David Wells works as an advisor to individuals, families, and organizations to help them wrestle with and answer the strategic questions they face to grow and succeed into the future. With over 15 years' experience, David leverages his background as an equity analyst, 4x entrepreneur, and Board member to collaborate with senior leaders across the US.
[00:00:29] BA: Hello, and welcome to The Conversation on Colloquium. Today, I've got an old friend of mine, David Wells, with me. David, how are you today?
[00:00:36] DW: I'm doing well, Brian. Doing well.
[00:00:38] BA: Thanks for joining us. David and I have known each other for, gosh, longer than I probably care to admit. But he is always been exceedingly thoughtful, smart, hardworking, and I am so happy for him that he is doing well with his consulting business. And he is put together this book, which I think is really needed right now.
So, before we get into the conversation, I'm going to do a little bit of background. David is the founder and CEO of Family Capital Strategy, which is a boutique consultancy, that provides strategic insight, investment, governance, development, and family office design for families facing liquidity events, generational transitions and other significant changes.
Prior to founding the firm, David has an extensive background conducting strategic and investment analysis. And he served as a partner and Portfolio Manager at a 20-year-old asset management firm, co-founded a long short hedge fund, and was also a senior equity analyst working with large hedge fund and private equity clients. So, a very diverse background and I think given all of that, this will be a very compelling conversation.
Before we get into it, the biggest takeaway I had from reading your book, which is called When Anything Is Possible, and I encourage anybody listening to go check it out. And I'm sure we’ll, at the end of this, provide you some opportunities to connect with David and also access the book. But this is a light motif throughout your book, which is it's all about the why. So, maybe before we get into the guts of the book itself, why did you sit down and write this thing?
[00:02:11] DW: Yeah, great question. I think it comes down to a couple of things, appreciate the bit of bio on my end and I've been very fortunate over the course of my career to work with a lot of different types of investors, a lot of different types of families. And I think what I was struck with was, we would have conversations and even when I was was a portfolio manager, managing portfolios for clients, you would sit down and have a conversation with someone and as a portfolio manager, you're kind of like a chef, where you've got a bunch of different ingredients that you can put together to build a portfolio. But until you know whether the client wants Chinese food, Italian, or hamburger, it's really tough to put something out there that's going to be aligned. And what I found was, you would get into a conversation with a client, begin to start walking down this path of what are you trying to accomplish with your wealth? What's really the priority set? It's a really squishy nebulous kind of ephemeral concept. And the challenge was that almost to a tee, that conversation would be something that families would say, “I want to make sure that I can travel”, in which pre-COVID, such an important part of modern life is, it's so easy to get around the world, they want to see their grandkids, and they may have a few philanthropic causes that they care about. But that was it, that was kind of the full total of the conversation.
And really whatever level of net worth you are, I think you've got a pretty broad range of choices, especially once you start getting into what's called kind of the ultra-high net worth category, which is typically kind of around the $25 million mark, especially as you go from there on up into the multi hundred millions, the question then is not okay, “Well, can I travel to the level of which I'm accustomed?” Yes, you could do that. You could live abroad. The answer is yes or can I see my grandkids and be involved in their lives? Absolutely.
So, you lay out those funding priorities, and then there's still a, there's still this massive amount of wealth that's left over. And nobody really knows what to do with it. Maybe it's held for longer term estate planning, maybe it's held for some philanthropic priorities. But for the most part, I think what happens is, as people end up with portfolios, or just an overall view of their wealth, that's not as strategically aligned with what's most important, because it's really hard to surface those kinds of core level priorities that are there, because it it's a little bit of art, and – well, maybe it's a little bit of science and a lot of art, to help people think through those things. And I think in general, the financial community, some folks are more willing to have those conversations, some are not and and the reality is what I found when working with families in my current business, having a series of these dialogues, it may take 15 to 20 hours with the client to really walk through things to lay out priorities, and that's before you even start saying, “Okay, what does that mean in terms of stocks and bonds?” It's just Just kind of getting everything to the table for the first time.
So, that was really the genesis of the book was, okay, it seems like people need some sort of a framework of how to have these conversations. My poor wife, I try out all my ideas on her and we've had a lot of these conversations, just in our household, what are we trying to do with our kids? We can do these things from a travel perspective. We can do these things from a house perspective. How do we surface our values as we make decisions, and it's nebulous, because I think there's great financial advice for folks who have a spending problem. Dave Ramsey, right here in Nashville has done so much for helping getting folks out of debt. It's harder to find folks that can offer a really thoughtful, “What do I do after that?”, as you end up in places where you've got more than you “need”, then you're making decisions based off of some other metric. And I just personally found it hard to find something that was a tool that I could use, either at home, with conversations with friends or with clients. So, it seemed like a book that needed to be written.
[00:06:00] BA: Yeah, and I would agree as context, my wife's family has a single-family office here in Nashville. And I remember talking to my father-in-law when I first joined the family and learned about the partnership, he said, when he founded it in, I guess, formally, probably like the late ‘90s, the term family office didn't even exist, it just was a limited partnership based in Tennessee for the benefit of his lineal descendants. So, as this concept has really become de rigueur in the financial industry, and everyone seemingly is talking about family offices, et cetera, could you give us a definition of in your mind, what qualifies as a family office?
[00:06:41] DW: Sure, the most common saying in family office world is if you've seen a family office, you've seen one family office, or something around that. And while that may be true, I actually find it to be an almost an unhelpful kind of sentiment, because it makes it sound like there's nothing common across family offices at all, that they're so unique and individualized to the family that you can't say anything holistically about them. So, I actually don't think that's the case, I think there's a lot of commonalities around them. And in general, what I view is, the simplest way that I think to explain a family office, is a family office is a tool that the family uses to manage its complexity. And that's kind of full stop.
Now, what forms in what shape that complexity is really depends on the family, I typically see it fall into three buckets. One is like this bucket of planning, it's all of the moving pieces across all of the various entities that exist within that and it so it's making sure all the ducks are in a row, the i's are dotted, the T's are crossed. So, you've got that vertical, there's the investment piece, when the family decides to make the business of managing its wealth of second business, the natural home of that is in the family office.
And then the third piece is all of this kind of middle stuff, which I kind of call family support, which oftentimes people hear that and they say, “Okay. That's where the family office pays your bills, or walks your dog or books your travel.” And for some offices, that's true. But I think for a lot of families, it's becomes this, if the family has broader goals as a family that aren't necessarily tied to the business, who does that work? If the family wants to schedule time in the summer to get together, and host meetings, like who's going to coordinate that lift? If the family wants to make sure that next generation is having some sort of financial education or history and story of the family work that's done. It's really going to the family office, that's the arms and legs of making sure that work gets done, because I know you and I both are super involved with nonprofits in Nashville, when you've got volunteers in leadership on boards, there's just a finite amount of ask that you can make from people and especially with larger families of wealth.
There's just so many moving pieces that that work has to land somewhere. Now granted, it's got to have good oversight and involvement of the family to make sure that they're moving in lockstep, but it's really the family office that becomes the front line for making sure that all of the other priorities of the family are brought to bear.
[00:09:11] BA: Yeah, I like your term nebulous. People ask me my definition. And I kind of think of it as some form of small business corpus that is meant to maintain a certain quality of life along a multi-generational time horizon and avoid taxes.
[00:09:29] DW: Yeah.
[00:09:30] BA: But there's a lot more to it, obviously. And I really want to get into the why that you write wrote the book, but when you start, it's the motivation behind why we want the things that we want in life and associating some kind of purpose with that. Could you kind of unpack that concept a little bit because I think it drives the narrative the entire book.
[00:09:54] DW: Yeah, if you think about family offices, or you know, really and certainly you've got that on the largest, most complex, and I think any family that has means of some sort, is wrestling with this kind of three – there are three tensions that they're trying to keep in balance at the same time. The first is, is what is the individual's priority set that they want their wealth to accomplish in their life? The second is, is what is the family aligned on as its direction of where it's going as a group of people, through time and space? And then the third piece is, is that, “Okay, how do we achieve that from a business perspective.”
So, in a family system, you're constantly trying to manage those two dynamics, what happens is, is that most of the time, the business of the wealth, whether it's an actual business that's still operating, or it's a robust investment entity, there's always something to do there, there's always an interesting deal, little gap, there's a fire to fight. And so that dominates, that’s 80% of the conversation in a family. Family gets together for lunch, dinner, goes on vacation, we're going to talk about that kind of stuff.
Probably the next piece down is is the family, “Okay, let's get all the siblings around the table, let's get a bunch of the cousins together, you guys figure out what's important to you and we'll make it happen.” So, you may see a bit of that, but maybe that's the 20% that doesn't get covered with that. And a lot of times what happens is the individual is really left out of that. And the concern is, is that while families can function as a whole unit, if you disregard what's happening on the individual level, if those get too far out of whack, like that is a natural breeding ground for either disunity, in its lightest form, or like the big food fights and blow ups that you see in in the paper, or if you're a succession fan, like on HBO, you see the story of that family, like you've got individual dynamics that have dramatic impacts on the family itself.
So, in my mind, that's why with this book, it was like, “Alright, let's start with the individual and give them the set of tools so that when they are a member of the family, they don't lose their identity, they can bring all of the various pieces and priorities to that. And then they can make a hopefully a more eyes wide open decision about where they want to go as a group.”
That's the kind of broader context, I think, under which I was trying to write, but I think to your original question, it does get back to what Simon Sinek said, it's this idea of like, starting with why. What's your priority set? What are the various pieces of life that have to be brought into alignment? And I think that in itself is a really large question. I mean, and that's the work of a lifetime, is to answer that. What I was then trying to do was, “Okay, let's break that into a couple of different buckets. Let's think about what I call kind of a wealth structure, which is all of the stuff that’s going to – it’s kind of like the lines on a soccer field, they define where the game is going to happen. These are the things that are kind of fencing you in a little bit, let's then talk about this concept of wealth identity, what's really important to you, what’s your core values look like.” And then, take that to this next level of saying, “If I'm living out what's most important to me, and in line with my values, what does that look like in the big areas of life?” And there's really only a handful. I mean, on a personal level, it's your family, it's the work that you do, and it's the communities that you're a part of. If you're living authentically, if at the risk of using a kind of a buzzword, you would see some congruence between what's most important to you, and then how you are present in each of those phases.
Once you've kind of got that laid out, then you can then shift to the to the actual wealth question, begin to lay out a strategy around consumption investment, what you give to future generations what you give to philanthropy. But if you get that order out of whack, you end up sub optimizing frankly, you may either spend too much, your consumption may overspend what's actually important to you, or you may end up – we saw this a lot in the investment world is you may end up with a portfolio that's too conservative, countless stories of folks who make more money than they ever thought they would make. They end up in these investment allocations, which are designed for belt suspenders, a bunker. I mean, it's come hell or high water, nothing can happen to the portfolio, which I'm not saying that a degree of risk management isn't important, but there's a difference between underinvesting a pool of assets and over indexing on risk. And I think in many cases, I think, because individuals haven't articulated, here's what we're trying to do longer term with our family. Here's what we're trying to do philanthropically in a meaningful way, if they can make peace with that, and frankly, still feel that their investment portfolio can support their spending, suddenly, you actually have a lot more flexibility with that portfolio to do some interesting things other than just own a lot of municipal bonds that pay you essentially nothing.
You got to have some of that to make sure that you are risk managed. So, I think it’s kind of an unspoken tragedy to see a pool of assets that is limited on its ability to growth and therefore limited on its ability to make an impact elsewhere because you don't really know, is this aligned with what's most important to me or not?
So, that's really the kind of the heart of the why question is, yes, that's super important. But what does it look like to then try and answer that question in a way that certainly is informed by all of the softer parts of life if you're a person of faith, your faith practice your philosophical views on the world, that's all there, but it's then, “Okay, well, in light of that, what does that mean on a Monday morning? How do I make decisions based off of this?”
[00:15:27] BA: Right, and that lends itself in segues to this concept of having a strategic plan. And so, can you tell us how you define strategy and how you implement a strategic plan if you are a family of means?
[00:15:41] DW: Yeah, absolutely. I actually was asked to lead a session on strategic planning for families by YPO’s Global Family Business Group. And what I was trying to lay out with that group, and I think it's relevant here is that strategy at the end of the day is about making choices. And a lot of times, we have lost because there's a lot of great books out there, Good To Great, Built To Last. There are a lot of great books that are out there that talk a lot about corporate identity. They don't necessarily talk about strategy.
Why I love Good To Great, fantastic book, wonderful for thinking about the culture of the organization and how it's run. There's a lot of businesses that have said, “Okay, if I've done that work, then I've got a good strategy.” And there are plenty of examples, and actually, one of the most common knocks on those books is is that the great companies that get profiled, you play for 10 or 15 years, and they're not great anymore. So, what happened? Was it the culture that failed or was in a strategy that's failed? And I think, if you look at the business world, you've got a lot of businesses that don't adapt, they don't move forward. And so, strategy then ultimately is about making a very conscious set of choices around the things that we will do, and most importantly, the things that we will not do, in pursuit of what success looks like for us. And this is where it gets a little bit squishier and when I was writing the book, spent a lot of time trying to think through how do you define success – with a business, it's pretty easy to say growth and profits, return on invested capital, like there's a metric you can point to, and say like, “Okay, this is going to be our line that we're going to measure things against.”
In life, it's not that easy. There's not necessarily a single bottom line that you can point to, it probably is multiple bottom lines. If you over index on work and blow up your family, when the accounting is all said and done, you actually may say that you weren't successful, or I do think it's actually possible to over index on family and under index on work. And then there's consequences for that. It’s really how as an individual do you, A, articulate what the finish line is or what is that bottom line that you're going to measure things against? And then what are the choices that you're going to thoughtfully make, to then limit your options to say that, “Okay, in pursuit of having a family, that looks a certain way”, for example, my father is a physician, heart surgeon by training, did his residency at the Mayo Clinic, incredibly critical credential guy. But while he was in private practice, he consciously made the choice where he said, “You know what, I'm not going to have a lot of hobbies outside of my family.” Because as he looked across the course of his life, things that would be personally interesting to him, he said, “You know what, there's not enough hours in the day and in my family is a priority so I'm going to kind of consciously under index on things that would take me away from that.”
So, the values choice that they made, and then what's interesting now is it’s like, he's not operating anymore, his life bounces back out, the guy is on the golf course, two or three days a week, which is fantastic. Because he's consciously making those adjustments. I think as parents, as individuals, it's how do we make those choices explicit, as opposed to implicit which I think, because of the business of life, we end up defaulting into behaviors. Oftentimes, without a whole lot of conscious thought. It's just, suddenly time goes by, and you look up, and it's like, “Wow. We're so far down the road on this, it's really hard now to back out of commitments.” And that can be true, whether that's nonprofit involvement, the way that your business is structured, and the number of decisions that rise to your plate, if you're the executive, or what you do with your marriage, your family, your kids, the things that are personally important to you, all of those have tradeoffs that play against each other.
[00:19:25] BA: If you if you want to see an organization's value system, look at its budget, and that net, and that budget could be how they spend their money, and also how you spend your time because that's a direct reflection of the emphasis you're putting on different parts of your life. So, that's kind of when I was reading through this strategic plan, and the wealth identity section which I want to get into next, that's how I internalize that was, “Okay, well, I'm going to put certain assets to work in these certain areas because they are a reflection of my value system.”
[00:20:02] DW: Absolutely. Maybe, it's an opportunity for like a financial technology company to step up. This week, Spotify came out with your year in review, so where's your year in review for where you spent your money last year? And if you were to take the largest transaction that you've made, and be able to look at them on like a top 10, and then overlay your core values and say, “Okay, some of those are going to be the HVAC on the house went out and there was a big –”,but if you look at the conscious choices that you've made, are those in alignment or not? And exactly to your point, I actually think that the hidden transaction that's really tough to account for is time. And I think especially as successful business executives, folks who have a lot of competing demands, I think we do tend to undervalue our time.
If we look at things and say, like, “Oh, I would never pay someone to do X for me.” But that's because we don't actually know what is the implied value of an hour of your time. And if you take a step back and say, “Well, I could do this, or I could pay someone to do it for me”, things that feel like luxuries, because we outsource them actually are – frankly, it's just another way of investing in those other forms of capital. That's the capex that funds the family piece of your priority set or the like. We end up funding a lot of that out of time, but we just don't have a good way of accounting for it, because with no offense to your prior profession, we're not all lawyers. We're not going to keep track of our lives in eight-minute buckets. It's tedious to do so, but there's we are making a lot of investment in a lot of places but we just don't have the way to get the P&L for what's happened.
[00:21:41] BA: Yeah, I would say a profession where the value creation is tied, not to how you impact the bottom line, but just how much time and effort you spend on something is a bad business, in my experience, but that's a whole another story.
Let's talk a little bit more about, so we've got this strategic plan and then it seems like the next step is understanding the wealth identity before you can get into actually implementing the strategy. So, could we talk a little bit more about kind of how you form a purpose statement, mission statement, vision statement? You kind of have all these terms out there.
[00:22:19] DW: Yeah, and I think those are can be challenging, because I think they are kind of one of the things that's it's important, but how do you actually go about doing it? I've tried in the book, and I don't profess to have like the one methodology that's best for doing it. I tried to amalgamate a handful of tools. And so actually, there's a separate worksheet that goes with the book that'll be posted online, when the book comes out, that walks through, I kind of view it almost the same way that you go to the doctor, they do diagnostic work, before they tell you what to do next, is let's go through a series of diagnostics to surface that.
So, there's a handful of questions that I think are helpful, as you begin to circle around that kind of core why question, really designed in some ways to kind of play it. It's almost to kind of start with the end in mind, which is the first question is, is if you woke up with enough money, sorry, if you woke up with enough money that it wasn't a concern, but you had less than 10 years to live, what would you start and stop doing in your life? That is not necessarily entirely my question. It's an amalgamation of a couple of different people's questions. But it's this idea that I think a lot of times we make choices, because we say, “Oh, I don't have the resources to do that”, or “I’ll do it I'm 65.” And so, the point is, is like, okay, let's take away the money constraint, let's bind your timetable, let's let's shorten that time horizon. There’s actually pretty interesting study that shows that when when we are faced with our mortality, it changes our behavior, but the longer that we view our mortality as being it that actually changes our behavior back. And so, like folks who have near death experiences or cancer diagnoses, behave in a certain way for a window of time after that, assuming that they were able to get back to health. But then, once they suddenly realize like, “Oh, like my life expectancy is now back at 20, 30, 40 years or longer down the road”, then they go back to behaving kind of how they were pre diagnosis.
So, the idea is let's try as a thought experiment, simulate that. I think the other piece of – and I mean, David Brooks is really spot on with this idea of this concept of eulogy virtues. What is it that when it's all said and done, the reality is, is that how people are going to remember you may come down to like 20 or 30 minutes that's given at a funeral someday, and I'll never forget even just watching. I had a grandparent who passed away a number of years ago. And by the time they had gone through the health system, they had a house, then they were an independent living, then they were in assisted living, and they were in nursing living and at every step of that there's this downsizing that goes.
By the time my grandmother was in nursing, the room had basically a single glass cabinet where her personal possessions could go, it was glass so you could see it. But yeah, this is a woman who loved beautiful things, love fashion, always had a gorgeous home. But by the time she was 86, 87, like it was down to a glass box. And so, the point being that even physical possessions are very much bounded by stage of life and where you're at, it's really that there's kind of core character traits that are ultimately going to be what people remember you by. And I know I’m guilty of this, I don't think we give them a lot of thought. And so, this idea of what are not the resume virtues, but what are the eulogy virtues? What is it that you would want people to say about you? And then beginning to kind of grade yourself and saying, “Okay, if I want to be known as somebody who's kind, how am I seeing that behavior lived out?” I know, for me, I come from a long line of folks who have taught in some capacity.
Great grandfather, who was a professor at Stanford, like my grandfather taught a Bible study at his church for 50 plus years. I've always had the chance to teach others about things. That's something that's on my list. If I'm not actively kind of tracking that year in and year out, when opportunities present themselves where I can share what I've learned and hopefully learn from others, maybe I'm going to be quicker to say yes or no to things, because it's not articulated. And I think as well, the kind of final question in this diagnosis pieces, what are the things that you consistently find are kind of robbing you of joy in the present moment whether it's worry, whether it's fear, and I think in a lot of cases, for some of those things like they are existential, there's nothing you can do about it. It's just part of the human condition. I think for a lot of times – Tim Ferriss, I think, asked this question on his podcast, which is like, what $100 purchase have you made that has dramatically improved your life? I actually think for a lot of things, they're pretty low cost, and maybe it's not 100, maybe it's 1,000, maybe it's 10,000. I don't think the dollar amount is important, but there are ways to to address things that are actively detracting from your ability to be present in your life. It's just like, you've never serviced it and said, “Hey, this is actually being negative influence.” Let's figure out if there is a pretty simple solution here? And it is probably 80/20, for 80% of the problems are very minor investment will solve them, 20% are the very big things.
I think that's kind of like a helpful starting place for wealth identity. There's an organization called 2164 that's based in New York, really thoughtful group of people. And in full disclosure, I'm on the board there, they have a set of values cards that they have developed over the years. I think some people naturally can say, “Hey, what are your core values?” And they can spout out five or six things really quickly. These values cards, motivational values, I think is the name, it's 2164.net is their website. To see the words written down in a small description, sometimes it is easier to say, “Okay, what's your top five? What's your bottom five on those?” And I think for some people, it’s really helpful to respond to that.
With vision, vision is kind of like, if these things are being lived out, what does that look like? And so that is actually, I think, can be a fun exercise of saying – what I tried to do in the book, and in this worksheet that goes with the book is to say, “Okay, here's some questions. Here's some big categories. Let's take a white sheet of paper, blank sheet of paper, and put some ideas out there of what this looks like and then refine it over time.” But I think it's more that people are just – we all are busy, we all have competing demands. It's easy to not take the time to put things down on paper to say, “For my own self, what am I real priorities? What are the things that I most enjoy doing? Am I making sure that that I have time and space in my life for those things? In my family, what does that look like? In my marriage, what does it look like? What does success look like for that?” And then saying, “Okay, how do we then take that to the next level? What is the funding requirement for that and what's the time funding requirement for it?”
I think in many cases, so much of life is, is you end up a degree off course at the beginning, and you play something for 10, 15, 20 years, and suddenly, you end up in a situation with either personally or within your family where an ounce of prevention is worth a pound of cure. It just wasn't on the radar 20 years earlier, and the heart is like, how do you get some of these things surface today?
[00:29:21] BA: Yeah, and so I think there's a lot of hard conversations there that people just frankly, don't want to have. Because you're basically auditing your time and your value system. And it can be really scary to realize that you're putting resources to work on things that don't reflect your values necessarily. But it is a really healthy exercise that everyone should go through. And I'm sure you help facilitate those type of conversations. But once you've kind of identified your vision statement and your purpose, how do you actually go about building the well strategy itself and executing on that strategy?
[00:29:58] DW: Yeah, I think about it in a couple of buckets. So, once you've kind of got that vision, that kind of core identity pieces in place, then the next step is saying, “Okay, how do I begin to translate that into –” It’s that old saying, what's measured gets managed. So, how do I go from a qualitative description in many cases, and then putting a quantitative number of that, a specific number or something that looks a little bit more precise. And in the book, I think it’s in the last chapter, walks through a handful of questions to basically say, “Okay, you know, in terms of consumption, let's begin to surface what the actual dollar amount is around that.” I think one of the classic questions I'm giving to future generations is how much is too much, right? No one wants to hurt future generations by giving them more wealth than they're able to handle, but that's unique to every child and it's unique to every family.
I just published a piece this morning on my blog around this concept of like entitlement, which we all know that that's a negative outcome, no one wants to create a situation where they build entitlement in their family, but the challenge is it’s a very squishy concept. What does it mean to be entitled? If it’s present in any form that's negative, or I actually think that we're probably all a little entitled, in certain parts of our lives. We have certain expectations around things. So, it's this question of, “Well, what do you do with that? And how do you manage that?”
So, all that to say, that next step is beginning to take qualitative, translating into quantitative, and then frankly, if there's then a financial implication from that, an actual acid implication, that's where you would go to the person – hopefully, you've got a great wealth manager that you're working with, a great investment advisor, that's going to be able to help translate that into a portfolio goal, that can see those things tracked, can make sure that you're on track from an investment perspective, in the case that it's actually something like a time commitment or other priorities. I actually think that's where beginning to set to develop some sort of annual planning process as a as a person, or as a family can be really helpful.
I worry because there's there's an old saying that says, that all of man's problems stem from the fact that he's unable to sit alone in a room and think, poor paraphrase, but if this idea that some of this work can be really tedious to do. And certainly, I do this work and spend time with clients, just for folks who say it's nice to have an outsider to be along for the journey. I don't think this doesn't have to be the equivalent of going to the gym 30 consecutive days. But I think to the extent that you can begin to say, “Okay, on an annual basis, or on a quarterly basis, if these are our big priorities, what does that actually look like? What does that mean in terms of where we go on vacation? What extracurricular activities our kids involved with?” It's the same goal setting that hopefully we all do in our businesses, year in and year out. It's just beginning to bring that discipline into to other parts of life.
There are some great tools that are out there, Chip & Dan, his books, switch about habit formation is great. There's a book called tiny habits, that's fantastic, that can help you kind of “hack” the way that your behavior changes on some of these things. It some ways, it's not necessarily about wholesale behavior change, it's how do you refine the things that are already going on in your life, and just make sure that they're more aligned with what's actually most important to you.
[00:33:30] BA: Yeah, which easier said than done. But having that type of rigor and structure is critical, in my opinion, in my experience. Now, that we've kind of gone through a little of that, before we wrap up, I want to touch on something that I just – crazy how the world works. You, in your book, reference this concept of relative happiness. And in the New York Times on Sunday, there was a long article about the Brickman study, which talked about how people who survived accidents versus recent lottery winners, thereafter, their relative happened is actually hadn't changed that much amongst those two populations. And if anything, the accident survivors actually had elevated happiness factors long after the event occurred, much more so than the lottery winners.
I think it's very difficult to be empathetic with a population of these family offices, but in my experience and opinion, this money in this capital has energy, and that energy can be positive or it can be negative. What have your experiences been like with that concept of relative happiness when you work with certain families?
[00:34:48] DW: It’s an excellent question and I would say, isn’t 2020 a really interesting example of that? And I was having this conversation on a Zoom call yesterday with someone, if you had told me a year ago that I would have worked from home for basically nine consecutive months, that every day looks pretty similar in terms of the places that I go. If you told me that in December of last year and said, “Okay, score your your level of happiness contemplating that reality on a 1 to 10”, I think I would have told you, I would have been on a two or three. You and I both enjoy meeting people. I typically travel at least once or twice a month for work, like the chance to get out and see the world. What's really interesting is, here we are nine months into this and I'm actually probably as happier happier. And so, I think that’s some of the challenge is exactly that humans can get comfortable with a lot. Maybe that's a good and a bad thing. I think it's, it speaks to the resilience of us as a species. I was having a conversation with another advisor to wealthy families recently, and he said, “The challenge with especially the ultra-high net worth and the folks who even get into the billion plus levels of net worth, when you when you start getting into the top 10 basis points, or one basis point of net worth is, is that wealth becomes almost like the shadow that you bring with you into every interaction.” And every family makes peace with that in different ways.
I think you see a lot of families, a lot of individuals who just deny that it's there. And they say, it's very much that I was raised in a certain way, I'm very comfortable in this. And so, I'm not going to change my behavior at all based off of my level of net worth. And then you've got other folks that run and they say like, this is fantastic. Probably, this is kind of general sentiment that the newly richer, the kind of the tackiest of the wealthy, they can be very splashy, which is like, “We’ve landed in the circumstances and we don't know what to do with that, so we're going do everything with it.” It's actually not wrestling with what it means to be wealthy. It's just defaulting to one person said, we're not going to do anything. And the other person said, I'm going to do everything. I think the challenge is how to thoughtfully integrate wealth into life. There are no clear answers. There's no way I can sit with a family and say, “This is what you should do.” It is contingent on the family's background, what their goals are, and every family answers that in different ways.
I do think that the challenge is, A, how to do it thoughtfully, and then, B, how to not do it in a reactive fashion? There's also a piece that I saw in the New York Times last week that was talking about inheritors of wealth who are using it to fund either non-capitalist causes or to give it away. And what I think is really interesting is, is that it skews predominantly to young people who are in that, and generally have a certain kind of political leaning or the like. And while I certainly am highly supportive of things like the Giving Pledge that Warren Buffett and Bill Gates have been super involved with, and encouraging folks to give away over half of their assets over time, folks choosing to engage in the Giving Pledge are doing it in a dramatically different way versus this cohort of individuals. And if you think about the work of a 20 something and I'm getting close to 40 here, and so not to sound like I've got it all figured out, but that early emerging adulthood is about figuring out who you are in the world and your place in it. And it's easy to define yourself in a negative fashion in the sense that they are reacting to something.
So, they see injustice as they define it in the world and then they're saying, “Well, I don't want to be supportive of that and so therefore, I'm going to do X.” That's a pretty short-term way to define oneself. I think it's actually pretty risky, because it's not really anchored in anything. You haven't made a series of positive affirmations. And I think the challenges is, is that we all make stupid decisions when we're young. We all are probably much more black and white on our views of the world when we're young. And that's like the beautiful bliss of naivete. I know what I found is, the older I get, the more complicated I realized the world is and how little I know of it. And so, the question is for those inheritors of wealth, I would hate for them to be making life altering decisions when they don't necessarily have all of the information, they need to make those decisions yet.
As time passes, they may say, these are the priorities that are important. But frankly, they may also say, the bigger values priority that they're expressing may be the same, but the theory of change may be different. And that's where learning to evaluate this kind of concept of theories of change in philanthropy, which is if I want to see an outcome, what's the actual best way to make sure that it happens? And oh, by the way, like not do harm to the population that I'm trying to help. I think that's something that you just need some years on you. I know, I feel that way right now and I can only imagine when I turn 60, how much more that'll be true. I think with wealthy families, it's creating that educational program. It's creating that path so that as young people come into adulthood, the wealth becomes something that becomes a tool, as opposed to like a transplant victim, or sure a transplant patient who like gets a new body part that's grafted in, and then their body attacks it and says, “We got to get this out.” I think you can almost see an immune like response in some families to say, “We don't know what to do with this, so we're just going to get rid of it as fast as we can.” I think longer term, it's, it's a harder path. But you can see a lot greater impact, whether it's in the family or in society, if you're willing to do the hard work to surface those things.
So, I think that's the question where some families either get that and are willing to do the work, or the other families, it takes time to get them convinced that it's like, “Hey, this is actually really important stuff to wrestle with.” Look, I think we’re all the same that we have inertia in our lives. Sometimes it takes a hardship, tragedy, pain, and pain can be wonderful in the sense of I think it can help us make the changes that we need in our lives. And some families have to wait for like that external catalyst to do some of that work.
[00:41:09] BA: You and I both have experienced the truism that it is very rarely the quantitative side that causes a family to fail. It's almost always the qualitative internal issues that nobody wants to address that cause the ruptures and the breakups in these families.
Well, we should have started this on the front end. But again, I really encourage anyone who's at all interested in this space to check out the book. What is the current day job for you? How do you work with families? What are the services you provide? If somebody listening has a friend, or they themselves might be a fit? What is the profile of groups that you work with?
[00:41:49] DW: Yeah, thanks. I appreciate the question. So, it's funny, I came into this work, because I came out of the investment. I was trained as a research analyst and portfolio manager. I kind of came out of this work as an investor. Exactly what you said though, what I saw was that families have the single greatest advantage in investing because they have this long-term time horizon. But if everything blows up before they can realize the time horizon, they may actually end up worse off.
So, I work with families, typically in two ways. The first is on this kind of conversation. It's either at an individual level or the family level. It's how do we begin to get alignment on where we want to go. So, much more strategic planning in nature. And so that's kind of bucket one. And then bucket two of the work is, “Okay, then how are we going to go about doing that?” And especially for families that choose to use a family office as the platform, for most families, they did not build their wealth by being an investor in businesses or through the management of assets. And so, it’s a new type of business for them to run.
So, I work with family offices to think about how do they build world class organizations that hit those three buckets that we started our conversation with, on the planning piece on the investment piece, and on the family support piece, and that work can be pretty broad and it could be everything from let's think about the staffing model team, what do you pay people? Where do you find the type of people that would would serve in that role? What are the operations of it look like? What systems do you need and the processes do you need? And then, what vendors are going to be around you to do that work? There was a study that said, I think the average family office has north of 40 vendor relationships that they manage. It’s a lot of people that are involved. Who are the people that the family's going to work with? Candidly, in any given space, there's a handful of firms on a natural basis that are probably thoughtful in how they serve families. So, do you know them? Do you know what market comp rates are for engaging them? And so, I can work with families, even just on kind of the procurement side of things to say, “Hey, we're looking for a partner to help us with X, who do you know and can you help us find those?”
So, I'm blessed where I get to work with families where they are, but really, it's designed with the heart of the work is, how do we keep families so that they stay invested together for the long term? And then what are those pieces around that, that have to be a place? I don't manage assets, I don't want to manage assets. If I've done my work well, I make for really great clients for wealth management firms, because they hopefully have a family that comes to them really aligned about direction, and then they get to do the work of building great portfolios. It's the prework that needs to be done before that that relationship happens.
[00:44:37] BA: And I can personally attest the fact that it's very powerful to have somebody who is in that type of role who's not looking to get your AUM, because a lot of people are and that's important. And again, to reinforce, David, probably has one of the most impressive networks for somebody his age within this world, knows everybody and makes it his job to know everybody. So, I strongly encourage you, if you are in this space, it's worth reaching out to David understanding exactly what he's doing. And along those lines, how can people best connect with you, and then keep up with the services you're doing and the work that you're doing?
[00:45:13] DW: Sure. So, if you go to whenanythingispossiblebook.com, that's the book website, it'll point you to more about the book, and also ties into my corporate website. I write typically at least something once a week on my blog.
Eight years ago, I started this kind of quirky newsletter called 15 On Friday, which is just a rundown of 15 interesting things I read that week. It is really wide ranging include. There may be a couple things related to the financial markets, but it may include some sports content, surprisingly the fashion content gets amazing click throughs, especially if it evolves with how wives can encourage their husbands to dress better. I can guarantee you that will be in any given week, the highest read thing. So that's called 15 On Friday, you can find that on the website as well. But yeah, if you go to whenanythingispossiblebook.com, that's probably the easiest place to go and everything else is laid out there.
[00:46:09] BA: Yeah, I strongly encourage you to sign up for the newsletter. I've been getting it for, gosh, I probably don't want to admit how long I've been getting it for, but a long time. And it's always a real treat when it lands, typically on Fridays, I think. And he always had some really good under the radar type articles that that didn't get on my desk and it's really helpful. Good weekend reading as well. So, definitely encourage you to sign up for that. And when does the book formerly drop?
[00:46:33] DW: Yeah, so it's January the 12th. So, it's the second Tuesday in January. It'll be out on Amazon and it’ll be there. So, if you do go to the website, and if you want to stay involved, kind of in the loop, there is a quick sign up there, you can get a free chapter of the book, give me your email address, and then I'll make sure that you get a blast when it's live and ready to go.
[00:46:56] BA: Yeah, I burned through this probably in two or three days and really good. I've read a lot of these type of things. But this is one of the best ones for sure. So, definitely want to tell people to, to wait for that January date to go ahead and preorder it if possible.
Well, David, thank you so much for joining us. This has been tremendous. I think the advent of the family office over the last 10 years has been disruptive to the financial services industry in a lot of ways, but it's still so young, that I think a lot of people that have a multi-generational family office, even they don't truly understand what it means necessarily. And so, I think the work you're doing is really powerful and important and I appreciate you telling the story on the show.
[00:47:41] DW: Absolutely, Brian, I really appreciate the time. Thanks so much.
[00:47:44] BA: Thanks, David.