Not custom structuring fees and legal terms is a bigger mistake than an overpriced home.

[01:57]

"We've had a client that bought a home for $15 million on an island, lifted it up, rotated it 40 ft so they had a better view from the kitchen of the ocean. And they bought that at top of the market. And so that's a dangerous thing to do."

[03:04]

"No custom fee structures or joint venture deals or co-GP deals or different LLC share classes. No negotiation of a reduction in fees because you're their number one investor or top five investor. No negotiation for co-investment rights or tag-along rights or drag-along rights or non-dilution rights."

[03:22]

"Not custom structuring the fees and legal structure is a multi-million dollar mistake, a much bigger mistake than buying a really expensive home at the top of a market. As you'll see, a lot of the mistakes here are a lack of clarity, a lack of intentionality."

Full transcript

Hello, this is Richard Wilson and welcome to module 10 in our minieries on how to start a family office. Actually, I just got off stage here teaching a workshop on how to do this to 30 ultra-wealthy families. So, the timing is great to record this. Uh, this module is going to be on the top $1 million mistakes that a lot of my clients have made uh or are making in real time right now.

Some of these fairly obvious. Some of these are the mere reflection of the other modules we've been teaching you. Obviously, we want to teach you the best practices and the fundamental pillars of your family office need to put into place. So, not doing that would be some of the most expensive common mistakes, of course. So, not focusing your energy, time, and money, not building a platform, not acquiring choke points, having lame service providers that are carryovers from before.

Maybe you want to keep your CPA who's been doing your bookkeeping for 15 years, but maybe you want to layer on top of them a proactive tax planner. Maybe you want to keep an attorney as familiar with where everything is, but layer on top a more strategic family office quality uh legal adviser or an offshore trust and estate planning adviser or onshore adviser. Other mistakes are often made are investing into startups all over the place and having really diversification. You think you're getting diversification, you're really just going into really high-risisk ventures that are seed capital, venture capital, angel, angel capital.

Everyone has some idea they want somebody else to fund and who knows, you know, it's like getting a lottery ticket. Maybe it'll work, maybe it won't. Uh we don't invest into any startups. So, we look for things that are already making money. They've learned how to crawl out of the ocean, walk on their own, and then we help them move faster and go faster.

The only exception would be a strategic investment in a niche we know really well where we created our wealth and we have assets on our balance sheet already. Some of the other mistakes um would be going and buying a $20 million dream home. You're probably going to want to move again in 3 to 5 years. You're probably going to end up owning 3 to five or seven different homes at once over time.

Uh we've had a client that bought a home for $15 million on an island, lifted it up, rotated at 40 ft, so they had a better view from the kitchen of the ocean. Um and they bought that at top of the market. And so that's a dangerous thing to do. Super luxury homes can go down by three to five, even $10 million in value in rough economies.

And it may have been on the market for years and then you had your exit. You come along and you pick it up. The day you want to sell that thing, especially if you did a million dollar renovation like one of my clients, uh you're not going to get your money back out. You just burned millions of dollars.

People worked their whole life to make that. If that's what you enjoy, uh and that's what you want to spend your time and money on, you know, so be it. But some families regret going top of the market and buying top of the market. You can negotiate really hard even in a hot market um on an asset, let's say, is going to be a a 5 million, 10 million, $20 million asset and take millions off that price tag.

Um if you negotiate hard and go about it in a strategic way and just be smart about the investment. Um, other things that would be big million-dollar mistakes. No custom structures. You just go into deals like everybody else. No custom fee structures or joint venture deals or co-GP deals or different LLC share classes. No negotiation of a reduction in fees because you're you're their number one investor or top five investor.

No negotiation for co-investment rights or tagalong rights or dragalong rights or non-dilution rights. Not custom structuring the fees and legal structure is a multi-million dollar mistake, a much bigger mistake than buying a really expensive home at the top of a market. Um, as you'll see, a lot of the mistakes here are a lack of clarity, a lack of intentionality. It's really important that you don't start taking actions until you fill out your family office dashboard that you can get for free from us.

That you know your family values, your objectives, your mission, you know your direct investment buy box, and have worked with someone like ourselves. We help for free to define what direct investments you should potentially be investing in and know what brands you're going to trust and upgrade for real family office quality wealth advisory and upgrade who you're using in that area, what managers you're going to trust for your real estate allocations and who you're going to trust for your direct investment allocations and and what should be the size of companies and types of companies that you buy there. Any one of those things could cost you a million dollars or more. And even if you're only worth3 to 57 $10 million, it could cost you hundreds of thousands of dollars.

If you're worth several hundred million, like many of our clients are, these could be multi-million dollar mistakes. So, hope you enjoyed this video. We're going to see you next on our video module um number 11. And we're going to talk about the value of persistence in negotiating deals, closing transactions, and growing your family office. Thank you.