles and stuff out of it, sold it for 800 million or something and created some. So like the different types of companies is just always astounds me. Yeah, it's incredible.

I think one of the big realizations for me is I had an appreciation for obviously family entrepreneurship. My wife's family has incredible history and lineage and goes back a million years. But the reality of, I mean, private enterprise and entrepreneurship drives so much of the American economy. It's, it's remarkable. And just the, the ingenuity and creativity of how people created this wealth. To your point. I mean, I remember talking to a family once.

Yeah. And I can't go into details, but kind of talking about how they got started and what they do. And so what you know, what's the story? Like what happened? I said, Oh, well, you know, my grandfather invented the seatbelt. You know, like, Whoa, it's pretty cool. It's great. Yeah. Good for society. Good for them. The flip side is my grandfather invented the Harley Davidson. That's cool. My great grandfather was a Davidson, but there was no family office. There was this. The company was going bankrupt 30 years later.

Yeah, I mean, it's your need like the need for a family office for do you see is there you have a chart of like without a family office the assets will evaporate in x years x generations yeah i don't have obviously this is a really opaque black box space in a lot of ways i think i think it's becoming more transparent and families are becoming more outward-facing and there's much more literature and and data around it but it's still very tough. I would say one of the what I kind of sometimes we get phone calls from folks that their advisor says you need to talk to these people and they're a first generation wealth creator and they say hey like I don't need this I don't need a family office so that's fine and we kind of well, tell me the story and tell the story. And they say the number and my, and I use a YPO modality where I don't give

advice, but I give experience share. I usually will say, Hey, listen to my experience. When you have this much money, this is enough money to screw up your grandkids. You have an obligation to either create structure and governance around it in the form of a family office, or you need to give it all away your choice. But that's the responsible thing to do. The irresponsible thing to do is with this much, that much liquidity, that many assets to just have a distribution policy based on nothing or to have some

kind of estate planning where when your kids turn 20 30 whatever yeah they get 50 million bucks yeah it's just I think that's irresponsible you should either have structure and governance around it and take it seriously like a small business or you should give it away in your money how many up to give it away increasingly more and more we see a lot of wind downs and a lot of sunsets now. There's a lot of obviously Buffett, Gates, there's a lot of folks that have signed the giving pledge and yeah, there's no judgment associated with it, but I think you're going to see more of it too moving forward. Some of that just optics too, right? Like

Buffett, I'm going to give it all away except I've already created all these trusts and right, these already created enough wealth for the generations where yeah, that's self sufficient. I can give the rest away. Yeah, yeah. Like versus just from Hey, all my, my lineage, you're going to have to work for every bit of it. You're not gonna get anything. I don't think that's realistic, but perhaps. Going back a few minutes, I was going to, there's so many crazy stories that these people must live in crazy places as well. So right, it's not just like all centered in New York, Chicago, LA or whatever, there's got to be around the country, small towns, medium sized towns. And so that's

got to be hard for you guys to be like, you got to relocate to such and such Idaho or Arkansas or something. Yeah. You know, to your question earlier about the number, I think that's what's misleading is there's a lot of these bigger families that started a widget company a couple of generations ago and they're in, you know, Des Moines and they're still there, right? And they're a big family. People don't really think about them as much, but there's a lot of those. That's one. The second part to your question, one of the trends we're seeing is geographic dispersion and co-location of family offices. So the mothership might be in Des Moines where the operating company is or the assets are,

but you might have your deal team, your investment team be in New York or Miami or Dallas because you're getting better looks, better networking, more GPs than sponsors and fund managers will get in front of you. And so I think you'll see that continue where maybe the back office administrative from a cost saving perspective will be one place, but maybe the investment team or the client customer relations team, because the dispersion geographically of a lot of these families has increased dramatically where people are in the sunbelt, even though the motherships in Chicago, and they're going to have satellite offices to help service them. I think you'll see more and more of that estate

management lifestyle concierge. That makes sense to me, which to me, it seems like that all consolidates at some point, and they're like, right right and then you outsource those pieces from a group which is talk about that for a minute the multifamily office that space do you guys put people into those as well we do a little bit of of mfo work not a huge not a huge amount i think if it's a boutique with kind of large separately managed account relationships that are north of 200 million, we can probably be helpful. But, you know, the majority of the platforms we're not a great fit for considering kind of our expertise

and the folks that we know, but we do a little bit of that work, yeah. It's a growing space. I think to our conversation earlier about the cost associated with these things, you're going to see more and more offerings and platforms and a lot of families that don't have the ability to continue to economically run their own family office. Pivoting to a multifamily office platform to defray their costs makes a lot of sense. You'll see more and more of that as well, especially these big multi-gens where, I mean,

the linear growth of your investment portfolio relative to the geometric expansion of your family is very difficult dynamic to maintain over five, six, seven generations. That's a fascinating piece there, right? The geometric growth of the family, right? The family tree, what does that look like? The geometric growth of the family, right? The family tree, what does that look like? What are some of these families? How many family members? Yeah, we just did a search for a family

that was on their eighth generation and they have 254 households they service. So over 500 family clients. Wow. Pretty wild. Yeah. Big family. So at that stage, this like you're running a mid cap 400 company or something, right?

Like you're running almost a fortune 500. Yeah, I mean, it's a very, very different search relative to like a de novo startup, first gen entrepreneur, obviously, they're legitimately institutional, just from a governance structure, legal entity organization. I mean, very much a private wealth management firm for the benefit of a select cohort of clients. But yeah, I mean, it gets into all kinds of interesting complications in terms of having investment offerings for people that range from unaccredited to qualified purchaser. range from unaccredited to qualified purchaser? Like how do you do that? How do you for one flat fee for service help a family that has a pretty simple household

level complexity versus one that has massive estate liability challenges? And just because three generations before one family had five kids and one had one, right? It's just the way these things work. Fascinating to figure out how they solve for that. I and you mentioned the comps. Can you talk through the comp? What are what are some of the levers? What are these guys and gals making looking to make? Yeah, I'd say traditionally it's kind of a base and bonus business, right?

So you've got a base salary plus some type of cash discretionary bonus. Most of the time, discretionary bonus in this world is pretty much guaranteed. And then increasingly you've got a lot more of the other bucket, which would be deferred, long-term incentive, participation in co-investment, carried interest and potentially profit sharing. A lot of families are now providing leverage to executives to allow them to participate in some of these offerings and they're all tying into some type of overall kind of strategic retention scheme and an alignment of incentives. So you're seeing a lot more co-investment, less carry, profit sharing not as much but it's becoming pretty consistent And what's it look like from a total comp level if you're allowed to say

Such a scary question with all kinds of caveats associated with it listen, I think it's tough to get a professional with, you know, 20 years of experience. It's tough to get those folks for under 750. These days, you know, I think all in you're looking at a million for somebody who's really, really good, and they really know what they're doing. I think all in, you're looking at a million for somebody who's really, really good and they really know what they're doing. But it depends, obviously. But yeah, that would include all of the deferred and investment participation. But yeah, I mean, if you just look at what the professional services firms, what those partners are making, it's pretty on par. What's the future look like for this space?

Like more tech, AI, where's it going to go? Or no, more handholding. I think the more tech that gets into it, the more human touch we need. Yeah, I mean, I think the family office space is growing dramatically, and will continue to grow. Tech is interesting, you know, most families are pretty slow adopters. But it's coming kind of just like in the wealth management side.

It's all coming and we're going to need it frankly, because there aren't enough people. So you know, there's a lot of doomsdaying. And I don't know if we're all going to end up in kind of Terminator two style or not. I have no idea. But I will say in the near term, there's just a real dearth of talent that has the technical skills and the work just keeps going up. I think the way I've experienced it myself is kind of, and I'm old enough now, where I remember when computers and email were going to save us all and it was going to make things much more efficient and give us time back. And all it did was just increase our capacity for work. And so now we just work more

all the time. No vacation. Yeah, like you and I are in a hotel room. Yeah, like I'm going to the beach on Wednesday and I'll be cranking it out. Evenings, mornings on walks, you know, like there's no getting away from it. So I just think that's the world that will continue to be in. I did want to ask the cliched family office, right? The drugged out bratty kid who shouldn't deserve the money and the exec, the family pushes that onto the exec to handle. Is that a real thing?

Is that, is that a downturn? If people are like, you're trying to put them into this role and they're like, I don't want to have to deal with those bratty kids or what? Yeah. I mean, there's some, it certainly happens. I think, you know, families are, um, it's kind of like the equivalent would be like the military. It's a snapshot of our society. And you've got some folks that are, you know, coming out of the Naval Academy at West Point,

you've got folks that are enlisted, coming from really hard conversations and challenging situations. It's reflective of our overall society. I will say that you certainly hear some pretty bad stories and I've seen some pretty sad stories. I think to understand it better would be to say fundamentally, if you're a first generation wealth creator and you work incredibly hard, you take massive risk and you have huge success and then you create dividend policies and estate planning structures to provide for your next generation so that they don't have to go through that suffering. your next generation so that they don't have to go through that suffering. The next generation then oftentimes looks to you and says, you robbed me of that opportunity to self actualize and self identify, and to actually know who I am because of that suffering.

And that's pretty much the dynamic. And that can be a really tough thing to navigate. Which from the head of the family, that's going to be so pressuring. Like, hey, I'm just trying to help here. Yeah, it's two people talking past each other because the first gen is saying, I did all this for you. And the second generation is like, you did all this for me. They're saying the same thing, but they're speaking past each other. That's why the most

effective highly functioning families I know, they create some type of culture where there's the opportunity for self actualization in the next generation. And it doesn't have to be being an entrepreneur or making money, but could be through nonprofit or giving or of service. But that's, that's typically what you see for really high functioning families is some type of mechanism to unlock that. Because if it's not there, it's very, it's very challenging place. Um, you have your own podcast, what's that called? And what do you guys talk about on there? Yeah, so it's, it's a very creative, it's called the Mac podcast. So I've been doing it for 400 plus episodes, I ported it over from my old platform. And we, you know, we talk about, I tell people, And we, you know, we talk about, I tell people it's, it's any subject matter or topic that you want as long as it's oriented towards the ultra high net worth or family office

world. So I've done everything from esoteric private alternative investing to drug addiction in families and everything in between. It's really fun. I enjoy it. It's a great way to meet people, like crowd source new relationships. That's how we met. Yeah. And so there's just a real paucity of decent content in the family office world.

That's not a marketing ploy. Just trying to give people some actionable value. Right. That's such a mismatch, right? There's too many... 98% of the content is like retail, how to trade options, how to do like, for probably not even 1% of what the assets of, of these families that that actually need this content. And it's tricky because even though these families are becoming more outward facing and external,'s still, you can't really bring a CEO of a family office onto the show, so I've got to kind of be creative about how I address certain

issues, but it's fun. I get to meet all kinds of cool people, so I enjoy that. For a little bit of fun, For a little bit of fun, if you could travel back in time to any big market event in your 88 DeLorean, back to future style, what would it be and why would you choose that one? Yeah, so I think I'd go back to kind of the start of World War I, you know, guerrilla friendship and the black hand and the assassination and everything that unfolded from that, because that was really the birth of the nation state in a lot of ways.

And that hundred years, call it a hundred years, from where we are today, we're kind of seeing the nation state almost devolve in many ways. And so it's been fascinating to see the last like 100 year development of what were these big consortium consolidated governing bodies to these kind of microstates

in the nation state and people define themselves by who they weren't and who they hated and now we're kind of almost going full circle where we're having like us versus them and these big blocks of countries that are having these loose affiliations and all of these structures that we built up over the last hundred years to prevent these bad things from recurring are all going away it It's like what happens next? It's a big one.

I thought you were going to go to, you're trading it, or you're getting someone in the family office of the, who have their Rothschilds to make sure that they blow out during World War I. Help them find a new CEO. Yeah. There's a cool story of Napoleon. The was it the Rock Jones? I think it was they was basically the first high frequency trading. They had a carrier pigeon that had reported that Napoleon had lost. And flew over to England and they were trading and they knew I had this and he.

Faked it like Napoleon had won the market, sold off, then he bought everything. And then by the time the ships had come over in the horse to deliver the actual news and the market rallied which was the urban legend of how lots of money was made there. Oh wow that's cool. I tried watching the Napoleon movie the new one and I couldn't do it too slow. Walking Phoenix. I didn't watch it.

I didn't watch it either. I got I had a flight to Seattle last week and I was like, okay, I'm going to do this. 20 minutes in. I said, I'm out. Can't do it. Try I tried. You're more the new F1 movie speed. I have got I mean, I got a lot of screen time in my life in terms of flying. So I'm always looking for new content. So if someone's listening and wants to run a family office, what they should give you a call or what's their background got to be?

Yeah, no, I mean, you care where they went to school. Do you care? I mean, it's at all the experience that matters. Culture fit. Biggest thing. What's your why? How do you spend your evenings and your weekends? I care more about that than what you do, what your pedigree is. That tells me a lot more about who you are as a person. Which is unique, right? Like most of the times it's where'd you go to school? What's your background? What's your experience?

I don't think that matters as much. Tell me about how you spent your Saturday when you didn't have to work. Or maybe you did work. But that I think is much more telling. It's kind of like the ring of guide. He's, you know, you can tell someone's true character. When they're invisible and what they do. It's like, I like to know what people do on their off time.

What what's the answer you're looking for that they were, oh, I've listened this podcast on how to set up estates to save taxes. Or is it like I went to my daughter's softball game and watched her win and it was great I think family is important Because people with families understand families. So I think that does make a difference We certainly don't screen for that. But I do think it makes a difference People who come from big families complex families I

Think that's a helpful experience for people. But what I'm really looking for folks that spend their time doing activities with continuous improvement, immediate negative feedback, and no real, there's no final boss. So like, golf, tennis, golf, martial arts, music, theater, singing, things that you do that have iterative negative feedback that you basically just get kicked in the teeth all the time and you still love to do it. But there's no end game. That's basically what working for a family is like. Sailing, skiing. I like that one. But thanks so much, Brian.

Yeah, it was great. We'll put links to your podcast and the website in the show notes and then be talking to you later. Okay. Thanks again for having me on. It was great. All right, Brian. Thanks so much.

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