E197: Why Most Family Offices Fail—7 Lessons from Harvard Professor

Christina Wing is a Senior Lecturer at Harvard Business School, where she teaches the “Family Enterprise” course—a foundational class for the rising generation of family office leaders. She’s also the founder of Wingspan Legacy Partners, where she advises ultra-high-net-worth families on governance, talent, and legacy. In this episode, I sat down with Christina to unpack why most family offices are structurally flawed—and what to do about it. Christina shares insights from advising dozens of families and training hundreds of HBS students from Gen 1, Gen 2, and beyond. We explore the real reason most family offices fail, how to build a high-functioning investment operation, and why separating investment, concierge, and philanthropic functions is critical. Christina also walks me through what makes MSD Capital, the Koch family office, and others stand out—and how the next generation can step up and lead with clarity.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Weisburd?

  So you teach the family office class at Harvard Business School. And you believe that 90% of family offices are structured incorrectly. Why do you believe that?

• 0:09Speaker 01

  What I teach is the family enterprise course and family offices are a family enterprise. And that is exactly why 90% are not structured correctly. Because people think of them as something that's not a business. And so when we say family enterprise, we teach about the business of family offices and the business of operating companies needing the same types of governance and planning. The whole word family office is one of the main reasons that 90% aren't structured right.

• 0:42David Weisburd?

  So how should family offices structure themselves correctly?

• 0:46Speaker 01

  Family offices should structure themselves just like any other business. There should be a business plan of why you're creating it. Then you should put together a team that can execute on the business plan that you created. And then you hire the team. Instead, families tend to have either come into liquidity and or inherent money. And they hire their best friend or their cousin to run the money.

• 1:14David Weisburd?

  What are some best practices? What do the very, very top family offices do when it comes to managing their money?

• 1:21Speaker 01

  So ironically, because business is so much about speed these days, the best family offices go slow to go fast. And so they kind of take a beat and they think, why am I creating another business? So, you know, first of all, they have to realize they're creating another business. And many of the people we work with, when I say, oh, so you retired from this and then you decided to create another business, they're like, no, no, no, I don't want to do another job. I'm like, but you're creating another business. And if they realize they're creating another business, that's the first step in succeeding before they do anything else. And so then, all right, great, I'm creating this business. What does that mean? What is the purpose of the money?

• 2:07Speaker 01

  Now, you might sit there and say, well, Christina, that's a silly question. The purpose of the money is to make money. That's not the purpose of every family office. Some family offices, the purpose of the money is preservation, not growth.

• 2:21Speaker 01

  Some family offices, the purpose of the money is to spend it all philanthropically, which means you need a different type of team. And some family offices, the purpose is to absolutely grow the money to the most possible that they can. All three of those scenarios need different business plans and different teams.

• 2:41David Weisburd?

  Are there any families that have gotten this governance right? And who would you point to as somebody that has been really good at building their family office?

• 2:51Speaker 01

  The concept of who's gotten this right is still very much in question. And what I mean by that is that we're in early innings of family offices. You know, in family businesses as a whole, excluding family offices, we're in generation 11, 12. We're not really in generation 11 and 12 in many family offices, barring a few like the Rockefellers and others. The families that are getting it right right now are separating concierge services from investment management.

• 3:31Speaker 01

  And so if you take one of the larger US families, the Koch family, Koch Industries is a family-run, founder-driven business. The Koch family also has a family office that's completely separate from that business. And in their family office, they have separated the investment functions from the concierge functions. So they have an elegant investment team in Denver that is focused on making money. They pay their employees similar to private equity, venture capital, hedge funds, whatever job they might be doing for the money.

• 4:14Speaker 01

  Then they have concierge services in an entirely different state that deals with the estate planning and the taxes and lifestyle things. And then to double-click on what at least Charles Koch has created, he also has separated his philanthropic giving from his investment arm and has a whole other area called Stand Together, run out of DC, that is about how to deploy investment dollars. So the beauty of those three entities is each group has a mandate and is paid based on the services they provide. Where we get in trouble is when one family office has everything in under house.

• 4:56Speaker 01

  And so you have an investment team and then you have the concierge team and you have other foundation and other things. And so as the head of the family office, what are you in charge of? Are you being paid on the investment returns? Are you being paid on the bills being paid on time and, you know, certain lifestyle things being done? Or are you being paid on evaluating a philanthropic activity? And so when you put them all under one, the head never knows what's most important. And I mean, the head of the family office. So think of it this way, if you were a surgeon and your job is to save lives, but your job is also

• 5:36Speaker 01

  to run the hospital, and then your job is also to deploy philanthropic dollars for a hospital. Like, we can sit here and say, clearly, saving lives is more important than the other two. However, maybe running the hospital property is more important. You, when you take important jobs and have different variables of what you can be measured, you rarely do them well.

• 6:01David Weisburd?

  Said another way, doing something better week after week is hard. It's hard to constantly improve. And absent of those metrics being attributed to a specific function or specific team, teams are gonna more or less take for granted their current state and not really push the envelope. But once you put them into their own silos, then they start really optimizing on the numbers. Similar to how Google created the Alphabet Holdco and made every single vertical responsible for its own metrics and it's for its own growth and its own being a lot default alive.

• 6:37Speaker 01

  You're getting to a question that I never want to answer. And that question is, well, then how much money do you need to run a proper family office? And what I mean by that is, the analogy I just gave around the cokes, they have a lot of money. But there are a lot of people that have family offices that have 50 million, 100 million. They still can have a family office, but they need to understand that they're never going to be able to hire the talent to go toe to toe with people that do private equity every day, or hedge funds every day, or venture every day. And so, how do those people in family offices succeed if they want to have their own? They outsource.

• 7:22Speaker 01

  And so, what that means is, they might do a little bit in-house, but they're going to outsource and use professionals to do the rest. Because somebody that's running a smaller family office can't afford the talent to compete with people that do it day and day again. And that is kind of where the extra rub comes. The rub is, how do you structure it? And then, how much money do you have? And how can you afford talent?

• 7:46David Weisburd?

  I had Randall Quarles on the podcast, who was partner at Carlyle. Is that who the top family offices are competing against? Like, the top private equity firms? Or are they mostly competing against other family office executives? In other words, is the pool truly family office versus every other asset class for talent? Or is it just between family offices?

• 8:09Speaker 01

  It's definitely against every other talent pool. Because there aren't enough good people working in existing family offices to be poached for all the new ones being created. And so, what you're seeing is, you're seeing excellent asset allocators, investors, other types of people, being pulled from the top firms in the world to run family offices. And the pitch that they're getting is, you never have to raise money again. We have permanent capital. You're going to have autonomy. You're not going to work the same number of hours. And I'm going to be very hands-off. Well, that sounds great, but you have to really do your due diligence.

• 8:50Speaker 01

  Because it's pretty hard for a lot of matriarchs and patriarchs to be that hands-off. But this talent gap is going to be one of the main things to watch with this great wealth transition. Because if we don't get the talent gap right, these family offices are going to blow up. And that's going to just be devastating to the economy.

• 9:12David Weisburd?

  What are some examples of either very large family offices or just extremely well-run family offices that have found a way to make it in a revenue driver versus a cost driver?

• 9:22Speaker 01

  So, what's interesting about that question is I believe almost every owner of a family office will still say that their family office is a cost center. Because for some reason, they don't understand that even saving them a lot of money can be viewed as profitable, but they want to see revenue. So, the best example would be MSD Capital, where Michael Dell set John Phelan and the team years ago on a mission to make money. And he separated that from the concierge services and MSD crushed it. They ran themselves equivalent to one of the best private equity firms.

• 10:06Speaker 01

  They paid their people like that. And it continued on until John left and then MSD merged. So, we'll see what happens with MSD and BDT now that they're together and they've become more institutional. But the places that have brought in the right talent from the beginning and the patriarch and matriarch have been hands-off are the places that have done the best. Similarly, Pritzker.

• 10:33David Weisburd?

  I know you weren't inside the room in these conversations, but what do you imagine the pitch was from somebody like a Michael Dell to John? How is he able to recruit him into that role?

• 10:45Speaker 01

  I would think that the pitch would be, "I'm going to save you the time of raising all this money. I'm very focused on my existing business, which is making computers, so I'm not going to meddle. I'm also going to be in Texas and you can run this in New York and hire who you want and pay them like it was a private equity firm. And all I'm going to do is look at the returns." I think that's the pitch that gets somebody of a very high talent level to want to take this on. Because there has to be a little bit of ego in any investor. And so, many top investors, when given that pitch, would say, "Well, I can raise the money."

• 11:28Speaker 01

  And so if raising the money is the only thing a family does for you, then that's not good. I would also imagine that Michael Dell said to John and the team, I'm also going to open doors for you and show you investments you might not see. But their match worked for 20-plus years. That's pretty darn good. That actually is longer than a lot of private equity.

• 11:51David Weisburd?

  To summarize, Michael Dell probably said something to the kind of, first of all, what I'm not going to do, I'm not going to meddle in your business. This is going to be a professionally run organization. And also, I will send you my relationships as I meet opportunities, as I meet people, and you have the funds to get started. So you could accelerate your business plan, and you have control over compensation and the ability to retain and recruit the very top people.

• 12:16Speaker 01

  And I would bet he said, and you're going to get rich too, alongside me. I'm going to get richer and you're going to get rich. Because the, you know, people don't go into the field of investing to make a salary. They go into the field of investing to crush it. And so you have to compete with the carry and the other things that you might get at other firms.

• 12:39David Weisburd?

  Are you familiar with the 10x rule of the Canadian pension plans?

• 12:43Speaker 01

  Yes.

• 12:44David Weisburd?

  So the 10x rule is the Canadian pension plans, Ontario Teachers Plan, CPPIB. They realized a somewhat counterintuitive lesson in that if they pay their staff significantly more, they could actually save 10 times in management fees and carries that they were sending out to GPs. So they could in-source that, and they ended up paying a lot of their GPs seven figures. So now, US institutional investors, pension funds, foundations, endowments, oftentimes they're hamstrung. I would say politically or optically, they can't pay, they can't pay a star person $2 or $3 million or $20 million if they're really like the best of the best because they're

• 13:29David Weisburd?

  going to have, you know, the public's going to be an uproar, why are you paying out of our pension plans $20 million, even if that saves them, you know, $200 million a year? But family offices are in a unique situation where they're not beholden to anybody but the family. So you'd think that they would be kind of the second movers around adopting this type of pay scale, but yet they haven't. Why do you think that is?

• 13:52Speaker 01

  They haven't because they don't value the family office the way they should yet. I mean, many people that create a family office don't really even understand the fees that they used to be paying at banks and other places. So number one, it's that. The second reason is they're starting a business that they might not participate in that actively. And so they don't think of it as a for-profit. They think of it as a cost center that takes care of a variety of different things. And so, you know, some family office heads might not even have any idea of the rigor that goes into making investments, but they remember that you forgot to change the travel

• 14:37Speaker 01

  for their daughter, or the tuition was late, and so they're pissed. And why am I paying you millions of dollars when you don't get the tuition in on time? And so the lack of clarity of roles has also done that. In the big sovereign wealth funds in Canada, those people aren't also doing personal things for the individuals. And so the results are very tangible, that it's like, we did this, we saved this. In a family office, everything feels like a cost. And I think that many families put much of their consumption through the family office.

• 15:16Speaker 01

  So it's hard to tell how profitable certain things are because of the way that they actually evaluate the bottom line.

• 15:26Speaker 01

  Do I hope with all of my heart that family offices start paying competitively? Yes, and the ones that do get loyalty, they get better returns, and they get clarity of roles and responsibilities and become a partner with the matriarch patriarchs. The ones that don't are the ones that live in fear. Of the people that own the business and live in fear that they're gonna have to every December go to bat to fight for their team to get paid. That's a really horrible way to run a business when you're afraid that every year is gonna be an argument.

• 16:05Speaker 01

  And so my recommendation to family offices is, gosh, pay more and get better talent. Two, you know, have the incentives aligned. So if you're one of the families that is looking to grow your wealth considerably, have an LTIP program where your team gets paid similarly to the returns you make. Give them motivation. If you're a family office that's focused on making money to give it away, you need a different type of an investment team. If you're a family office that's very focused on asset preservation, then have a two-person family office team and outsource everything to other professionals and keep a moderate portfolio.

• 16:50Speaker 01

  So I think the pay and the mission need to be aligned. And if we can get that right, why wouldn't everybody want to go to a family office instead of somewhere else? It stinks to raise money, to travel around the globe begging for money for a fund when you just hit like top quartile. It's demoralizing. It's annoying. If you can have money that's permanently there, number one, you'll get more investments because like if I'm selling my business, I much more want to sell it to a smart family office that is gonna be aligned with me to just keep growing it than to a private equity firm that's gonna have to sell it in seven years and five years I'm gonna have to get antsy.

• 17:32Speaker 01

  So as a founder, you should want to sell to family offices. As a family office, it's a competitive advantage to have permanent capital, but you gotta pay your people. If you don't pay your people well, you're gonna get crappy investments and you kinda deserve them.

• 17:47David Weisburd?

  So I want to go back to this kind of model family office. We've been oscillating between things not to do and things to do. So let's go back to things to do. So you have this MSD capital. Obviously, they're paying them more. But how do you actually structure the family office in a way that makes money for the patriarch? In other words, are they creating blind pools of capital where they're raising from other family offices? What are the tactical things that these family offices are doing that separates them from others that are spending them?

• 18:14Speaker 01

  There's two tactical things that family offices are doing to create revenue. One of which is they are buying and or investing in businesses that are cash generating. And so it's not just the deployment of the money. And I'll see it when I see it. They're investing in businesses that spit off cash right now. So that feels like revenue. So that is one thing that they're doing. The second thing that they're doing is some of them are creating products in house that they leverage other family office money for. And so you'll see some family offices similar to the Pritzkers when they started,

• 18:58Speaker 01

  and they don't call themselves a family office purposely, but they are. And that's how they started, saying, we have this great team that knows how to evaluate opportunities. We can raise funds from other families. So you don't have to build this great team and we will all be investors together. Now, when they do that, they get management fee and they get extra carry for their employees. So you're seeing family offices taking the private equity model and other models in house and creating revenue streams for their family office by deploying with other people's money.

• 19:38Speaker 01

  It makes sense, but you need to then have a team in house that's willing to do some of the very things that were the reason they didn't want to go to a family office, which is raise money and have the other kind of structured rigor around other investors and shareholders. So it takes the right team to do it.

• 20:01David Weisburd?

  So let me take a stab on this, and I want you to correct me. So I'm a Gen one. Family office, say I have a billion dollars and I first think about how do I want to be allocated? Maybe I want to have 30% venture, 20% private equity, 10, 15% in hedge funds, private credit, etc. And then the way that I would leverage my money is I would be the anchor check for these strategies. I would go in and let's say in venture, I decide my strategy is venture fund of fund. I would go out and hire one of the top fund of fund people out there in the ventures class. I would say, come in, build this franchise for me. I'm the first anchor check. Then I would go out and do that in private equity. Maybe in private equity would be more deal by deal, but same thing.

• 20:45David Weisburd?

  I will backstop these investments and so on. Is that oversimplified or is that how family offices can leverage their capital while also staying consistent with their own investment objectives?

• 20:57Speaker 01

  It's a little oversimplified because if you are backing an individual to go create a fund, that's different than having a team in-house that you kind of get to know, see their strengths and then other people's money comes in. And so what I mean by that is many family offices, the patriarchs and matriarchs are lonely and the CEO of the family office are lonely. Once they meet each other, they're so excited to have people they can talk to because it feels really silly when you've never been in the business of wealth to talk about money with other people.

• 21:40Speaker 01

  But once you realize it's a business and you can talk about it, you start to say, hey, David, I did this great deal. Well, my team is amazing. They keep buying this great real estate. And then other families are like, can I get in on that? And so you start by kind of co-investing a lot of times. And then eventually, when you realize you have a decent track record of doing it, then you might say to said young individual who's been doing the real estate. You want to go raise a fund around this with family office money? Here are five friends that I think would be interesting. Let's come up with economics that work for you as well. And then you go do it. That's that is the more likely scenario. However, there are other families that say,

• 22:25Speaker 01

  I don't want to have a huge team, but I want to get into the business of lowering my costs by having other people pay for part of my team. And those people go out and identify, like you said, here's a a kick butt woman that wants to invest in the tech space. Let's call her Carol. Hey, Carol, I'll back you and give you seed money. And you can go raise a fund and we'll run it out of my family office. That's a different model than the first one that's more natural.

• 23:00David Weisburd?

  So one is more organic and the other one is more kind of from from the beginning, you're thinking from a fund perspective?

• 23:07Speaker 01

  And I think, you know, the people that do the latter tend to be people that made their money in financial services. So, you know, there are a lot of billionaires that have been investors all their lives. And they get the whole cost structure and everything else better than anyone. Those investors are the ones I see starting their family offices, almost more like a search fund model, where they back a couple of great people and say, I'm going to pay your salary and this, go raise money and I will take GP interest in your fund. Those people are more qualified to monitor these kind of younger, uprising investors

• 23:50Speaker 01

  than people that have never been in the investment field.

• 23:53David Weisburd?

  One of your unique vantage points is you teach this class at Harvard Business School and you get to see these these Gen two, Gen three students in your classroom every day. You get to really know them. They work on projects. Talk to me about the psychological aspects between Gen one and Gen two, or maybe Gen two and Gen three families? And how do those play into the dynamics of the family office?

• 24:16Speaker 01

  Oh gosh, do we have twenty-four hours? Because one of the things that families are famous for never talking about is money. And so, the irony here is I see, I know so many of my former students that had very qualified investment careers somewhere before business school. And they go to business school and their parents say to them, "Let's set up a family office." And so they come into my office, they're all excited. "We're gonna set up a family office and I'm gonna be an investor with my parents." And I'm like, "Great, how much money do you have?" "I have no idea." I'm like, "What do you mean you have no idea?" "Well, we don't talk about that."

• 24:58Speaker 01

  "Well, how do you know if you have the right amount of money to set up a family office to execute on the strategy that you want?" Well, I don't wanna ask them how much money I have. They have, I'm like, "Okay, well, would you go to another family office and take a job without knowing how much money they have?" Absolutely not. And so the first thing is, in order to have Generation One to Generation Two to Generation Three family offices, you have to talk about how much money you have. If you're trying to recruit your daughter to join your manufacturing company, you start with, "We have this much in revenue and your target's to grow." There's no hiding it. Something about the money makes it difficult because

• 25:43Speaker 01

  parents feel like talking about money with their children might lower their motivation and/or lead to different types of bad behavior. It makes no sense. People guess, they kind of figure out what people have, they should just talk about it. So number one, my issue is that. The second thing is that when you're creating a business that's about money... Everyone always thinks it can just end any minute. Because you don't sell it, you just stop. Well, it's so wrong, because so many of your positions are long term, or you might own businesses. Whereas if you own a business together, family members don't feel like they can just walk away.

• 26:28Speaker 01

  Because they feel like, well, they might have to sell it, and there are all these employees. And so the thing about generation one to generation two succeeding in the family office space is treating it like a business. Understanding it can't just be shut down tomorrow. It's not all cash. And so you have to learn the roles and the responsibilities that different people have. And then the third thing about the generation two to three is we don't talk about money, but we also don't talk about death. And so we don't talk about what is the succession plan for both the money? And the employees, if something happens to the matriarch and patriarch?

• 27:07Speaker 01

  And so unlike other businesses where there tends to be a CEO succession plan? And a board governance plan? And all these other things, which by the way are hard to do. We don't do any of it in the family office side. And so you have teams of people running money that don't know if the matriarch and patriarch die. In the US, do we owe fifty percent in taxes? Does our business go from two billion to one billion overnight?

• 27:40Speaker 01

  Does our business go from two billion to one billion? And then to four owners? Meaning mom and dad are up here with the two billion. If they haven't structured things right, they die. It goes to one billion, and then it's divvied up between their four kids. So now you have four kids with two hundred and fifty grand. Are they required to stay together in the estate planning, or can they leave? So do you suddenly have a team that is at the cost center of two billion? That's now managing two hundred and fifty thou- two hundred and fifty million? Because there's not been the right planning put in place for the family unit to stay together.

• 28:22Speaker 01

  So it's an entirely different succession set of issues than it is in a different operating company.

• 28:30David Weisburd?

  In many ways, it's it's pretty cruel. It's like clipping the wings of the kids in that they're waiting around not knowing. So they can't pursue something else. And it's the previous generation's reluctance to have those difficult conversations that leads to significant difficulty in their kids' lives.

• 28:46Speaker 01

  It's, I mean, how often do you talk about money in your own family or death in your own family? It's, you know, you don't need to be a wealthy family to not talk about these things, but they're compounded when there's great wealth.

• 29:03David Weisburd?

  Me, me and my partner, and even me and my fiance, we talk about the step up in basis and death. We think it's a great, great tax strategy. So I'm a little bit different. Last time we chatted, you really surprised me. You said that the parents were more responsible for the difficult dynamics between the parents and the kids. One thing that I've learned from talking to hundreds of investors, founders and business leaders is that planning for the future isn't just about growing assets. It's also about protecting the people who matter most. Life comes with a lot of important milestones. Maybe you're buying a home, starting a family, planning for college, or simply thinking more intentionally about your financial future. As those responsibilities grow, it's worth making sure you protect those you love. Not sure what kind of life insurance you may need? Concerned about how much it may cost? Think life insurance is too complicated? Your local State Farm agent can help answer those questions.

• 29:48David Weisburd?

  They can help you explore your options for life insurance and choose coverage that you can adjust as your family's needs change over time. Financial protection for your loved ones when it matters most. Learn more about life insurance at statefarm.com. Like a good neighbor, State Farm is there. And I had always thought it was the kids, kind of the spoiled rotten kids that are that are responsible for that. Double click on that. Why is it that the parents are the ones that are typically creating these problems?

• 30:13Speaker 01

  I'm so excited that you're giving me the opportunity to say that the rising gen are not all spoiled brats because they're not. They are really good people and I'm betting on them. I'm betting on them because they're getting education, they're asking questions, they're trying to get training. The parents are more responsible because they create a dynamic of what's appropriate to talk about at home. And I have parents that I work with that say, I'm gonna talk to my children about wealth when they're in their 30s. I'm like, in their 30s? Like, do you think they're blind? They're on your private plane, they're on your yacht.

• 30:55Speaker 01

  They see the wealth, but you're not gonna talk to them about it when they're young? If you start talking to your children about wealth, first of all, how hard it is to save money, and talk to them about their responsibility, not what they're getting, then they're gonna be productive citizens. The when we run into problems is when parents just give children a little bit of money along the way and don't ever talk to them about a responsibility. And then the child feels this inadequacy between the generation one and generation two, and they just kinda go off on their own. I mean, by all means, are there spoiled people in the world?

• 31:39Speaker 01

  Yes, but they're not all wealthy. There are a lot of other people that can behave in a spoiled way and whatnot. But I believe when you share what the responsibility is of anything with people and you make them feel included, they rise to the occasion. And so, I don't think all families should leave all the money that they've created to their children. But I think they should educate them on the responsibility and the options and the great things they could do with that money. I love my students that come in and have great dreams of having huge social impact and that they have been educated for generations about the wealth that their family has created.

• 32:24Speaker 01

  And they, from a young age, talk to the family about, "I wanna use some of that wealth to create clean water in India, to bring, you know, telephones and things to rule Turkey." And so, why not embrace them early so it's part of everyone's plan? When you wait too long... That's when bad behavior starts. That's why I think it's the parent's responsibility.

• 32:48David Weisburd?

  All things being equals, I'd rather work with the Gen one versus the Gen two individual. Typically, the Gen one, he or she is just self-made, has similar values to me. And Gen two, probably if I had to put a number, eighty percent of the time, there's an entitlement, maybe twenty percent. They are exactly like their parents. They work hard. Their parents made them work. But eighty percent of the time, they are extremely difficult to work with, at least from the business context. Now, you might argue, those two theories might be aligned in that the reason that they're spoiled and difficult to work with is because of bad parenting. I give you that. But isn't there something to that in that there is almost a form of entitlement in Gen two? Even if it's not their fault, just growing up with money leads to this kind of behavior

• 33:33David Weisburd?

  versus Gen one is more able to align with people. And Gen one has learned the skill set of influencing people and partnering with people to do the things that they want to do versus Gen two kind of has this like, "Do this for me because I'm XYZ name."

• 33:49Speaker 01

  I think, you know, if we could turn it around and say, "You love founders." And so, like, I love founders. I am infatuated with how they came up with this idea, how they pursued it, and how they were successful. Now, most of the founders that I've met had nothing to lose. And so, their entire thing was, "I'm going to create this great shoe company." And they didn't have any money to begin with. Many of them are immigrants. And they're just gritty, hardworking, and you love the story of their family business or whatever they did.

• 34:31Speaker 01

  Now, many G2s are viewed as not as gritty. And so, you already kind of lose the interest in their story. However, I'd argue that many G2s and onward have a responsibility, a guilt, and a nervousness of losing what G1 created.

• 34:56Speaker 01

  And that is where they might behave differently. They might not take the same risks. You might not be as attracted to them because they're not just like all in. And that's because many of them feel this responsibility to carry on this legacy. This is where our opportunity exists. If G1s would remind and continue to teach G2s that the only reason we even call them a G1 is because they were an entrepreneur. Our family is built on entrepreneurship. So you, G2, you might have some funds I didn't have, but we're all about growth and entrepreneurship. Get out there, do something. And it can be something for profit, not for profit.

• 35:39Speaker 01

  But if we better keep being entrepreneurs each generation or whatever we did in G1 is going to be gone by G3. And so I think it's more the story. Like, I am consistently incredibly attracted to the story of G1 because I want to sit around a fire with a bottle of wine and hear how they did all this. But I can tell you, I've met a lot of G2s that were raised in a household with entrepreneurship as the backbone, with fiscal and moral, it just reinforcement. And they are back to be entrepreneurs. They're just as good as G1. But they will never be G1.

• 36:22Speaker 01

  And so, you know, what's the life of an inheritor? Is being an inheritor mean inheriting money? Or does, you can also be an inheritor that inherited responsibility. But then the third thing is you can be an inheritor of a legacy. And so it's daunting to inherit a legacy. There are a lot of people that inherit the legacy of what G1 put out there without any money. And so let's give G2 and G3 and everybody else a chance. But get out there and do something. And I'm with you. Like, if they're lazy, it's the same as any other lazy person. And we all see tons of those.

• 37:08Speaker 01

  But this, if we don't start betting on the rising gen, we're in a whole world of hurt because this wealth transition that's coming has the opportunity to transform our world in a way that nobody's ever seen. And so let's give them the tools to do it.

• 37:26David Weisburd?

  You mentioned the G2 should go out and do something and fail. I'm reminded of the Jeff Bezos quote, which is, I'd rather have a child with nine fingers than a child that does not have resourcefulness.

• 37:37Speaker 01

  I completely agree. And I also say fail fast. And so if you go back to what do we not talk about at home? We don't talk about money. We don't talk about death. We also don't talk about failures. And so when we raise our families and the only time we talk about anything is when they won the race or they got an A, that's a problem because you don't always win every race. My father used to say that when you were skiing, if you didn't fall, you weren't getting better. And, you know, so fall, learn, because you pushed yourself harder and then get up. And so there has to be room in life for failure. And I'm a mother of three. I also struggle.

• 38:20Speaker 01

  I want to keep celebrating failure because failure is putting yourself out there and trying something. I mean, failure could be going and doing an improv night and nobody laughs. Well, at least you tried. So you have to try. And we as parents have to give the safe space for what is perceived as failure. Otherwise, we're going to get mediocrity because no one's going to put themselves out there.

• 38:44David Weisburd?

  As I mentioned, you have this really great vantage point in that you're now approaching close to 1,000 students from Gen 1, Gen 2, Gen 3, and people that I want to work in family offices. And you see them intimately, year 1 from year 2. Is being a centimillionaire or a billionaire, is that a curse that these families have? Would they be better off just, you know, being moderately wealthy and not having to deal with these dynamics? Or is it still a blessing in your opinion?

• 39:11Speaker 01

  I view being incredibly wealthy as an opportunity, not a curse.

• 39:18Speaker 01

  And not a blessing. I think it can be a curse if you don't choose to use the opportunity the right way. And what I mean by that is if you're afraid of the money and it makes you afraid of your own shadow and you never do anything that you love or want to try because of it, then it is probably a curse. But I look at it as an opportunity to make to change the world. And changing the world does not mean that I want everybody to give all their money away. It means take that money and create more jobs. Take that money and be innovative and, you know, rise people up. I mean, there's so many ways to have

• 39:59Speaker 01

  impact and families by nature are better stewards of businesses than most. They care for their community, they care for their employees. In the families I work with during COVID, not one of my families laid one person off. They just took, they take care of their own. So if you could take this wealth and keep investing it in the people and the community and businesses, then it's an opportunity, not a curse. Where it's a curse is if you have it somewhere where nobody can access it, nobody understands it, and it, you know,

• 40:39Speaker 01

  it's used as a weapon. If you don't do this, I won't give you that, then it's a curse.

• 40:45David Weisburd?

  To use a Gen Z term, it's it's main player energy versus NPC and not non-playing character. So you're walking around the world instead of just being beholden to circumstances, having things happen to you, you go out there and you shape the future for your family and for others. And yes, some of the times, maybe most of the time, you fail and you learn, but you're constantly developing yourself in pursuit of of your goals of making the world a better place, making your family better off, all these things that family offices have as as their northern North Star.

• 41:17Speaker 01

  Absolutely. And, you know, just to kind of double click again on G1 versus other generations.

• 41:25Speaker 01

  The prior, you know, G1 holds a good amount of responsibility because they typically set the stage for what can be discussed. But G2, G3, G4, like, step up. Ask the difficult questions. You know, if you sit there and wait for somebody to kind of tell you everything, then shame on you as well. It needs to be a conversation. And if you're a part of the dialogue from an early age, then it works. If you're afraid of G1, then maybe there's a reason.

• 42:01David Weisburd?

  I love that. There's a concept called extreme ownership by Jaco Willink, and he explains it in a battlefield. A battlefield could be very chaotic, and at any point, it's not like a movie where everybody's going in rows and everything's predictable. There's bullets flying, and at any point, you might have 90% lack of control on anything. But even then, you have this 10% agency, this 10%, like, how you move around, what angles you're going so that you're not sniped, like, how you communicate with your battalion. So even if 90% of what you do has no, is set in stone and you can't change, you still could focus on that 10%.

• 42:41David Weisburd?

  And even if you're Gen 2 and you have a difficult parent, which almost by definition, these founders are extremely difficult, you know, unchangeable characters, you still have that 10%. You could focus on that, and how do you change? How do you bring up those tough conversations? How do you make your family better, even and maybe even especially if it's in a difficult dynamic?

• 43:04Speaker 01

  Absolutely. And persistence is an admirable trait. And so when you said you'd always rather be with a G1, I bet there will be some G2s, G3s you'll meet that are persistent, and...

• 43:20Speaker 01

  Get things done that you'll like just as much as founders. But we need more of G2 to have that persistency. And you know, you referenced at Harvard that I have the opportunity to work with the rising gen. I also have the opportunity to work with their parents because we have exec ed programs. So I get to see the parent in the room with the child for classes. And that's when it's really amazing because when you see a parent that is listening to another two talk and they're shaking their head and afterwards they're like, that's just ridiculous. He should have educated his son on blah, blah, blah. And then I'm looking at this one going, you're doing the same thing. You're also not sharing that information.

• 44:01Speaker 01

  And so when you put them all together and you start talking, that's when people start changing. And so back to where we started, you know, being a founder is lonely. And many of family offices are started with founder generation money. We need these family offices to start speaking. And unlike the places they're competing with, they're not competing with each other as much. And so like they can, they can collaborate. And so hopefully you'll invite me back on this in five years and we'll see family offices outperforming all of the other asset categories because they're going to finally get it right.

• 44:44Speaker 01

  But right now we're still on the hamster reel a little bit.

• 44:47David Weisburd?

  Give me some low hanging fruits. What is something that gen one or gen two family members could do today in order to significantly increase their chance of success?

• 44:57Speaker 01

  The, the first thing they should do is make sure they really have a mission for their family office. The second thing they should do is make sure that they have a business plan with metrics and that they hire the right people. What I would say for anyone starting a family office, do not hire your best friend or give the job to somebody you know because you trust them with your money. That is so different than trusting them to grow your money. You need to have the patience to find the right people and put a professional team in place. Also, low hanging fruit, it is not a place for. Family members that are unemployable elsewhere.

• 45:41Speaker 01

  Family offices are not a place for unemployable family members. I can't say that enough. And you need to understand you're creating another business. If people listen to your podcast and say, oh, my God, I didn't want to create another business. Why do I really? Is family office really another business? Yes. And if you don't want it, shut it down. Put your money, outsource it to the wealth managers and hire one person to do concierge services for your family. But if you've put a team together and they're in charge of all your money, it is another business. And so people need to understand that.

• 46:20David Weisburd?

  I would posit that those Gen one family members that don't want another business should go take three months off. Go on, go on a beach and then come talk to us because I suspect in three months, they will be ready. Probably in one month, the, the successful ones will be ready for their, for the next business and for the next adventure.

• 46:37Speaker 01

  Hopefully, and if they took that three months on the beach, they realized they didn't want to hire their two best friends to do it. Because their two best friends should be their two best friends and let's go put a business plan together and hire the right people.

• 46:51David Weisburd?

  It's almost like this advice, when somebody gets a huge liquidity event, they say, put it in the bank or put it in the S and P 500 or whatever equivalent for 30 days, do nothing. The best thing you could do for 30 days is do nothing. Let kind of endowment effect take place. It's a psychological phenomenon that you're now consistent with your new amount of money. And just relax and don't do anything crazy because typically in those 30 days, people do some, make some outlandish purchases and make some poor investments.

• 47:22Speaker 01

  They, they do, David, and that's going back to the go slow to go fast. And, you know, most of these people were operators of something they loved. And so suddenly, if they sold completely and they simply have liquidity, they're twiddling their thumbs because they're used to being on 24/7. And what did they do? They buy another business. And so, you know, Take a minute, understand what you want to do, and then do it. Many founders of family offices that we set up, we give them like a slush fund to play with because they want to go buy a Dunkin' Donuts franchise, or they want to go buy something

• 48:04Speaker 01

  that they can tinker with because they don't enjoy the business of money going up and down. And so that's why you have to have the mission. And if the mission is to make more money, said founder has to remember to make more money, we have to deploy it. And so, you know, all of them, I love the idea. Three months on the beach, go do that, and then let's talk. But that's not what happens. They get the money and they start investing, and that's why we call it bottom up instead of top down.

• 48:34David Weisburd?

  This has been a masterclass on family office investing. How should the audience keep in touch with you and keep track of everything that you're working on?

• 48:43Speaker 01

  Oh, well, that's very flattering. I mean, I'm very easy to find through the Harvard Business School website, and you can't miss me there. And then also through Wingspan, which is my private practice that advises families. And what I will tell all of you that are listening to this, we have yet to meet a family office that's hired us that doesn't need to be completely restructured. And so I challenge, come find me and show me one that doesn't need to be restructured because to date, everyone we have worked with needs a complete restructuring. And that's something we need to change. We need to start getting it right from the beginning.

• 49:24David Weisburd?

  Great. Well, thank you, Christina. Appreciate you jumping on and look forward to sitting down in Boston or New York very soon.

• 49:30Speaker 01

  Come see me, come to class.

• 49:33David Weisburd?

  I would love that. Thank you, Christina. Thanks for listening to my conversation. If you enjoyed this episode, please share with a friend. This helps us grow, also provides the very best feedback when we review the episode's analytics. Thank you for your support.