A family office dashboard costs nothing, yet many $100 million families still lack one.

[04:02]

"The second insight is that a family office dashboard costs you absolutely nothing, so every single family here in the room should have a planning document for yourself that has one page with just your mission, your wealth creation story, your values, your objectives,"

[25:16]

"There's other people that say, well, we have an 8% preferred return and we take 20% of profits, and that's industry standard, even though that second set of terms is much more favorable to you as an investor."

[31:19]

"A start-up has about 12 types of risk that a company doing just a million in revenue and making 200,000 a year they've taken nine of those twelve risk off the table."

Full transcript

Jesus you can use as a private investor to be more effective. Maybe two out of these 18 are a crossover from yesterday's presentation I gave. But a few people said I talked very quickly and as soon as I started to think about something I said I was telling them three more things. So any idea that's repetitive will be for you if that was bad yesterday.

But also I'll try just give a practical example and a case study. Instead of taking time to explain the three compartments of your investment portfolio, I'll just give a couple case studies or examples that hopefully make it all more practical. The more questions you have, the better, so feel free to raise your hand at any time. If you have an insight it's really helpful for your portfolio, raise your hand, we can share it with the audience.

Might be better than any idea I have on my slides and if something doesn't make sense or there's a word I used, you know, like our ia or something like that from this morning, I feel free to let me know. This is from a webinar we did, but I think forest is is recording this as well. Not sure if it's working. All right, disclaimer.

So I think most of you here yesterday, but I'm Richard Wilson. I started the family office Club twelve years ago and we advise families, most of them over 100 million, summit 16 million, summit 2030 million, on a basically direct investment program development and how to start there. Single thing on the office or virtual family office, we do 25 live events a year and I've met over 2,000 family offices in persons. That's where a lot of the insights come from, but even more so it's listening to these family stories and then implementing how they created their wealth in an effective way and implementing that within my own business model.

And also working with clients face-to-face and email, texting and calling with them every day, including weekends sometimes, and it's enjoyable because these are the winners in the game of capitalism. None of my clients won the lottery. None of them inherited their money. They created money by creating value in their business. So I think that um related to you know the talk we just heard.

I think that knowing who you want to be a hero to, first and second and third is really important. And another dam solving concept is knowing your own unique ability and there's a workbook he has called unique ability 2.0 and you complete that and you do three or four psychological little exams that cost you maybe twenty dollars each. Then you ask ten people who know you very well for over a decade what they think your unique ability is. Then you think yourself what it is, as you're getting that feedback and the test results in the end of that workbook, as you know yourself much better than most human beings do and most business people do, and then you can focus your time not only and who you want to be a hero to, but also the types of things you're doing every day, because if you're good at sourcing department buildings but not negotiating the deal or managing it, then you should build your team around that.

So I think that's important to take away. I've gotten from my clients and just different groups. I'm in alright, so we're gonna go pretty quick through this guy like to have a little bit more time for questions, and I did yesterday. The first thing here is: some people get hung up on whether they need a virtual family office or a single family office, or should we just join a multi-family office?

The main insight, though, that I've seen over the last decade is that it shouldn't get slowed down by this type of thing and not do anything for two years or three years if you just had an exit or you're about to have one, because there is no perfect answer to this, and everybody has usually both. In other words, almost everyone needs a multi-family office or a private bank for some part of their portfolio. It's just whether it's ten percent or ninety percent of your portfolio. How much you want to do in house just depends on how much control you want.

It's not an either-or decision, and a lot of families get hung up on that, and then you just sit there and they don't do anything for a long time and just sit on the cash and pay extra taxes, etc. The second insight is that a family office dashboard costs you absolutely nothing, so every single family here in the room should have a planning document for yourself that has one page with just your mission, your wealth creation story, your values, your objectives, what's most important to you and your family. The next page could have where you're looking at deal flow and why it could have what's in your portfolio now. And the issue is that you know I'm not intimately familiar with how, how Forrest does things with you guys, who does consulting, so forgive me for that, but one issue the lot of investors have, private investors have, is that they might have some old angel investments they've done.

They might have some rental properties they might have invested in a you know want to create self storage deals, etc. And then there's our wealth portfolio. Many times that's never in the same report or it's many times not aggregated into one report. And then, just when you sit down with your spouse or people on your team just making sure you're looking at the broad scope of things, because someone comes into your office and they're not coming through your wealth advisor and they're pitching you, hey, you want to invest in our new mobile startup app, or do you want to invest in our direct consumer Amazon company or in our apartment building deal and it's coming to you through a friend or a referral.

It's helpful to look back at this document and say, well, this is what we said our strike zone was and these are the reasons why, and here's what's in our portfolio right now. And having that all in one place and one concise document, it doesn't have to be an expensive piece of software, is very helpful. And then one page of this is usually who's on the team, who are all your service providers and what are their contact details and which one is the problem, one that needs to get switched out at some point or supplemented, and having that documented stuff, something that happened to you. Your spouse knows who all those service providers are, your family knows and, as a group, you know who you're looking out for in terms of who's missing from that equation and in the final page for all my clients I've always have in place is: what are you gonna improve?

So it could be monthly or quarterly. My wife and I do this quarterly. But is what? Why do we need to improve for our family, for our family business Holdings, for our investment portfolio over the next quarter? And then we have those objectives and that way you're always moving the ball forward and you're not just looking at a couple investment deals, but you're thinking a little more holistically about we need this.

We need a better, higher quality CPA or more proactive tax planning instead of just tax preparation. That might be one thing we need to move forward. Finally, yes, no on working with this one investment manager. When talking to them for two or three years, let's either do it or not, etc. So very simple ideas, but you don't know how many 100 million plus families I talk to that have 10 full-time people on their team and might be paying the head of their family office half a million a year and they don't have a simple planning document.

They don't have everything in one simple dashboard like this. There's no reason not to. We talked about this a little bit yesterday, but I had to blow through the slide because we were getting into it late. But making sure that the way that you build your family office or virtual family office or your investor work is in line with who you are as people and that you just don't work with people that you think are jerks, that you get people off your team you don't enjoy working with.

I think a lot of us would define success is being able to, you know, cut people out of your life that just cause friction and just aren't the same type of people as you are. Also, I think it gives your family freedom to do that more liberally when everyone knows you know who you put up with in the world versus who you don't, and also, the more that you have your values created, the more that you will attract others and then your team will be more loyal to you because they know that your country, you kind of have this immune system of not allowing clients into your firm or not allowing people into your group who aren't at a high level and who are adding extra strategic value versus just kind of being there. Yep, yeah, yeah, it's our family crest, yeah, sure. So I grew up with this version on a wooden plaque in my house growing up and you know that the family name actually goes back to the 1500s and my grandpa was like a historian and he would look back and he tracked it back to like what ship our family came over to England on and and when we came to the United States, which is like in the late 1700s, and then John Wilson was a Presbyterian like minister, pastor and and he was in Boston.

And when I started our business, you know I wasn't smart enough to latch on to this. You know I started it and it was called. We had the hedge fund group like a networking group. We had an investment vlog and then does that grew. I realized that when I wrote about family offices in capital reason and hedge funds that people cared most about family offices and then about capital raising and then hedge funds, and so I realized after two or three years that we should have more of the focus be on family offices.

So we called it family office group and we had this ugly, green and blue kind of patchwork logo. That meant nothing. And then I was at home one day, my dad's office, and I looked to the side and on the wall was this, the plaque here, and I realized like, oh well, it's the most natural thing to do is just use our families family crest because it's related to family offices and our family history etc. And then I went on to 99designs and I think on the other slides you can see the logo.

But they, they made the hairs a little bit more spiky. We took the blood drops off the head, I guess, and clean this up a bit, but I just made four really natural, natural logo basically. So I got a little lucky there. But some people asked like, oh well, do you come from some ultra wealthy family? And the answer is no, I didn't grow up homeless.

But I, you know, I, when I went to school, my parents paid for tuition but I didn't have money for extra food or for, you know, going crazy or getting the Mercedes on my sixteenth birthday, nothing like that at all. So I think that's part of the values of my family passed on is really making sure that we didn't have too much extra money. And if I wanted any spending money in college had to work in the computer lab. I had come up with business ideas.

I remember looking at my cell phone in college and getting a girl's phone number and not having three dollars to buy her a cup of coffee and I was like man, this sucks, you know, and that's good. That's what you want to do to your kids that are here. So [Music]: yeah, so I think that's the problem with with family offices. Many times they send their kids to forty thousand a year preschools and they have five houses and they're on private jets and then how do you make them hungry like you were?

You know it's almost impossible. So you have to come up with with challenges and really make them, you know, create challenges for them. Any other questions on this? For the last two slides? Yeah, I'm a mirror, a story from one family office. They said: your kids got on an airplane once and they were sitting down in first class and they turn around, looked back and say: what are all these people doing on an airplane?

Because there's used to flying on their own private airplane. Right, it's like it seems unreal, but I, most of us, experience that at a different level. But a lot of people here might have your kids in a $1000 a year private school or you might sometimes fly first class or just go on vacations or own a couple homes. So was that you growing up?

You know, for a good percentage of you, you know maybe not. Maybe you had it harder and that's why you work so hard. Ethical policies are something that can prevent some of the worst possible things happening to your family. You know many families get torn apart by the wealth and then the wealth gets destroyed and it's because of lack of understanding and, last, lack of protection of different processes.

It should be in place. You know requirements of. Should someone have to go to school. Are you gonna allow your son to run the business, even though he dropped out of college because he had too much fun at the frat house and after six years paying tuition he said: enough, you know, just come work in the business.

Are you gonna make the family work outside the business before they're allowed to come into the business? Or are you gonna make somebody be a responsible human being before they inherit any money or before you help them buy a house? Or are you gonna pay for their school, even if they want to get their PhD in history? Or the only job is to teach history to other people who want a PhD in history?

Or do you only pay for degrees that have some functional execution in the real world, or can they do whatever they want where they want, with however much money they want, you know? So having all of that set up so that from the beginning, there's a really clear understanding is really important. We're gonna skip over this slide just for times sake, alright. So when I talked about this yesterday, I had a few people ask me, you know, by the pool, the bar yesterday, just about how to make this more practical for what they're doing and, I think, related to the last presentation on what is success and how do you define success.

That directly impacts everything that you do here. So if your definition of success is you get to work on really exciting projects here and the rest of your portfolio is managed to the extent that if something that happened to you, you have enough income coming here and enough emergency funds here that everything is okay, that might be your definition of success, while others just want to work a few hours a day and they really want to just oversee something here. And I know that many of you are still in a medical practice and I spoke to several of you yesterday networking who are basically trying to figure out. They have this part in place, but you're trying to figure out this.

You made maybe two to three investments, two to four investments, what most most people seem to be at, and then here, most people I talked to had their own practice with again two to four other locations and they're expanding their dental or the medical practice and so I think part of being here is evolving what you see your vision asks: who do you enjoy serving more than anyone else who needs a lot of help? But also is the crossroads where there's not a lot of competition there. And where do you think is the most natural application of the growth here? Because you all have challenges on growing these two areas to the next level.

Who do you, who do you trust? How much income do you need versus risk? How much appreciation? Here? Oftentimes you might have partners. They're slowing down your vision for what you really want to do, or you need capital to expand, or people don't value your practice at the level you want to exit at until you get it to ten or twenty locations.

So figuring out the actual, the exact game plan that you want to play, that's going to take advantage of your background, is one of the most important investments of any. I think you can do by coming here and talking to your peers, because if you can figure out, not not a copy, template of what someone else is doing, to figure out what's unique to your situation, like. Maybe you have an ich, unique procedure or unique device idea that you're thinking about and there might be a way to execute here that no one else in the room could do or no one else in your market could do, and so by applying your energy, they're entrusting best-in-class providers. Here you might get a double or triple return.

Investment wise, because it's use of your natural, natural skill sets. And I think a big mistake is try to do everything yourself and try to move up eight learning curves at once. Instead, if you focus on your strengths and double down, triple down and what you enjoy doing and are excellent at, then that's where you get a better ROI and I think, family offices again, at all levels. You kind of expect sometimes when you talk to someone is that fifty million or a hundred million plus.

They've got it all figured out and they've heard everything before and everything is well organized and everything is well focused. Many times they were hard-working, just like you. Maybe they are right place, right time and very hardworking and around the front of a big trend coming and it carried them forward. But they have this exact same challenges that many of you here are facing.

So I found it's not the case that people have thought this over. We talked about this yesterday. I want to see if anyone had questions, cuz we went through it really quickly within one or two minutes yesterday. There's anyone have questions about how to apply this to what they're doing or a challenge that someone is facing? Yeah, David, he's turned it up there.

You. I had a follow-up to, I think what was the question from yesterday? When you're looking at the, the two accesses in the difference. Is it binary, yes or no, or is it some kind of percentage of how much control do I want? How do you, how do you kind of fill this out? Usually it's do yes or no.

The only thing is that if you're working with a wealth advisor, obviously they're gonna derive the strategy hopefully from getting to know you very, very well. So whether you're helping them with that strategy or they're just pulling it out of your brain, you know it just comes down to semantics, but usually it's a yes or no like: do we want to be doing due diligence on real estate deals? You, most families, would say no right, unless you made your money in that area, and that's a really key thing, is like weird. Where is your wealth created?

Or where do you really want to invest your brain, in your energy going forward for the next decade? For example, gene obviously is focused on residential assisted living, so is it good for him to be analyzing stocks and bonds and trying to look at technical analysis charts on commodity using a trading gold? You know, probably not right, but many of us are probably keeping some things close to us or trying to move up these learning curves. That is kind of painful versus surrounding ourselves with the best people possible in those areas.

Any other questions on this to make it more more practical? No, okay, so this is something that I haven't heard come up at this event yet. I missed some of the content on Friday coming in here, but there's a lot of trends in the family office space of wanting more control. The whole reason why family offices exist is that people say, hey, I should kind of know what's going on in each division and not have my wealth advisor tell me one thing and then two months later my CPA says something and says: don't forget to do this.

And then four months later an insurance agent tells you something and there's some tax benefit with a life insurance policy. And then you meet with some other people through HSA, they give you some advice etc. And Alice is all swirling around in your head and you're the one that's supposed to keep this all straight. While you're running your for dental clinics, while you're looking at deal flow, you know the more successful you are, the easier it is to forget little details and like little fine print, especially if the details of Taxation is not your strength.

That's why family offices exist: to make things more holistic, well-planned, prevent those mistakes. But along with that was that 15 years ago, 20 years ago, almost everyone in your position would just invest in funds or buy single-family rentals. There were not many independent sponsors at all. That term doesn't even exist. 15 years ago the term was called funless sponsors, but independent sponsors didn't like being called fund list sponsors, so they kind of morphs that name.

And two independent sponsors like maybe seven to ten years ago, and now those have exploded in popularity. Most people would rather know what their money's going into rather than putting it into a fund and then happen to be spread around. And that's very much in line with the more that family offices grow, the more that independent sponsors grow. A lot of people are a big private equity real estate shops and they spin out and say, hey, I'm gonna do this, but use the new model of going deal by deal.

So this is all in the trend of people want more control, more accountability, more transparency than what their money's going into. And along with that trend are these structures of having a co GP relationship with somebody. So what is a co GP relationship? So GP LP is a fundamental term of an investment, investment investor relationship. We're usually doing your liability.

It would be limited usually to the money you put into a deal. As an LP, you're putting in money to earn money passively from the work that the GP is doing. So whether it's a real estate deal, you know through David, or self-storage deal through Craig, etc. If you're the GP, you're organising the deal, you're sourcing it, you're negotiating it, you've got a fee term-sheet for the investors.

As an investor, you need to do your due diligence as thoroughly as you can. If you decide to invest, you put your money in and besides reports coming to you, and maybe they asked for a little bit of feedback, if you're in the space you know, you're just passively have your money in there. That's the LP GP relationship. And a co GP relationship is if, let's say, you have 25 dental clinics or tend into clinics and you know what it's like to lease a medical office building, you know that dentists might be gun-shy on buying real estate or they can have a dentist and busy being a dentist, so I'm not gonna buy the building I'm in, etc.

Well, co GP relationship would be you identifying a medical office building investment group who is looking for more deal flow and maybe through your practices you know that five out of the 15 buildings that you're operating then could be purchased and you see that you could help them in maybe getting dentists to invest in their medical office building fund or independent sponsor. And the co GP relationship means that instead of just coming in as an LP, you can have strategic value. You can source deals or source investors and come in as a co GP, which would mean kind of like their partner in the fund, which means you're either gonna not pay fees or just a little bit of a performance fee or a much lower waterfall. So this is something that is um.

Most family offices have never heard the word Co GP. They don't know how it works, they don't know how to negotiate it, they don't know what it means. But if you identify someone that you think is doing very well and you have a way to open doors for them or really help them and propel their business, you might be able to partner with them. If you're at a level where you're you're at ten million plus net worth, you might be able to find someone you can think is really excellent.

They're really committed, they do good quality deals and you see them growing nicely over the last two to four years. But they're not a big fund yet or a big independent sponsor. And you could say to them, and multifamily offices and single family offices do this, the ones who know about this, quite often and they'll say: well, I think you're gonna be a huge success. We can help make some introductions.

We'll be on your advisory board and will systematically will allocate to every deal you do and we'll fill up 10% of that LP base that you need. If you're raising $400,000 for your next deal, or let's say two million dollars, we'll put in 200,000 as long as it meets these criteria that you say you're always doing. We still get a yes/no veto, but will systematically invest in all of your deals, Plus open doors for you, etc. But in exchange we want performance fee only or in exchange, we just want this little fee that still respects your work.

But really we want to be your partner in growing this and with some family offices, to leave and say: we'll invest in your mother ship company and instead investing in your next deal will allow you to take 500,000 off the table and pay off that mortgage so you can push on the gas on this model, so you don't have a personal mortgage and you have no debt at all and you feel more free to really do and pursue your vision, and on flipping Gary or whatever your vision is, and they just enable you personally to do so and say: we don't mind you taking that money off the table, we see that you're committed, but in exchange for doing so, we want to own 7% of your independent sponsor firm. So each deal you do after this, we're a 7% partner in it and we're not paying any fees, but you're usually an independent sponsor does a deal. If you don't notice, they're usually putting up 10% of the deal in equity, sometimes 20, but usually 10, and so they could say: well, when you put up that 10%, we're gonna be putting up 7% of that 10%, cuz we now own 7% of your mothership of your, your GP firm, and so we want to become a true partner with you, a co GP partner, and in that sense, just help you move faster through the world and get more deals done.

So the reason why I wanted to explain that is a lot of investors get confused by what LP and GP mean and they don't know what those terms mean exactly, or they've never heard the term co GP is just a way where maybe one out of every 30 investment firms you talk to might be so related to what you do and you have such insight with it that you might say, well, let me get to know this group. Maybe this is an opportunity where you know it can be a great leverage of your expertise and your money at a whole, nother level above just being a passive investor. So that's just something to try to keep an eye out for. Also, what's interesting in having 6,000 plus people come through our conferences?

Everybody says their fees are industry standard, even though they're all over the map. So people all say, yeah, we do a 6% prep and then we take 50% of profits and that's pretty much industry standard, and I've seen them raise hundreds of millions of dollars doing that like more power. To my guess, they're going to be retired faster than I will be. There's other people that say, well, we have an 8% preferred return and we take 20% of profits, and that's industry standard, even though that second set of terms is much more favorable to you as an investor.

So you should just know that just because I say it's an industry standard, it doesn't mean anything. They might just think it is in their brain or as part of their sales pitch. So just watch out for that. And I would also look for managers that wear on their sleeve their confidence and theirs in their abilities through their structure and their fee model.

So on the other side, when I'm talking to fund managers, sometimes they'll say, yeah, well, the industry standard is is 2 and 20, or the industry standard is taking 30% of profits. Should we do that? And I was like: well, you want to be standard and lost in the crowd or do want to have a better model than everyone else. So why would you want to be standard and in average, right?

That doesn't make any sense. So that's part of my feedback to them and I tell them: look, if you want to really attract investors faster, show them that you're more aligned and you're just being long-term greedy and not short-term greedy, because if you're managing a 500 million dollar organization, you can have much leaner fees and make a lot more money than the person that has phat fees, but they're managing 50 million dollars. So I know that Mike from from our MC at a family issues, I don't think he was able to come this time, and he's a friend from from Groupon MC and he's a great guy and a great team. But they have a really unique model in their fee structure.

It's not why people invest. I don't say, oh well, your fee structure is so amazing it's. You know, we're just going to invest based on that. You know they're a great team but have an excellent strategy. You know good returns. But also they have a very unique fee structure.

And when I meant them. I said, wow, nobody is doing this. And in 12 years I've never seen anyone do this through the family office club, and you know we see a lot of stuff, and they were at 400 million in assets then and they're at point three billion in assets now, just three years later. And so yesterday I was speaking here, as a friend is in a multifamily space I've known for years, it used to be an EEO forum with, him said, no, I'm very well, and he was looking at the math because I was showing him you know what group are.

MC doesn't saying, okay, I think you know, having a more alternative fee structure might be a wave of the future in a way to differentiate yourself. But he's like, he's like, yeah, but the fuser, like a third or a fourth of what I would get if I charge the old way. I was like: yeah, that's the point. Like the investors will see that you're more aligned, but if you do work very well, they're gonna invest in your next deal, in your next deal, in your next deal.

And then you get that momentum and if you look out seven years out, you can get more fees short-term by charging a lot. But if you have it based on success and you make it lean, you just get that momentum. Then that helps things move forward. So with with our investors, you know what we do is we don't, uh, we don't do it for us does we don't do it any wealth management firm does.

Really we don't do it. Multifamily offices do we just help get direct investment deal flow in our deal flow. Us to compete against what you're seeing or what our clients are seen, and only if they allocate to the deal. Then we charge at ten percent performance fee and there's no other feat. There's no other acquisition or management or consulting fee or retainer police or charge retainers and just cause friction.

And then some clients who really wanted to work with would go really slow just because of a retainer, regardless of how much it was, and other clients would do the retainer but then never execute on a deal. So in both cases it wasn't really ideal for us. But people say, well, why don't you charge fifteen or twenty percent, that's more close to industry standard, and say, well, I want to get to a billion dollars in assets under advisory? You know, in our first 12 months of opening the, our ia, because we had a broker-dealer licenses before.

So I would just look for people who are playing the long game. Look for people who are aligned. Look for Co GP opportunities. If you negotiate with every investment we energy meet with and try to negotiate a co GP, when it makes no sense, they're going to very quickly say no and it's just not going to be a good use of time.

It might even be insulting to them that you don't want to pay for their hard work. It has to be someone where you really can open the door to them and do something very strategic, you know, with them. So how many people here watch Shark Tank sometimes at least? So you know, mr. Wonderful is like my favorite guy up there, cuz he that says the candid truth and tells people take it behind the shed and shoot it if he needs to, and he also gets better valuations on deals if it's related to weddings or birthdays, etc.

Because he has his platform for that, and so, whether it's sending you know cupcakes or pop-up cards or whatever, he has that strategic value, and that's why they say: well, that's great that you raised a nine million dollar valuation from your Golf Club friends, but welcome to the shark tank. We're adding a lot of strategic value here. So this is the valuation that you get in our world, and so what I'm saying is that one out of every 20 investments you see might be you being mr. Wonderful, being able to really be strategically valuable.

So I'd keep an eye out for those, because that can be a really interesting thing to have happen in your portfolio's and your leveraging their work and your leveraging your money. So it's not just leveraging your money, you're also leveraging their work within that structure. Any questions about that? The other thing I'd say related to joint ventures is just that, um, many people become wealthy and for whatever reason, I think it's because there's so many of them, they start investing in startups.

Everyone's got a startup. Everyone has an idea. They want you to fund, you put your money at risk for their dream. They've been waiting to start but they haven't got it, you know, made to progress yet and I think that it's interesting to see this. And this happens every level of net worth, even with families that, like one family in the Northeast, they sold their business for a billion dollars and they're still invested in the startups that are not proven.

And it's okay sometimes invest in a start-up if you really know what they're doing and they're in your space. Perhaps, or you have control or you've known the person for a very long time. But what I found is that most families gravitate overtime, through painful lessons and money getting burned, to invest in companies that are already making a million of revenue, half a million of revenue, and the market has proven there's demand for it to figure out the pricing, to figure out operations. They have a team that actually works together.

A start-up has about 12 types of risk that a company doing just a million in revenue and making 200,000 a year they've taken nine of those twelve risk off the table. Are they gonna be able to scale? That's still another question. You know they can be able to have the right leadership at the next level now. Is it too nichy?

You know there's still lots of risks, but not nearly as many. So you're much better off usually going to a company that has something proven that you understand and pain, a multiple on profits, perhaps in pain 2.5 to four times profits to get into a company already making money rather than funding somebody's dream and I don't know how to execute. They don't know how to follow up. You're going to be their learning curve again and that's going to be painful.

So I would restrict most of your investments in the companies at that level. It's a real big mistake of new families not doing so. So one trend I talked about for just maybe 10 seconds yesterday was just doing performance focused, performance only fee models, and what I find is that some investors are scared then that someone's gonna spike up the risk and just try to get a huge performance fee and if it doesn't go over well, then the investor loses their money. So it might be taking a lot of risk to get that performance fee and a lot of investment managers say, oh no, I couldn't do that because this will be the perception.

But I see that in the future there's going to be a more sophisticated model where the performance fee could go into an escrow account that gets dripped out over eight or sixteen quarters. So if there's a drawdown then that manager loses the performance if it gets taken out of the performance fees. So that way they can't take just a real concentrated risk and put a 100 percent of your portfolio and the Amazon stock right before an earnings call and hope it hits big. So you get a big fee on you this quarter.

That money would go into an escrow account and get stripped out slowly over a number of months or a number of years. And it's really interesting because the SEC in the wealth management space, you know the normal mode of wealth management is to charge like a percentage, like, oh, one percent on your assets or something like that right, and some people do a consulting fee as an alternative. But it's interesting because they're more restrictive about performance fee, which is really interesting if you think about it. The SEC is saying like, just charge your clients all the time.

If you charge them a performance fee, you know, watch out because there might be some bad actors. Don't pay people for when they make money, just pay him all the time. That's, that's safer. It's really interesting when I read that. I read like three times, feel like what. And then they said like well, we don't want people to be spiking up the risk and then the investor can lose or they make a lot of money.

And I think this is one of the solutions to it. Like in the investment industry where we have options and complex hedge fund strategies and just figuring out their reporting and consolidation of reporting to do for your clients as a wealth advisor is fairly complex and annoying to do. It's it's fairly hard to do with expensive software. So why is that?

The whole industry isn't sophisticated enough to come up with a model where it's performance based but it gets dripped out over time, just kind of strange, and I think it's just inevitable that's gonna come out at some point and be developed more and it'll be something you see more in the future. So just keep an eye out for that. We went through this pretty quick yesterday. But my main point is that when you first become liquid, you're gonna get more deal flow.

Or when you start going to groups like this, you're gonna get more deal flow than you were before. You know, start feeling like, wow, there's a lot of things to consider, there's a lot of deals here. But what's interesting is some people think that a lot of deal flow is like one of my friends sold to Bed, Bath & Beyond. He said, well, I've been flooded with deals of pricing, forty deals the last three years.

Like for us probably it's 40 deals a week sent to them, right, and we see at least 40 deals a week coming in and if not sometimes per day, sometimes from a single email blast we'll have three, four hundred replies and like at least half those people are raising capital from something. So when you are trying to get smart on deals and trying to get better deal flow, it's really about getting a statistically relevant amount of deal flow in an area where you can actually intelligently see what is an anomaly, what is average, what's better than average. Because if you look at 40 stem-cell deals, even if you knew nothing about stem cells before, after looking through the material, some are gonna make a lot more sense, some of you a lot more credible, some bring a longer track record, a lot of them going to look the same and if you are gonna look really exceptional, somehow better terms than others. But if you're not looking at enough or you can start getting that insight, then you don't know whether you're making good investments.

That's why you need to be in groups like this. Otherwise you just hear about a deal or two from your friends over a poker game or at the school function for your kids and then you're like, oh okay, well, let's interesting. Oh, that's their fees. Okay, well, sounds reasonable, they it's industry standard. But like you know the back, your mind.

You're kind of scared because you don't know what you don't know. So if you don't have that frame of reference, it can be painful and challenging and people will think it's a lot of deal flow to see 40 deals over three years, and it's really not. And so trying to find that balance for you is partially why you need to have this focus. There's no way that you can be excellent at investing in Amazon companies and dry cleaners and biotech and in dental clinics.

You know there's no. Even multi-billion dollar families aren't good at investing in all those things. So that's why I'm keep on hammering that point home. The more that you know what your strike zone is and all of these components of the strike zone and all the things that you prefer to see, then the better your due diligence will be, the more high conviction you'll be on every investment you make, the more you'll know where you need to trust others, and we'll get to the other benefit of this in just a slide or two down the road.

So Dan Kennedy always says the most dangerous number is one he also. One of my favorite sayings from him is: whatever everybody else is doing, if you're not sure what to do, just do the opposite, because usually everyone's wrong. You know, the average person is $10,000 in credit card debt, has not saved anything for retirement, doesn't know what they want to do. You know the rest of your life doesn't have passive real-estate income coming in.

If you're on the investment manager side here everybody's emailing investors they don't have a relationship with yet trying to build a relationship. And investors get hundreds of emails a week. I asked on stage in San Francisco how many of you actually get just a one-page piece of thought leadership and a flat envelope. That just adds value to you.

It's not selling you on their hedge fund, you know, or their senior living offering etc. And it's just adding value to you. And it's coming to you just once a month. Zero hands went up. No one ever sends them anything. It's just adding value and comes in the old school mail.

And if you're raising capital, if the top 300 investors you're reaching out to, aren't? We're spending $1 each on postage, then stop trying to raise capital from them and add value to them first. Everybody's using email, so don't use email, use text use, use direct mail etc. And that goes for anyone who owns any business in here.

I think text message gets 93 read rate, emails get an 8% read rate. You know, we're all. We're all annoyed by what the masses are doing. So doing something that's totally unique and different is what we're always looking for, what we're always encouraging our clients to do. Another example is a manufacturing auto parts family just had an exit for a couple hundred million and we're talking to them about strategies, and I talked them about branding their family office to attract auto parts manufacturing deal flow, but also about what's the bigger game they could be playing, the more complex game.

So it's more of a chess board that's very strategic and others don't have all the same pieces they have on the table. So instead of just buying, you know eight auto part manufacturing companies that are like your pawns and just trying to move them forward on the board, which that alone would be better than spreading their money all over, because they could cross sell products and they would learn a lot about due diligence etc. It's even more interesting to think about: how do you acquire a 10% equity stake in the number one auto parts Expo in Las Vegas each year where there's 700 vendors come in and then maybe the companies in their portfolio they get to put at the front of the expo. So, out of 600 people that have exhibit tables there's, get in the front, or maybe because they're an owner the Expo, they get to go to the people running it and say, hey, out of the 600 exhibiting, we looked over the list and we want the rights each year just to cherry pick 10 and get their contact details before the expo and reach out as a co-owner and meet with them before the expo even begins and say, hey, by the way, we own the expo that you just paid thirty thousand dollars to exhibit at.

How would you like a strategic board member to be part of your team and will put you front row at the expo next year and get you plugged in to our other media assets and help improve things and recapitalize your business. Another example is what if the family, and this is idea we're just talking about this morning with the family, is if you acquired an auto parts distribution company. I direct a consumer company, maybe a company on Amazon that's a top 20 in the category and has different products, or a website that has hundreds of products on there. Now, whenever you invest in a company and you can push them through the website, you can source products based on who you're already doing business with within that website.

That website should be making money and it's a little machine that makes money on its own, but a byproduct is you get more deal flow and then anytime you go to a company and be like we know your space very well, in fact, you're already on one of our holding company's websites and if you allow us to invest with you at a valuation of three times profits instead of four point five, we're going to take you somewhere you haven't been. You can take some money off the table, pay off your mortgage, and we're gonna push you through this website and boost your sales. So we're gonna pay for what we just bought within the first quarter after closing. And who else has offered that to them?

Nobody. And the thing is that if you know who you're trying to invest in, you build that database of four hundred prospect. So there it's: a medical clinic, you want to acquire an auto part company and you reach out to them. My experiences most people are apply and they say, oh, no one's ever offered to buy my business before.

What do you think it's worth? And then you get into the discussion of a good valuation based on who you are. If you do the opposite and you wait for an investment banker to come around and show you a nice polished deck of an operating business for sale, as you know, if you're trying to sell your medical practice, you want it to be an auction. You want people fighting over your business.

But if you are buying, if you are investing the real estate, people here in the room know you don't want the stuff that's on MLS. You don't want the stuff on loopnet. You want the stuff that's not on the market yet and they have to close quick because of divorce. You want the inefficiency, I and you want the that.

You get the inefficiency by knowing exactly what you want and going to people that have never gotten an offer before because they're just a one location medical clinic, because they're a small operating business, and then you talk to the CEO directly and you make a strategic offer to them and that's how you get a real advantage. That's why yesterday, when I blew through the slide, it didn't have time to talk about those examples. I think everyone here in the room could probably take advantage of this now or in the near future, just by getting super clear and intentional. So I think, like I said yesterday, and the number one most important thing in business and life is integrity and integrating everything, like what you eat, what events you go to, who's on your team, what your core values are, what your deal flow is, and having everything highly integrated.

So there's no friction by Dan Sullivan says the number one most important thing is intentionality, and then it goes, are very closely tied. But he says the person who's most intentional wins because they know where they're trying to go, so they're going to get there. If you don't know what your end goal is or what reality you want to live in, how can you live in it? Any questions on these two slides?

Okay, so why multiply your deal flow? You need to get a statistically relevant amount so you know what an anomaly is. Investing is all about high conviction, so you need high conviction, valuation and due diligence. And then, when you do see the right opportunity, you want to have the resources and capabilities, the specialized consultant to help with due diligence, or they accounting research you need to do on it, etc.

So you can move quickly when is needed and act with confidence. With it there's more capital than ever before, so as a private investor, you're competing with others for the deals, so you have to find ways to rise above that competition and while everyone else plays a generic game, play a more specialized game and that'll oftentimes get you passed. I think some investors forget that if a company is at a certain size, everyone's fighting over giving money to them and lots of people are offering their checkbook to them. So it depends on who you're going to, on how much competition there is, but there's more and more capital, more and more private investors fighting over the same pieces of real estate.

That's why the real estate markets are where they are positioning for. Deal flow is a lot of things. Families, I don't think about. I see less than 1% of family offices doing this right now and it is thinking about what deal flow do we want to attract more than everything else and then brand your family office around that so anyone looking for a strategic investor in their space finds you.

Everyone's like: no, no, we're private, we don't want anyone knowing we exist. It's like, okay, well then you're still gonna be complaining in three years. You don't have any deal flow and I think that you can make it so that the domain name protects the Whois details and doesn't have your private name. The team just has your team members names and doesn't use use your middle name as your last name on the website.

If you want to protect your family's privacy, all that is good and fine. You don't have to call it the Wilson family office because then no one knows what deal flow to send you. But if you brand the family office around the strategic value, then yours going to naturally attract deal flow more quickly. And then when you said in cold an email to somebody because you want to invest in their company or acquire their practice instantly, they're gonna see that you're irrelevant investor in that they've been keeping an eye out for someone just like you and it's night and day different than emailing someone with a gmail address as an investor and then they're like at it.

They might not even reply and they don't know who you are. So just a three-page website, one page PDF on what you invest in and why and where you add strategic value and kind of your strike zone and sharing that with others will make it so they don't waste your time. Then they won't come to the meeting or ask you for a meeting if they don't fit your strike zone, and it will help everyone around you execute more rapidly. And almost no one does this because of privacy concerns or they think, oh, why would we want to be on the radar somewhere?

Or why would we want to do marketing? We're not trying to attract clients, but in the very same breath, they complain about deal flow, they don't have good enough deal flow, etc. So this is one of the solutions to it, and more people are branding their family offices than just three to five years ago. Every year there's more being branded.

One thing that can help with getting more deal flow as a private investor is to draw out your blueprint like: where are the deals concentrated? Are they at an expo? Are they in a group like this? Are they through a CPA who advises all of the types of businesses in your niche? Is there a tax attorney or a state planning attorney or a CCIM type group or a dental association or something where they're all congregating and you can speak in front of that group to get deal flow, or you can get a membership list of that group or you can be the volunteer leader of that group or can you be the exclusive.

If you have a product offering, you're an investment manager, can you be an exclusive sponsor of that group, like if there's someone here, multifamily, that's raising capital from dentists. You can go to a dental conference or Association where everyone's pushing their dental devices etc. And you could have the multifamily. You give a talk at multifamily or you could talk about the seven expensive mistakes that Dennis make while investing in passive income real estate and he goes, dial it in and to spend the next 10 years just talking about the pains of dentists.

And there's a wealth management firm in Canada, it's done that for physicians, called MD wealth management and they've grown to over a billion dollars in assets but they only serve physicians only in Canada and it's very niche focused, but they they bring in the clients because of that and I think that if you're on that side of the game here in the room, learning from forest and what you have here could be a springboard to greater effectiveness with all of your investor relations. I think so. Really, when you're looking for a deal flow, he's have to figure out where's the deal flow congregating and, like I showed on the blueprint earlier, sometimes visually, that can help. We draw out in a whiteboard sometimes all the different places where the deal flow can be, because the more that you maximize the deal flow you're seen, the smarter you get and the more that you're gonna find the best deals.

If you get a hundred deals a year, your top 10% of deals is 10. If you have 500 deals a year, you have 50 to choose from. So you can go to the next level. The ten percent of your ten percent go to the one percent. If you go to one percent of a hundred deals, you have one deal to consider.

You know what? If the guys on the other side of the country or their team just doesn't really resonate with you how they act, how slow they are to follow up, then now you have no deals right. So getting that, getting that grown, is important. Focus geographically helps a lot. This could just be on one part of your portfolio, it doesn't have to be for your whole portfolio.

But the more that you focus then typically the faster you can value things and move quickly through the world. It simplifies things and it makes it so that there's a known scope. So if you're it in looking at real estate deal flow or medical practices etc. You can get a database of all the dentists in the state of Delaware.

Or you could get a database of all the self-storage facilities in New Jersey and you can look up in the county records who owns those, etc. Or all the medical office buildings, and then you can go about it systematically and go laser focused on it for at least in one part of your portfolio. Another idea is to build your finder Network. I know one billionaire who has 85 people referring deals to him and he's in a stay business that's related to that, it's associated with his operating business, but because of those deal finders he's literally became a billionaire, because that is that enormous success.

So this goes into something I mentioned a little bit earlier about having a business within your business, like the manufacturing auto parts distribution holding company. If you can have a business that makes you money, even if it's just 15% profit margins to the 20 you'd like to have, but the byproduct is your deal flow is now excellent, then that's gonna pay extra dividends and it doesn't cost you anything. It's actually making you money, you know. So it's interesting to think about that.

It's like what? What little machines can you set up? Like a New York different New York real estate family only invests in office parks within a half square mile at Times Square. It's a pretty competitive space to be by in office parks in. But everyone else on planet earth who buys in that half square mile is also buying in Tokyo, also buys three miles out.

They're also buying in London, San Francisco, etc. And by only focusing there and by doing maintenance and leasing and brokerage in that same exact area, they know better than the owner of the asset who's not gonna renew their lease or when the markets getting soft, and they know on a first name basis everybody who owns an asset in their circle, and that's the most competitive market in Planet Earth, and they're the only ones doing that. So all of you can have an advantage by being more focused. Brian Tracy says that there's a.

You can have a ten thousand dollar camera, like maybe one of four cameras over here, but you can record a better video on a three-year-old iPhone if he's not allowed to focus the camera. So it doesn't matter who you're competing against. If you have a laser focus, then you're gonna penetrate and get more done like I shouldn't really exist. I started 12 years ago at a really young age and the only reason I existed is no one else was focusing on family offices.

And when Einstein was awarded Nobel Prize, they said: oh wow, you're genius, you figured this all out. He discovered relativity and I said, no, I didn't. When I was born, people were working on relativity. They knew it existed, but I thought about nothing else for a decade and that's how I. That's how I broke it and figured it out.

So I think it's the laser focus and the plane. A more unique, complex game. That's true to your DNA is that it produces the most power. Being holistic is going to get you the most amount of deal flow. So finding two or three communities like this, one that's hyper local to you, one that's really fun, one hopefully is where you live, etc.

Is going to get your deal flow spiked up very quickly. Positioning yourself proactively, reaching out to the target leads and your criteria, acquiring choke points like equity stake in an expo, etc. And in operating in the business, like doing brokerage work on the same office Park area where you are investing, most people are in a community or two. They somewhat know what they want to attract and they're not doing anything else that we talked about up here.

Sometimes, by default, they're operating within the business and that's why they want to invest more in the area, but almost no private investors are doing these things. If you forget everything else I've said and you just try to implement these at a very basic level, your deal flow is gonna be much higher and better. So you want to find places where you can have hooks in the water for deal flow swimming by. You want to create nets where you're attracting them systematically and they're coming to you.

You want to find where they're congregating and whether you're raising capital, looking for investors or looking for deal flow. You just want to imagine, go into a lake and trying to get a spear and throwing the spear into the water to try to get a fish going by can be pretty hard. But if you study the lake and figure out where the deals are flowing, where the investors are flowing, and you figure out how to be like the grizzly bear and find the waterfall where the fish are jumping towards you, then everything becomes much more simple and it's better to invest the energy into positioning yourself first for the deals or for the investors, rather than splashing around the water. You know, lunging at the random fish swimming by.

It's just not effective and it's painful. I went through this earlier. We talked about royalties yesterday. We talked about this yesterday. Almost no family offices or private investors have checklists for what they're doing, except for, maybe, a due diligence checklist. So definitely put this together.

It doesn't matter even if you're at the five million or ten million level. You should have checklists for different things, whether it's an annual process. If you want, kind of create your own virtual family office setup, then you need to be doing this. That's the whole point of having a virtual family office is systematizing things, making them consistent, making them better organized and de-risking making expensive mistakes while optimizing how you source deals within the niche that you care about most.

So you could do this around: how to get more co GP investments or more real estate deal flow, etc. Chokepoint, like in the movie 300, is when a huge army has to go through a very small area and you know there aren't the. The army of just 300, you know, held back thousands of warriors. In that movie.

If you've seen it, it's been things on the news lately in the Middle East about this exact area and this is cut off. Then all the trade coming in and out of here can be controlled by just one country, or stopped or put to a halt or it causes a major conflict in the area because it's so powerful to do, and the quick story behind it, this is from mastering the Rockefeller habits by Vern Harnish, is that Rockefeller was competing with many oil tycoons, but then he started buying up the oak barrel companies because that was his bottleneck. That's what slowed him down. So think about what slows you down.

But then not only buying up all the oak barrel companies and not providing them to competition that didn't cooperate with him, but now he had cheaper access to those barrels and more of them. Then he started buying all the oak Grove's and after he owned all the oak Grove's in the u.s. Pretty much and not didn't supplying the oak to the other barrel companies, he started drying the oak. So his barrels were lighter weight and it's so successful that in part monopoly rules which are just starting to impact Amazon and Google.

It seems like you know, I came into place in part because of how successful acquiring choke points are. So if you can acquire choke points that once you invest in it. Now your competition has more pain and your cost go down and everything goes faster for you, like when we found that five or six of our LinkedIn groups we're getting us more clients. We bought 42 groups on LinkedIn and we owned more groups on LinkedIn than anyone else in the world, and investments finance, real estate, PE, VC, family offices, and we're never going to sell them.

Just like family offices, comm, capital raising calm their choke points. Once you have them, no one else can have them because you've already got them or it's hard to displace you. And then I've hammered this home. But I just think it's like so critical and central it ties everything we talked about together is you need to figure out what unique game you're gonna be playing that's not the same of anyone else here in the room.

No one else you know can tell you what your game is or and no one else can say, oh for sure, you should just be doing this. Just keep it simple. If you're at the five million dollar level, or you're going to be, or more, then you really need to figure out what the unique game is that you want to be playing and what the game rules are and how you keep score and how do you know if you're winning or not. Like my friend, Dean Jackson, says, he's got these rules of how he knows he's being successful and one of them is: like I know I'm being successful when I wake up in the morning and ask myself, what do I want to do today?

And that's one of his rules for the game that he's playing and that could be very different than a rule that you want to live by cent to millionaires. Calm, I've got eight free giveaways if anyone wants a checklist of questions, a book, you know, a quiz, ethics policy, etc. These are some of the books I've written. Get those for free there if you'd like.

And that's me when I'm dressed up more like yesterday. All right, great, three thanks, Richard, we'll take a few questions, we got sure. Thanks, couple questions. Raise your hand so I can see you guys. Good question can catch. Hey, Richard, hey, ah, quick question.

You'd mentioned, I think, at the very beginning that you're not working with clients who've inherited money, right? I understand that right, right, so are you only working with first Joan, first gen or early second gen? So the first gen is, I think, still alive in every case. Sometimes they're in their 80s, late 80s in one case. But the reason why is that we only help with the direct investment portion.

We don't do any of the traditional wealth management work and really people want a family office and they want direct investments because they want more control and usually it's an entrepreneurial gene and they can't exist without it and that's what made them survive in the jungle and do well. So really just helping them take that gene that it took them to being wealthy, successful, and now apply it to direct investments. They can still have fun and use their passion and that part of their portfolio. Yeah, I asked because I remember having this conversation with my younger son about having looked at the Forbes 400 mm-hm and 273 of them were self-made, right, hundred and twenty-seven had inherited the money and I said: what are we gonna learn from the people who have inherited the money.

I'd rather, I'd rather focus on the other 273 and that's what we did right. That's a really good point about generation three, four. The wealth gets distributed among many kids and lots. People are more likely to be claiming as being part of the extended family when someone's worth one hundred million dollars or more, and so it gets dissipated.

But then even more so when you're at third, fourth, fifth generation. You just don't want to lose great Grandpa's money, so you diversify to the extreme and then usually the family can't keep a strength, a major focus. Unless I have a major holding like Walmart and the family, they usually don't keep that expertise and high-tech beyond two generations. That's why it's first or second generation by the third or fourth.

They're just playing pure defense and they're just diversifying everything to the extreme and that's not really our, our skills. So that's not what we're trying to do for me. Yeah, Mike, sure, educational programs on family offices. We have a family office certification program, just like we have a capital-raising one at investment certifications, com. We have at family offices, com, a free book on family offices we have at sent to millionaires com the free book I've sent to millionaires and all the headaches there that I talked about yesterday I think apply to most people here in the room.

And then we have, out of the 25 events a year, we have private investor summit. So we get to hear from 30 investors talk about how they're structuring deals, negotiating, what fees are paying, what new trends they have, what headaches they have, openly sharing on stage and that can be great for an investor and move up the learning curve quickly. But it's much different than this. It's not medical focused and only 25% or so the room is made up of investors and the peer community.

The other 75% are people trying to raise capital etc. And if you're raising capital then I recognize some of you from inside the field. My office Club here we have capital raising and investor relation workshops where for six-and-a-half hours I'll talk upfront and just go through one hundred and thirty slides of ideas and he's kind of pick and choose what you can use for your, for your firm.