Joe Reilly
Fantastic. It is now the top of the hour. Hello and welcome to Inside the High-Performing Family Offices: Lessons from Family Members. This webcast program brings together three notable authors of books on family offices to share their insights on the drivers of high-performing families. While family offices continue to gain size and influence in our society, many lack basic systems and structures, which leads to suboptimal performance, and in some cases, a failure to pass to the subsequent generations. The panelists each have research, consulted, and written on family offices and bring a wide perspective of ideas and insights into what leads to family office success. I will introduce our panelists now, the first off is Kirby Rosplock, who is a member of the fourth generation of her family and a member of her family office. She's a 25-year veteran of wealth, governance, and family enterprise, and the founder CEO of Tamarind Partners and Tamarind Learning. Kirby is not just an advisor. She's one of the field's most read voices. She's the author of Wiley's Complete Family Office Handbook and the Complete Direct Investing Handbook, with hundreds of talks, articles, and podcast episodes shaping how families educate rising owners.
Joe Reilly
Kirby's thought leadership is recognized at the highest levels. She received the Family Firm Institute's Richard Beckhard Practice Award and the Family Wealth Alliance Thought Leadership Award, as well as thought leadership recognition from Family Wealth Report. She's a graduate of Middlebury College, has an MBA from Marquette, and earned a PhD from Saybrook, where she studied with Dennis Jaffee.
Joe Reilly
Scott Saslow is the founder and CEO of Palo Alto-based One World Investments, which provides capital to early-stage impact-focused companies and funds and provides education and networking for a community of entrepreneurs and investors. Prior to One World, Scott was the founder CEO of the Institute of Executive Development, supporting executives and global 2000 organizations, including American Express, BlackRock, Intel, Time Warner, and the US Navy. Earlier in his career, Scott worked at Siebel Systems and Microsoft Corporation in leadership roles. Scott has been a founder or founding team member of seven startups. He's a graduate of Harvard Business School at Northwestern University. And last year, he published his best-selling book, Building a Sustainable Family Office, which is a remarkable story of how he coped with the death of his father and the subsequent organization of his family and family office. It is an eloquent example of how a family can navigate this challenging journey and bind together effectively.
Joe Reilly
We are also very pleased to have my friend Jay Hughes, the distinguished author and expert in family governance and wealth preservation. Jay is the author of numerous influential books, including Family Wealth: Keeping It in the Family, of which I have a first edition. And my favorite, The Cycle of the Gift, which he wrote with Keith Whittaker and Susan Mascenzio. He is a retired legal professional, founding a law partnership in New York City and holding partnerships at Kudair Brothers & Jones Day. A graduate of Princeton University in Columbia Law School, Jay is a counselor to the Family Office Exchange and a recipient of their Founder's Award. He has also received the Private Asset Management Lifetime Achievement Award and the Lifetime Achievement Award from Family Wealth Report. In 2021, the James E. Hughes Jr. Foundation was established in his honor to advance family wealth management and generational well-being, inspired by his landmark Five Capitals research. Jay is committed to shifting the world's understanding of wealth as a financial burden to that of holistic well-being. We are very honored to have a visionary with us today.
Joe Reilly
I am Joe Reilly. I'm the host of the Private Capital podcast, where I interview people about making investment decisions. I just recently interviewed Paul Carbone, who many of you might know, as well as Roger Ferguson, the former vice chairman of the Federal Reserve. More relevant to this panel, I also host the Inheritance podcast, where Jay has been twice a guest. I've spoken with Jim Grubman, Dennis Jaffe, Kristen Keffler, Keith Whitaker, John Warnick, Christian Stewart, Coventry Edwards-Pitt, and Louis Lapham, among many others. It is part of the Inheritance Project, a nonprofit which collects and shares the stories of inheritors. Previously, I helped start a family office and foundation in New York, where I was an investment manager for six years. I was also the co-founder of the Family Office Association, a group of 350 family offices, which hosted Ray Dalio and Mike Milken, and currently run the Circulus Group, which is a family office network based in Greenwich, Connecticut. Welcome to all of you on Zoom, and welcome our panelists. We will be sending out a recording within the next week or so, and I would please ask you to ask questions in the chat, and we'll get to those in a bit.
Joe Reilly
So first question to Kirby. Should family members work in the family office?
Kirby Rosplock
Oh, well, that is a loaded question, and I will tell you, many families have one or more family members working in their office. So it's not a bad It's just a complicated idea. And I think the reality is it's the natural fit where family feel trust often times with the founder or whoever is starting the office. Over generations, it actually gets far more complex. And I think the challenge for family members is, how are they a client, and how are they a leader, and how are they potentially an owner, and how do those hats all fit together? And, oh, Then you throw in if maybe they're a trustee as well, and it gets very interesting. I'm all for family members who are ready to step up into that role. I just am cautious about how they make sure they don't compromise critical relationships with their family because it can be loaded and it can be dicey at times.
Joe Reilly
Excellent. Scott, could you take yourself off mute and tell us your thoughts?
Scott Saslow
Happy to be here. Thank you so much. Yeah. Thanks everyone for joining. On that issue, I think the answer is wherever possible to some degree. I see a lot of principles G2, G3, beyond that are not connected and they want to be. I think for better or worse, what's being created in some cases is a situation where the expectation is unless you have direct investing experience, there may not be a role. We might be able to do something for you over in the foundation, but that's a sidecar. Really, that's in part why I do some of the work I do, and I wrote the book, was to help principals, specifically those that are maybe less sophisticated or aren't investment professionals as the way they define their career, so that they can have some understanding of the basics and also participate. I think all things equal. The more participation, the better and stronger, and indeed, the more sustainable a family office can be.
Joe Reilly
Excellent. Jay?
Jay Hughes
Well, thank you, Kirby and Scott and Joe. It's a great privilege to be here with you today. Thank you all for taking your time, which is your pleasure, to join us today. Very, very kind of each of you. I think I would add this. Family office work is often, in my view, the work of being a great fiduciary, small f. That doesn't mean you have any titles. Kirby mentioned a whole bunch of them that you could have. But I think when you choose to join a family office of your own family, it is because you have some desire for service rather than a job. I say that because the complexity of working for your family means that you do not have the objective position that occurs in almost every other job you might imagine. It's a subjective experience. You have to want to be a fiduciary in some sense. That is, you must want to serve this group of people. I think I would add, Joe, that once you take on the role in the family office, of whatever that job may be, you must, in some sense, accept that you can't make any decisions that would benefit yourself and all the other relationships you have to the family.
Jay Hughes
You have to make the decisions objectively for the benefit of all. I think it's a job, a role. I wouldn't say it's a job. I think it's a calling which has great complexity. I'll leave it there.
Joe Reilly
Do you folks think, and anyone can jump in on this one, do you think there's an optimal balance between family and non-family in any of the decision-making structures in a family office in a family? Kirby, do you have some thoughts?
Kirby Rosplock
I think you have to be a little bit more specific because there's a lot of structures where decision-making is occurring, whether it's on the investment committee, whether it's on the distribution committee, whether it's on a wealth transfer committee or a board. So let's hone in. What are we defining as structure and what roles make most sense? Jay wants to say something. Say it, Jay.
Jay Hughes
Well, I think that the most important thing in a family office is the word family, modifying office, and therefore, you have to be cultivating a culture of care. You're not just serving the public, you're serving your family. So you must cultivate a culture of care. If you cultivate a culture of care, you have to then decide what you care about. It It would seem to me, dear panelists and all that are listening, that the one overriding question of a family office is, is it enhancing the lives of its clients? So you have to decide first to care, and I think the second thing you have to do is care about is the question of enhancing the lives of the people who are your clients. I just leave it there.
Joe Reilly
Scott, did you have any thoughts on that?
Scott Saslow
I believe that most family offices can benefit from both more family and more office. So by that, the family side of it is greater participation and maybe participation in ways that the principals haven't up until a certain point, having them more involved in maybe setting the mission for a family office. We can talk about mission and the importance of that. Then on the office side, it is a more professional entity. It surprises me how Lucy-goosey, if we can use that term, some family offices are, some very substantial family offices. I think in the same way that good governance in public companies and in larger private companies, there's almost always an element of independent director and some outside perspectives that just brings expertise and some objectivity that's hard to do if it's purely family members. I think in many cases, family offices can benefit from that same element.
Joe Reilly
Scott, when you think of a high-performing family office, what traits or behaviors come to mind?
Scott Saslow
I think there is a articulated mission, right? I mean, look, it's table stakes in a family office that the purpose is to protect and grow the capital and to serve the principles to some degree. However, that's ultimately defined. That's table stakes. You got to do that. I think where it gets really interesting, and the common thread I see in what I'd call sustainable family offices, those that are passed on successfully, generation to generation, is they You've established a mission that is at least in part external. Part of the purpose of the office is to serve those outside of the family. Let's not get caught in the tyranny of the Or. It's not if you serve outside, then you're not serving the family members. You can do both. We can walk and chew gum at the same time. So it's this element of in part a mission that is defined as benefiting some external audience, some part of society. It's having goals and again, some objective ways to measure those goals. And that's not only financial. Financial is the obvious one that everyone always gravitates toward, and you got to have that. If it's not successfully financially, it won't endure.
Scott Saslow
Then I think participation. The most successful ones, they have broader-based participation across different generations and in ways that maybe are not universally seen.
Joe Reilly
Kirby, you wrote a book on how to put together a family office. It's a wonderful book. I highly recommend to anybody on this call. It should be on everyone's desk. When you think back about putting that book together, what traits and behaviors spring to mind?
Kirby Rosplock
Well, that book is really a reflection of so many thought leaders. Jay's wisdom is in the foreword, and there's so much insight broadly. I think some of the things that really stick out to me is the importance of clarity and cadence, clarity of what is your purpose? What are we trying to achieve with what we're pulling together? Because I visit many families, work with many families, even look at my own family. And I think sometimes we don't know, we don't have clarity on what we're trying to achieve with this wealth and how to structure it effectively. And if you really care about taxes, then you better be thinking about a tax-efficient structure and not overlook that. So having very high awareness. And then I would say cadence is another C-word that comes to mind because many family offices start Start, but they don't create a cadence of operating norms and how they're going to engage, and how they're going to continue, improve, and get better over time, and not just think once you're set, it's a one and done. I've created the office, and now it's there. So there's a cadence of continual improvement of wanting to make it better on the tech stack, on the investment front, on your engagement with clients.
Kirby Rosplock
And that's a big one, how family members continue to come and be to engage with the office over generations, because it's not just the founder who needs to be engaged. It has to really succeed in the G2, G3, and beyond. And most of the offices were just set up in the last few decades Although we have some historic legacy multi-gen offices that are in the sixth, seventh generations and beyond in the United States, but the vast majority are still in their infancy. So that cadence hasn't really been established What do you mean by cadence?
Joe Reilly
What is a cadence?
Kirby Rosplock
An operating norm of how we work effectively between the office function and the family members who receive whatever services, whatever experience of the office. And that understanding that it's a two-prong, it's two sides of a coin. The office won't be successful unless the family itself, on some level, is successful in utilizing that office. And the office can't do everything. And I agree with Jay about it's in service to the family as a duty of care. But the family members have an equal duty of care to care about what that office is there and designed to do and not to abuse it, overuse it, or actually ask it to do things that it's really not scoped to do.
Joe Reilly
Is that something that just happens over time? As people calibrate to each other, the family learns how to use the office? Is it something you can implement from the beginning?
Kirby Rosplock
I think it's an intentional implementation that the family office knows that the only way we are going to be strategic and high-performing is if we're utilized correctly. I see a lot of offices find that they are in such a duty of service that they don't know how to set boundaries of, You know what? We actually don't do that. And that's not part of our service level agreement or our mandate. And I'll give you an example of what some offices I've seen do that are out of scope. Hey, will you look at a deal that my friend gave me? And I don't think I'm going to invest in it, but they just wanted our family office's perspective on, is this a good deal. And who else might we want to share this deal with?
Joe Reilly
That's never happened, Kirby.
Kirby Rosplock
Never happened. But again, that burns family office time and resources. That's a direct expense. It goes back to the family, whether they know it or not. And it's a misuse of your family office, in my opinion.
Joe Reilly
Jay, you've worked with many substantial families. When you think about a high-performing family office, what comes to mind?
Jay Hughes
Well, it hasn't quite come up this morning so far, so I'm going to answer the question a little more broadly, and that is this. My experience of these offices, Joe, is that they frequently, and this is the service element that both Scott and Kirby are speaking to, don't clearly identify who their client or clients is or are. Every professional organization has to decide who its client is or are. What am I getting at? Well, as Kirby has just said, in the last couple of decades, there have been many, many hundreds, if not multiple thousands of family offices created, which are, in fact, founder's offices. They are not family offices. They are offices that grow out of liquidity events or accumulation of assets other than in the enterprise, which need custodial management and thoughtful investment activity. The family members of those offices, in my experience, are by and large appendages of the founder rather than actual clients. So they receive service, but they do not receive service from the standpoint of the people providing that service as the principles of those people's intention. Founders' offices are terrific, but it's important that they be recognized as such.
Jay Hughes
Who's my client? Now, to take the question a little further, one of the interesting things in many, many situations that I've seen, Joe, is the second generation of the office is not yet the rising generation It's trust. I think we all know that in America, in Britain, Canada, Australia, New Zealand, by the second generation of a family that retains its financial capital, about 50% of that financial capital is in trust, sometimes 90%, and by the third generation, 90%. So that trust wave means that that office becomes a fiduciary office of the trustees. I cannot I'll tell you how often this is ignored. The assets are being managed by the office, but the trustees are not seen as the clients of the office when in fact, they are the clients of the office and the beneficiaries are a consequence of trust. I'm using words very carefully. I think the great question of whether something becomes a family office is when a later generation of family members who have been clients beneficiaries or appendices of a founder, actually ask the executives, Would you provide me service individually? And the executives of the office must now decide if they have new clients.
Jay Hughes
I'm making this point because the confusion all through my career of the executives of the office as to who they serve has been monumental. And the problem of anything that creates confusion is it only adds to the complexity of the human relationships we're all talking about. So one of the things I've been trying, Joe and Kirby and Scott and our wonderful audience, I've been trying to get the people that I help to define who their clients are, who is actually the person you feel is your client or persons you feel are your clients? That does not mean you're not serving other people, but who do you feel your first loyalty is to? Because if you're a family member and you're receiving services and you sense you're not the principal concern of that person, you're not going to be very comfortable being served by that person. You see the confusion? Clarity of who your client is, to me, is the greatest and most important question for the executives of the firm. I'm upset.
Joe Reilly
Now, is that something the executives have to decide? If you're the recipient of one of those calls, what advice would you give to them?
Jay Hughes
Okay, look, you see, I'm smiling. Here's the problem. What were you hired to do? Oh, yeah. What were you hired to do? Well, the founder hired me when he sold his business or she was accumulating a lot of money from her business and couldn't invest it. She hired me and she said, We're going to have a family office. She hired me or he hired me, and that's who I work for. Oh, okay, that makes a lot of sense. And what's your background? Quantitative. What do you mean quantitative? I'm a lawyer, I'm an accountant, I'm a banker, I'm a something or other, where quantity was my responsibility. Okay, so I manage financial capital. I don't manage them. I'm not interested, Mr. Hughes, in the four qualitative capitals. I'm interested in managing hard assets, financial capital. Fine. Well, but do you understand you're in a fiduciary position? I'm not a trustee. That's not what I said. I said, You understand that you have other people you're serving who think of you as their principal. Is that how you think? No, it isn't how I think. Oh, wow, is this complicated? This is Kirby's point and Scott's point.
Jay Hughes
Who are you serving? Who is your client? Now, it becomes even more complicated, Joe, and enough of Jay, because my voice too much on this call. When it becomes the office of the trustees, remember I said before, in the second generation, it becomes the office of the trustees. Because that's where the money is. Willie Sutton. Where's the money? I robbed banks because that's where the money is. I cannot tell you how rarely the executives recognize that they're now running a trust company, small trust company, not a organized trust company. They're running a trust company. They may have hundreds of trusts that have been created by that process of the liquidity being intermediated. They have not only no experience running a trust company, but they're not interested in it. Well, who are your clients? You see, this is where the confusion leads to complexity, and complexity leads to failed service. Service, service, service, the core question we're asking. But I'm sorry to keep repeating myself, but over and over and over, Joe, in my career, I've had to try to sit with the executives and say, Who is your client? Not, Who do you Advertise your client.
Jay Hughes
Who do you see as you're going? Who are you serving? Why was that an important question?
Joe Reilly
So speaking of quantitative, Scott, you are in the quantitative capital of the United States, and you've worked with many executives from technology firms. I'd be curious in what you're seeing in the first-generation wealth out there and what high-performing family offices mean to them.
Scott Saslow
I think it's a bit TBD. I mean, some of these family offices in Silicon Valley are very new, as in within the last few years. I'm seeing a lot of whether it's AI wealth, crypto wealth, just broader tech wealth. And what's really interesting, because I think we all can agree, you're talking a very different situation when you have an operating company that's part of the mix versus a family office where the operating business has been sold off or maybe a few generations has been sold off. So out here it is much more common to see first-generation wealth. You'll see founders in their 40s and young 50s, and they're They're all very active. They're still very much. Now, the good and the bad of that, I suppose, is, well, on one hand, there's just simply far less complexity than if even you have a G3 situation, and some don't even have G2. Their G2s are in grade school. So on one hand, things are less complicated. On the other hand, what I'm baffled to see time and again is founders who, when it comes to the wealth, They think that's been created, that's maybe been taken out of a company, let's say, that liquid wealth, the lack of professionalism and how they're thinking about it and the structures that they're creating around that.
Scott Saslow
On one hand, I get it. They're very busy running the show at the company that created the wealth and taking care of the goose, so to speak. But on the other hand, it's surprising to see in some cases such indifference toward how professional, how thoughtful they are toward the wealth that comes out and hope for the best, but in some cases, I'm not very optimistic. That's just a little bit of how some of the newer wealth is being looked at and being managed.
Joe Reilly
I just want to remind folks that we're taking questions in the chat, so please, if you have any questions for us, I'll put them in the chat window. I would appreciate it. Kirby, what role should the family office play in preparing the next generation for stewardship, leadership, or just simply living with wealth?
Kirby Rosplock
I think this gets back to many of the comments that Jay has shared, and that there's an inextricable link between your role as a mediator, facilitator, coordinator, director in certain cases, with respect to structures, trust, operating companies, investment policy statements. So there's a duty to provide knowledge and education around what the office is doing for you, for your family, and understanding what your role in that relationship is. And oftentimes, family offices are not instructional designers, and they're not teachers. And so where does that knowledge come from? Well, they know how to advise on what they do for a family. But it's different when you actually have to teach, How does a trust really work? How do you read a trust? What's the dispositive provisions of a trust? And how do you instruct so that you meet people where they are, not because you assume they have an MBA or they have a finance degree. So I think there's a lot that is required just to be a good beneficial owner. And we're not given a handbook, right? We're not given some guide when you sign up for your family's family office, typically about... Now, I will say there are some extraordinary offices out there where I have heard there's massive binders that go out in such a way that are guides for onboarding.
Kirby Rosplock
But there's a lot of information that's needed to be prepared to be a good steward and not assume through osmosis or just because they were in a board meeting one time or shareholder meeting that they got it.
Jay Hughes
Joe, I'm going to jump in on this question. Thank you, Kirby, and add this. Every human being in a rising generation, by the way, I don't like next. I think nobody likes to be next. I think we really should be putting the word rising for our rising generations. There are two things I think we'll quickly add to what Kirby said. First, every rising generation member has an integration problem of a meteor from outer space. Everyone who's a client of that office will have an integration problem. I think everyone can just think about that for a moment because they didn't create it. They receive it from outer space by gift or inheritance or whatever it may be, and they have to integrate it. And by the way, just for all of us to think about it, in the next 50 years, $120 trillion will be moving around the world to millions and millions of families that have never had an inheritance event. That's the abundance created in the last 70 years. All of those people are going to have an integration event. But coming right to our subject today, they're going to have to integrate that which happens.
Jay Hughes
Now, to the point for the moment to trust, I'm just using this as one example, somebody said to me the other day how interesting and complex it is if you happen to be a first beneficiary or a first trustee, that adjective first modifying those words is a very interesting point for the office. Because the office may understand trusts, they may understand foundations, they may understand LLLCs, they may understand all these things. But the first person who's going to be a member of that LLLC, or the first person who's going to be a beneficiary or the first person who's going to be a trustee has no knowledge at all about the circumstances in which they find themselves with this integration event. So the executives have this problem. How do we work with human beings who are the first in these places, and therefore, their families have no experience of it either? It's fascinating problems.
Joe Reilly
Scott, do you think family offices are doing a good job of training their beneficiaries?
Scott Saslow
I think there's a lot that can be done beyond what might be happening today. I think when you, at least for me anecdotally, I think a lot of the research, it's one of the things that keeps the principles up at night. How do I engage the rising gen? I think that's really compelling. I think that's That's great. On one hand, that there's a recognition that more can be done. I think we can maybe use this call and talk about a few things that we've all seen as being successful. For me, one thing I'd offer is there's two areas that the rising gen, those in their 20s and 30s, seem to really gravitate toward. If you can hit both of them even better, one is entrepreneurship. I think the family offices that have found ways to support the entrepreneurial community through investing or other ways. Family offices have a lot of assets beyond investment capital, but that's an obvious one. Then the other would be an area I spend a lot of time thinking about, and that's around sustainable investing. It's thematic investing around something that might be focused on K-12 education or health care or sustainable climate technologies.
Scott Saslow
It's been a beautiful thing. I'll just share a personal story here. For me, I have two daughters. They're relatively young. What's been amazing to me is when I bring them in Silicon Valley, but now really everywhere, these pitch events, these demo days, they could be at a university or sometimes Sometimes entrepreneurial companies will host these demo days where new companies will showcase what they're doing, and the crowd can figure out how they want to support them or invest in them and that thing. Those are eye-opening for that next Gen. For me, in my case, I have two girls. A beautiful observation one of them made to me was like, Hey, dad, it was really cool to see a lot of other girl entrepreneurs. I always thought that all the tech leaders and all the COs were guys. I think those are some ways to engage the next gen. I think that can be really powerful. And the earlier, the better, seems to be the consensus.
Joe Reilly
Jay, are you seeing new roles or functions emerging inside family offices, roles that wouldn't have existed, say, 10 years ago or 20 years ago?
Jay Hughes
Yes. I would say two things are happening at the same time that are a reflection of the comments that you're hearing this morning. The first is that the most advanced offices are including chief learning officers in the firm almost from its inception. So they're not looking at the office simply as a quantitative activity. That's a wonderful development. The older offices are struggling with it because they don't have the experience of the holistic work that we were talking about, this developmental work. I think that's very exciting. The second thing I'm seeing is that with the offices that are going to be administering trusts or are administering trusts, they're facilitating the development of beneficiary relations committees and life enhancement committees in those trusts. And that's the work being assigned to that chief learning officer, along with the things Scott was speaking about. It's interesting. Families are conservative. Bringing people into the atmosphere of your family is a risky proposition, isn't it? So families are conservative, I don't mean politically. They're conservative in what they bring into their systems because there's risk in that when they do that. But what the newer families and some of the older ones are seeing is they're getting the benefit of the talk we're giving this morning.
Jay Hughes
And they're hearing, Gee, I see what those nice people are talking about. We're talking about the fact that we have to have a qualitative element in our office from day one. That qualitative element has to be learning systems, as Scott was just saying, and Scurbie has been mentioning, and also learning systems within those first beneficiary, first trustee trusts of how you enhance the life of the beneficiary. What I'm seeing, and I think it's extraordinarily important, is the development within the office of a chief learning officer. Now, that does not mean that they're not people brought in to assist with those functions. But the moment you have someone in your office whose daily work is the well-being, Joe, back to what you introduced me, wealth is well-being. The well-being of the family members as their principal responsibility, you change fundamentally the characteristic of that office. And you move it to a question, Well, I guess we have more clients than the founder. We're looking more broadly at the people that we're serving. So I see that as a terrific development. I'm very excited about I'd love to add to that, too, if you don't mind. Please.
Kirby Rosplock
I think there is an increased awareness that family offices need to find curriculum data consultants, advisors to support this big development piece. And I would just challenge that a lot of family offices I work with, ideally, want a chief learning officer. They don't have them. I mean, I wish they all had them. But it's hard. Back to conservative, I agree with Jay that a lot of families still look at the office as a quantitative function that manages and oversees the wealth. Or the businesses or both. And they struggle with justifying a full-time paid position for a chief learning officer. And you can look at the data, I think less than 10 % have a full-time family office this chief learning officer. Jay is raising his hand.
Jay Hughes
I'm going to just quickly say this.
Kirby Rosplock
I just want to finish a thought there, Jay. Go ahead. Just let me finish the thought. I think we have more people outsourcing to chief learning officer functions, and we're finding other ways to get it achieved, but using that mechanism of the family office still to drive learning initiatives, where there's a family committee related to education who's working with maybe an outsource provider or an outsource consultant to help co-create it. I don't think it's the role of the family office necessarily to build curriculum and to build all the education, because that is a huge lift. I know from Taman Learning, that's what we do. So knowing how we partner with family offices, I think it's more realistic to say, what are we good at? And that's typically the advisory function. How do we support families to achieve their highest and best use? And I'll tell you the other thing. Sometimes the family office is looked at as conflicted. If you are managing and overseeing my trust, and then I have to ask you that I don't understand your role as trustee, does that feel a little ick? Because I know a lot of family members don't want to show their vulnerability to their small F fiduciary, that they're not as competent, and they are expected to be.
Kirby Rosplock
So I'm going to make a little push that I think sometimes family actually want to look to the outside side of their family office because they don't want to have that vulnerability of being called out as like, you're not competent, you're not prepared. Why aren't you so knowledgeable? You should be. Sorry, I'm spicing up the conversation here.
Jay Hughes
Joe, all I What I'm just going to add, and I think, is this. When Delaware, last January, passed the Wellbeing Trust statute, everything in the world changed. So some of the questions we're talking about are going to be fundamentally issues the offices have to deal with when the beneficiaries say, I want one of those. That's just a fact of life that now exists. I think all of the offices around the world are going to have to ask themselves, if we're administering trusts and the beneficiary wants a well-being trust, how are we going to do that? What a great creative question. Opens up all of the curriculum issues, Kerber, you're talking about. But that's a huge sea change in our world. Enough said.
Joe Reilly
Jay, just two seconds on the well-being trust for those of us on the call who don't know about it.
Jay Hughes
Well, Delaware has simply said to a beneficiary and a trustee, If you have a Delaware trust, by the way, not a new one that's called a Wellbeing Trust, but any trust in Delaware, and the beneficiary and the trustee agree it will become a Wellbeing Trust, that's what it is then. Therefore, the focus of the duty of care, the trustee's first duty, we call, is to care, then be loyal, then be impartial, but first duty is to care. If you call it a well-being trust, you have declared that you care about the well-being of the beneficiary. How about that?
Joe Reilly
Excellent. We've got a lot of great questions and comments in the chat. Thank you for your positive comments. We've got a great one here because we do have two family members on the call from Bill Lyons. He says, You've talked about the importance of clarity about defining roles for family office and advisors. How are you thinking about your own roles, including the multiple hats that you are wearing and how you struggle with that. Scott?
Scott Saslow
Yeah, it's a really interesting question. One of the things I think is really fascinating about this field, if we think about family offices as a business type, they are businesses. They're often multiple businesses. Is there so much change on both the demand and the supply side? From the demand side, meaning, again, back to the purpose, what's the purpose of the office? Who is it serving? Who's involved in what capacity? And the supply side means there's so many interesting vendors and services that are popping up all the time. And so in my role, I'm leading my family lines family office. I think about this quite a bit. I think about, what are my strengths? Do I have any business running this family office? What's the purpose of the office? What are my strengths? Actually, I'm going through a process right now with my advisory council to have them rate me formally and evaluate me and say, Okay, versus... Kirby, I just asked you for some other job specs out there. Compared to other heads of family offices, where do I measure up? What do I need? I think you have to have that growth mindset. You have to think about talent management in a strategic way.
Scott Saslow
Then I need to backfill. If we determine that the purpose of this office in terms of who we're serving and what we need to do requires skills and competencies that I don't have, I better get those. I better hire those. I better build those. I think it's having some of these talent management processes, I think, is really important. I think about it. We're trying to walk the walk, obviously. Then we should probably at some point say a little bit about succession because that's hand in hand with talent management. The research on that is pretty staggering. I think it's roughly around a third of family offices have formalized plans. So again, I have a very young family in my family line, but I think a lot about succession. It's not a burden. It's often a little bit unpleasant to think about my demise, but that's part and parcel with this privilege of wealth is the responsibility and thinking about how does it live on, how does it continue to serve, who is it serving? So hopefully that's helpful.
Joe Reilly
Kirby, how do you deal with the challenges of different hats?
Kirby Rosplock
Not well. No, I'm just kidding. I think the biggest thing for me is to be mindful of what hat I'm wearing in which capacity. And And when I'm specifically with my other family members on foundation discussions, for example, I'm a trustee of the foundation, so I'm part of that process. But that's a very different role than when I, and I no longer do, but sat on the board of directors of our operating company. So you have to be mindful of what you can share, what you know that maybe not everybody else has the privilege of knowing, how you conduct yourself with the right professional decorum, and recognizing that you're still the daughter of, the sister of, the niece of. And I think that's a really critical piece of awareness that not always is given in a formal capacity. You either have that awareness or you don't. But you certainly know in different roles, there's privileged information, there's decisions that are being made, and also knowing who has authority and who needs to opine and who needs to be part of the process at which steps. And I think those role considerations come in key, as Scott was mentioning, in a succession situation, because a lot of times we operate in the role that we are hired into, and we operate, as Jay was saying, with that purview.
Kirby Rosplock
But things change. When the family is moving beyond one generation to the next, and you actually have to plan about the impact that your role might have with a whole new set of stakeholders per the who do you serve conversation, then you really have to know, how do you show up? And how... I'm still seen as the youngest of the fourth generation, especially by the elders. But now I'm actually seen very differently by, I think, the younger folks coming up in our family. So I think that is a different perspective is that we're all actually moving. Our roles are shifting, our perceptions of how we operate and then being very clear about conflicts of interest that you might have in those roles.
Joe Reilly
Or Kirby, stuck at the kids table forever. So we have a wonderful question here about talent. Do you think the industry is effectively… Thomas Clancy. Thank you, Thomas. Do you think the industry is effectively developing talent to serve these critical and highly bespoke family needs? Scott?
Scott Saslow
By talent, I assume that the implication there is family talent. Again, my observation is there's quite an interesting ecosystem already, and it's going to get much more interesting in terms of service providers. When we, I guess, thinking about family talent, there are some things that are being done that are effective, but there's a whole lot more. I think even before you think about developing skills, you think about talent management, I think some of these fundamental issues that we've talked about at the top here, top of the session around who are we serving, what's the purpose of the office, where are the lanes? Those need to be defined. It might sound like, okay, sure, We know who we're serving. We know the goals. But my observation is unless it's really articulated and clear and on paper, if you don't give people the information, they will manufacture it. Let me give you an example. My dear wife, so she's an in-law to the family office. We've had countless conversations over the years. What's her role in all of this in the wealth and managing the wealth and being served by the family office, et cetera. That, of course, changed dramatically from when there was an operating business in the family to when there wasn't.
Scott Saslow
And it was never clear. That's one of the things as a family, we could have done a lot better at is being very clear around what does it mean to be an in-law? What does it mean to be adjacent? And an appendage, I think, is used the term J. And so there's no right or wrong answer. And whatever you choose as a family, you can evolve that answer over time. But you have to start with something. You have to take a shot at it and define it. And this maybe goes to another element that I see in the sustainable family houses is flexibility. Think like the bamboo tree. You want to be flexible. You want to withstand change. You want to pivot. In Silicon Valley, pivot is a good thing. We celebrate pivots. That means you see a change coming and you make an adjustment. And I think, Kirby, maybe you made the point, you don't just build it once and it lives forever. It certainly doesn't live throughout the generations. You have to be very thoughtful what's worked historically, what hasn't.
Joe Reilly
Jay, what are your thoughts about developing talent?
Jay Hughes
Well, I think the most The important thing in the talent is what moral promises will that person make to whomever are his or her clients? A lot of offices assign people to jobs, a lot of the offices I've seen, including family members, without considering what moral promises that person is making to the family members who are served. What level What promise am I making about the quality of the service that I'm providing? And that's because they begin quantitatively. And then the core transition that we're all talking about. By the way, I don't like succession. It sounds cutting. Scott, I prefer transition. It flows. I don't see much cutting, but I see a lot of flowing, if I could put it that way. But one of the things that flows are what are the moral promises the employees are making and the talent is making to the actual people that they're serving. I think it takes Joe a certain person to join a family office once the qualitative issues are emerging that are the substance of our conversation today. What moral promises is that person prepared to make in his or her work to the people that they're serving?
Jay Hughes
Because There aren't any customers. They're family members. This is not a customer service business. It's family members, moral well-beings. They are, after all, the wealth of the office, the family members. How they do has to be part of how that person sees his or her tasks. Moral promises are very important. And, Kirby, the multiple hats we've talked about that people wear, each of those moral hats carries with it moral promises. And they're different. If I'm a director of a company, or I'm a trustee, or I'm a power of attorney, or whatever it is, each one has moral premises that follow from taking on that function. So I would just say this in a funny way. Very often in offices that I've seen, people assigned tasks without the person assigning them a task, thinking through what the moral promises are that that person now must make when they take on that work. That's a hugely important question.
Joe Reilly
Could you talk a little bit about what you mean by the concept of a moral promise?
Jay Hughes
Well, every function, Joe, has an agent and a principal. I'm not being a lawyer. Every one. So you're a client. I'm asking You're asking me to do something. I'm an agent. Agents have different levels of responsibility. One might be to walk the dog. I would say that's an agency responsibility that probably doesn't... Well, the dog may want you to have a moral promise. He didn't take care of me. But if you take on the roles that Kirby was mentioning, the different hats, as an agent, if you're a director, if you're a member of a board, if you're a trustee, you're always that. You have principles. You have people you're serving. Well, what promises are you making to them? That's the moral question of each one of these roles. Each one of them does have different levels of promise that the person who's the principle can assume the agent they're asking to help is willing to undertake. And again, just back for a moment, if you're a quantitative person by interest and by expertise, and you like counting things, that's hugely important in the world, a financial intermediation. Get money from here to here, move it around, do that, it's fine.
Jay Hughes
Hugely important. But if you're actually responsible for the human being that has the integration problem I mentioned, which every family member has after the founder, then every relationship you have with that person is about that process of integrating something someone else created into his or her life and then being able to live a meaningful life afterwards. That's a huge moral responsibility. I'm not saying people can't undertake it. I'm suggesting that when you're assigned that task, someone had better understand what the premises are on which you now will be acting.
Scott Saslow
May I make an observation?
Joe Reilly
Please.
Scott Saslow
Most of our conversation has not talked about investing investing or accounting or filing taxes. I think for the majority of family offices, certainly the newer ones, G2, G3, max, when they think about family office, when they think about how they invest their time and energy, it's around those issues. But I think what we're seeing here, three different viewpoints, what we all agree on for perhaps is, again, that's table stakes. These soft issues, these brain issues, these human issues, this is really what separates the pack. I think that's fascinating. I mean, for me, that's very intriguing as, again, a student of different types of businesses. I think that for all the principles and those that support principles, it furthers this point around, this is tough. This is hard stuff. It's not insurmountable. There's a great Great ecosystem of folks that can help you full-time, part-time. But have the mindset. Morgan Housel, great book on wealth. Keeping wealth and making wealth, two very different things. I think a lot of principles ignore that lesson.
Kirby Rosplock
I agree. Joe, I know we're almost out of time here. Do you want to start giving us some direction at the end? I know we have so many questions in the chat, and I just want to also say if If anyone didn't get their question answered, we'll try to follow up with the follow up from the webinar today.
Joe Reilly
I have about 15 more questions, and I've blocked out the rest of the afternoon. I don't know where you folks are going. I'll be here. Maybe somebody wants to grab this one. What's one piece of advice that you have given or you would give to a family setting up a new family office?
Kirby Rosplock
I'll take that one. I think a really quick bite of recommendation is don't necessarily set up the structure before you actually know what you're trying to achieve. A lot of families immediately want a paper. They want to deploy capital. They're ready to get going because they think it's an operational imperative to be efficient. And I think a lot of people miss the boat of actually stepping back and saying, what do we want this to do? Do we even really need a family office? Is it something we really want to maintain and pay for? Do we know that we have a new job as soon And as we set one up, whether we're an operator or not? So I'm a big believer that there's a lot more diligence and a business plan that goes into place before you start talking attorneys and structuring and papering and really figure out, is it going to work for you? Because a lot of families set them up and they wind down after the founder because there's no interest to try to perpetuate the structure. That's the transitions I'm seeing, Jay. I'm seeing so many families calling me saying, What do we do now?
Kirby Rosplock
So just don't run to set up a family office. Make sure it's got a viable future.
Joe Reilly
Jay, you've got one minute, one piece of advice to solve everyone's problems.
Jay Hughes
Pay attention with the rising generation to the millennials and the Gen Zs request that when they deal with you, they have an experience. They're not silent generation like me who wanted a balance sheet and a book to read and a memo. They are not the baby boomers who wanted a balance sheet, a book to read, and a memo. They're asking for human experience that impacts them. That's the one thing I would say. If you look at your rising clients, ask yourself what they're telling you about what they want, and then ask yourself, how well is your office situated to respond to those very legitimate human requests?
Joe Reilly
Absolutely fabulous. Thank you, Jay. And thank all of you, Kirby Rosplock, Tamarind Learning, Scott Saslow at One World Investments, Jay Hughes from the J. E. Hughes Foundation, which I encourage all of you to check out. I'm Joe Reilly. Thank you all for joining us. Thank you for your wonderful questions and comments. And I hope you all enjoyed our panel today.
