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CRE Insights Blog

Top Single Family Offices

In this video Richard C. Wilson talks about best practices from top single family offices, often $1B+ single family offices that he works with. To learn more about Richard’s work please see http://SingleFamilyOffices.com and http://BillionaireFamilyOffice.com. You can also download his free report at http://FamilyOfficeReport.com Hello, my name is Richard Wilson. I’m coming to you from Prague today and I just met with a single family office. I’ve had two conference calls this week with multibillion dollar single family offices, so I thought it’d be appropriate to do a short video on single family office best practices. Really what I want to focus on is what do top single family offices do. I think this might help those that are based in places like the Czech Republic or Moscow or Brazil or Australia where there’s a moderate level of family office activity and it’s growing, but there’s not many resources. There’s not an opportunity to grow a large local network and learn from other peers in the industry. So what do some of the top single family offices do that others don’t? First of all, a lot of the top single family offices have medium to large sized teams. I don’t see anybody who is a single family office that you’d want a model that only has one to two professionals on it. Typically, even if they rely heavily on outsourcing, they have seven, 10, 12 or more professionals. If you outsourced everything to the best partners in the world, perhaps you could have three to five people on the team, but I’ve just never seen that happen in my experience. They always have a core team that’s larger than that. In addition, every one of the single family offices I know that does very well does direct investing in co-investments. Not all of them do more formalized club investing, but buying and operating businesses and managing those and finding synergies between them and reinvesting in the industry where the wealth is created in the first place is a very common practice on the top single family offices. In addition to that, probably 95% of the single family offices I work with that are at this top level invest in a fully diversified portfolio of CTA funds, hedge funds, private equity funds, typically a little bit in ETFs and also in commodities directly in hard assets. Almost all of them invest in real estate, but one thing that’s unique is that a lot of these single family offices have enough conviction in what they’re doing and what they’re good at and not good at. Many of them do have one area or two or three areas that might be small, but they’ve decided they never want to go there again, that they got burned. It’s not transparent. It’s not easy to understand. It’s not in their wheelhouse. For some, it’s fund to funds, but fund to funds are easy to pick on, so it’s not the best example. For others, it is private equity funds and they think because they do co-investments and direct investing, they don’t need to invest through a private equity fund. Obviously, there are reasons to still use private equity funds, but some people have just decided that that’s not their strengths. So, I think that that is something that’s a best practice as well, because if you’re consistently losing money with one type of investment, you know, cutting that out. If it’s not in your skills, it can be a really smart decision as a large single family office. I also think that there is a desire for the best single family offices to constantly network, learn, grow, add to their advisory board, and recruit the best talent possible. I think that some small single family offices can grow stale. They have the same team for too long, too small of a team. Maybe the patriarch and matriarch isn’t involved in a very hands on way. Or the person who’s made the CEO of the single family office isn’t constantly innovating and pushing and changing and tweaking.

About the author

Richard Wilson