Enjoy a recap of Day 2 of the 2023 Family Forum by Erin Hulse, Founder of Deviate Consulting, LLC.

Industry Founders Panel: The Evolution of Wealth

Sarah Hamilton, James (Jay) Hughes Jr., Dennis Jaffe, Ellen Perry, John Warnick, and moderated by Peter Moustakerski

For the first time, FOX has gathered on the same stage the five most important founders of the family wealth field. Panelists reflect on the journey of the past four decades and share their visions, offering wisdom and advice for the rising gen leaders.

• Five Decades of Evolution for Families
  • Growing the family business – 1980s
  • Preserving the family wealth – 1990s
  • Prioritizing Family and Education – 2000s
  • Aspiring to be an Enterprise Family – 2010s
  • Sustainability and Impact of the Family and Society – 2020s

• Ellen Perry - We are having a disruptive moment! This is a very exciting time. It’s a time of possibility, but a time of uncertainty. For the second generation to succeed, they need much different skills that the first generation. These are things that weren’t traditionally learned, so they have a big lift to learn these skills.

• Jay Hughes – We need to read the books as they are written, a sentiment from the past. We need to have conversations with the families we are serving, asking what is important to them, not to us. We want experiences from the life of people who have walked the path. Our work is all about the people. Jay is the author of Family Wealth: Keeping it in the Family, and of Family – The Compact Among Generations.

• Dennis Jaffe – Let’s not look at what the average families are doing, let’s look at the families who are making a difference. How did they do it? How did the make it happen? After they created their wealth, they decided to create a great family and to empower people. It’s not just about having a business.

• John Warnick – We are walking where we are today because of all these incredible influencers on this panel. Trust documents are very generalized and very boilerplate. We need to be creating these agreements specific to the family needs. He was inspired by Jay because purpose needs to be the focus. Let’s ask ourselves what the purpose is. Jay introduced him to the importance of Philosophy, especially Socrates. The trust needs to reflect heartfelt purpose. Let’s see the emergence of new vocabulary tied to purpose. We need to discover our purpose.

• Sarah Hamilton – Family is at the center of the circle. It’s made up of the sum of all parts, and families take many different forms. Sometimes we are united, sometimes we are divided. We need to define how the family wants to engage with each other. Every FOX family is an aspiring enterprise. It’s just not about the business or the philanthropy, it’s about the larger picture of the family.

Q&A

• Q – How do you work with the families to “convince” them to focus on the important things?
  • Ellen Perry – We ask the right questions. We don’t necessarily know the answers to the questions, but we can listen.
  • Sarah Hamilton – Asking the right questions at the right time is very important. There are windows that are open at certain times, and the art is finding the right time.
  • John Warnick – Let’s not use the word “kids” and change it to “adult children.” This changes the way they are viewing their kids as adults. The rising gen needs to be looked at as a conduit to change.
  • Dennis Jaffe – Still sees his kids as kids, and it’s hard to get out of that view. Need to focus the intention on changing that view. How can we help ask questions that move people forward and out of their comfort zone.

• Q - The trusts don’t benefit the children until the parents pass. How do you get someone involved who doesn’t see this as a benefit until further into the future?
  • James Hughes – Three types of family offices: Founders Office, Office of the Trustees, Family Office. If you aren’t really a “client” of the family office, then why would you care? Need to view themselves as a client of the family office. The client needs care, loyalty, and impartiality. Chief learning office is crucial. If you want your office to be relevant, you’ll need a CLO. This should be the compliment to the COO, CFO.
  • Sarah Hamilton – What are the roles that the family office should be serving for the family? This must be decided by the family and not by the family office. This family office environment should be a safe space. In one family, they call it “working groups” and not committees.
  • Dennis Jaffe – The family office should be a place where everyone comes together for support. Many ways they can be part of the family office.
  • Ellen Perry – Why isn’t the next generation interested? It’s often that they are busy with their own lives, not that they are lazy or disinterested. Get curious about why they aren’t engaged. Provide ways of being attracted to the family.

• Q – Where is this field going and what should be doing, how should we be planning and thinking?
  • James Hughes – We will have succeeded when every trust begins with “this trust is here for love and exists to enhance the lives of its beneficiaries.” It doesn’t matter what the trust says, it just matters how you plan to administer it. That is the future. If a future trustee is not spending 60% of their time on life enhancements, change the trustee.
  • Sarah Hamilton – The family members should be allowed to pick the trustee, sit on the board, and they are in control of the ultimate destiny of who we choose to administer our trust. They are owners of the trusts, and they are very involved. Understanding the function of the trust as its relative to the family.
  • Dennis Jaffe – When you get an inquiry from a client, they have an idea of what they want. Advisors can’t just give them what they want, they need to educate them before providing a solution. There is a difference between what they think they need and what they actually need.
  • Ellen Perry – The trusts she likes the best are the ones who tell the beneficiaries what they intend for them in the values in the family, and then what we do with the money follows that. Framing it that way puts things in perspective on what is most important. Families want their advisors to look beyond saving taxes, etc. This is being driven by the rising gen.
  • John Warnick – The pioneers are the ones with the arrows in their bags, but how do we change that? This is a disruption moment. Families are going to lead this disruption because they are going to demand more from their advisory teams. The advisors who get it are going to come forward and offer forward thinking. TV always shows the reading of the will, not the trust documents. The trustees ask if the trust says anything about them, and oftentimes it doesn’t. We will see in the future the work beginning much earlier, not just when the patriarch or matriarch passes. A huge emphasis on early learning of the next generation.

PROXIMITY: How All Industries Will Transform – and How to Win

Robert C. Wolcott, Barbara Belvisi

Everyone witnesses the technological changes underway, including AI, but few have noted one common force, which is that these technologies push the production and provision of value ever closer to the moment of actual demand in time and space. Understanding this will clarify where industries are heading and suggests priorities for innovation and investment.

• Unified Theory of Technology & Markets
  • Digital technologies push the production and provision of value ever closer to the moment of demand in time and space
• Where will AI be in 5 or 10 years?
• Amazon has a patent for anticipatory shipping, and they can predict what we might order. They are sending products to warehouses close to us in anticipation that we will order. It’s happening before we are even ordering.
• Today, we have a global supply chain optimized for scale manufacturing at a distance
  • Over the next 30 years, the global supply chain will hybridize
• In 2010, Silicon Valley predicted Tesla electric cars would fail
• What is the main reason most people do not buy an electric vehicle?
  • Charging range!
• Don’t just improve, transform!
• Interstellar Lab offers data services on plants for manufacturers to use in their products
• Quiz time!
  • Proximity refers to:
    • Digital technologies push production and provision ever close to the moment of time and space
  • To lead the proximity trend in their markets established companies should:
    • Diversify and provide optionality
  • When tech can increasingly do anything what should we do and why?
    • Purpose - We only see the things for which we’re looking
    • What questions are you asking?

  Amplifying Rising Gen Voices: Translating Challenges into Opportunities

  Marissa Evans, Chad Nicholson, Victoria Onufrieff, Mindy Kalinowski Earley, Allison Lawshe

  Diving into data through the lens of our rising gen panelists. Learning how they experience, work through, and address the rising gen challenges in their lives and families. Discussing common challenges and goals and understanding how to better serve this group.

  • The Rising Gen wants a relational and social connection first - unity.
  • The Rising Gen sees conflict in prior generations, and they don’t want that; they want generational unity
  • The Rising Gen doesn’t feel like they are a part of the group, a connection, that piece of unity isn’t there and it’s hard to move forward
  • Rising Gen engagement – what are your families doing well to keep you engaged?
    • Specific committee in the foundation dedicated to family learning, relationships, etc.
    • The MFO that they work with, as well as FOX, gives great information
    • The family is open and embracing of new opportunities
    • The ability to be open minded about what the family office wants, and that they might need a change
    • Open doors for questions and new ideas
    • They realize where they are lacking and where they need to focus, and they can change it
  • What else could your family improve upon to better engage and educate?
    • They are building the boat as they go, and they don’t know exactly what they are doing, but they are doing it together, approaching it from a place of learning
    • Improving accountability, participating, engagement
    • Focusing on the family office as a job
    • Valuing education and learning
    • Being open to hearing questions from the rising gen, not being closed off to new ideas
  • Many families do not have a formal time period for engagement. Any ideas around what is appropriate?
    • Participant was brought in at 14 to start learning
    • Being engaged young is very valuable
    • Start as early as possible
  • What tips do you have for the rising gen?
    • Getting the conversation going is imperative
    • Lay a solid foundation, but be open to changes
    • One generation is different from the next and being able to pivot
    • Give opportunities to different family members around different areas and topics because people have different interests
    • Ask the members what they like and what they need to know
    • Having relationships be at the center of what you do
    • Follow everyone’s interests and find something they are interested in

Q&A

• Q – What are the expectations of people marrying into the family?
  • There needs to be a better way of onboarding spouses
  • For some there hasn’t been any extra expectations

Family Case Study: The Tsotsorkov Family – Empowering Visionaries

Dimitar Tsotsorkov, Miguel Lopez de Silanes Gomez

A journey over the decades, going back 250 years to its modern-day enterprise. Sharing the story and learnings from the family’s recent efforts to capture and codify the unique values that have shaped the family and its ecosystem. How they defined and articulated the family brand representing its shared identity.

• Q – What are your top three values? Are your values clear?
  • Integrity, excellence, trust, honesty, loyalty

• Q – Have you changed your family vision?
  • Mostly no, but large percentage of yes

• Q – What new ideas did you learn that you can implement in your family values? How are they being demonstrated?
  • Acceptance, Affinity, love, resilience, empathy, wellbeing

• Empowering Visionaries
• Stories are a great way to instill values and teach
• They have a large philanthropy, a foundation that they take a lot of pride in
• How do you keep growing and keep out of complacency?
  • Don’t force things, let it happen naturally when teaching values
  • Sports can be a great way of teaching values
  • Traveling can bring up situations to instill values

Question from Sarah Hamilton:

• How did they prepare for the family retreat?
  • The focus was on different generations, so it was easy to see the differences
  • They focus on generational differences at school

• Your family values are unique, so how do you deal with families that don’t have strong values?
  • They might not be a good fit to spend time with

Deviate Consulting is a professional services firm that provides a full suite of software consulting and back office services for single and multi-family offices. Our software expertise includes a wide range of investment and partnership accounting suites prominent in the UHNW wealth management space. Learn More About Deviate Consulting →