Kyle McDonald: Fantastic. Thank you. Rebecca, over to you. 

Rebecca McGuire: Thank you. I’m Rebecca McGuire. I am the founder of EFO Advisory Services. We focus on operations within family offices. I’ve worked in the industry for about 20 years and started off actually as a personal chef, even though my first job out of college was at KPMG as a consultant. So I have a finance background. But everything that I did in my younger years brought me to the family office. I’ve been a key member or lead executive building out five multibillion-dollar family offices both from the inside and at EFO; my team has over 45 years of working in the industry from the inside. And similar to Lisa, while we work with families and advise them, you know, as an outsider, we also help them choose advisors, you know, from tax, legal, accounting, it, security, and help them vet, you know, who’s best for their family office. 

Kyle McDonald: Fantastic. And then Harry, over to you. 

Harinder Hundle: Great, thank you, Carl. Yeah. I’m Harry Hundel, also known as Harinda, and I run Hunderland Partners, which is a single-family office. I’ve been in the industry for over 20 years. Of those roughly 15 years, I was with JP Morgan and Credit Suisse and ran a single-family office. Our whole philosophy here at Hundel is about delivering this single-family office experience to multiple families. And I think with a very intentional recognition that with our open architecture approach, both on the investment, wealth structuring and corporate finance side, we need to go out to sort of best practitioners in the market. It’s our role to select them and the appropriate ones for each family; by the way, those families can be very different in their needs. 

Therefore, in this new age of technology and openness, we think our approach is absolutely appropriate. 

Kyle McDonald: Fantastic. So, as you can see, we have a fantastic panel today. Sort of a macro view from PwC with multiple sorts of lenses that they’re able to support, outside in view when it comes to Rebecca’s approach, but also this experience that she’s able to draw from being inside out. And then obviously, Harry was able to really add that financial lens as well, having run family offices but now sort of advising them as well. So I guess diving a little bit into sort of a bit of a baseline understanding, and maybe I’ll sort of throw this question over to you, Lisa. 

You know, when typically family offices, which come in many shapes and sizes, begin to think about seeking out service providers to support them, what do they begin to, you know, what are the typical questions that get knocked on your door with? 

Lisa Cornwell: So I guess there are two different ways that family offices will start to talk about working with service providers with us, either family offices at the startup phase or those that are well established. Maybe I’ll start with the well-established ones. Almost by definition, if they’re coming to talk to us, it probably means something’s going wrong. Now, it might not be that they’ve had an event that’s a problem so far, but it might be that they’re aware that they are not managing risk, or they’re not maximising an opportunity in the best way that they could, and they need some help externally. So it could also be they’re looking to expand into a different area. So they’re looking to go into hedge funds, for example, and they only have a little in-house hedge fund expertise. 

Do they want to build that out in-house or not? And that will prompt a discussion. If it’s a family office that’s being established, Rebecca will know a lot about this. Often, one of the things we see is from our perspective: if we’re helping design the family office, we’re saying from the outset, what services do you want to insource? And have a very clear understanding when you start of what you actually want the family office to do. In reality, that develops over time. So we often see family offices try to take on a lot in the first few years and then, over time, work out actually, what are those key services we’ll keep in-house, and what are the ones that we can start to outsource? Maybe I’ll pause there because, Rebecca, I feel like I’m directly speaking to you when I’m…

Rebecca McGuire: Yeah, yeah. I mean, I think we work a lot with new family offices that are, you know, potentially unclear of what the mission of their office will be. But they know that they need, you know, the basics. They need tax, accounting, trust in estate, and usually security. So, you know, in looking at those, we like to help them understand working with advisors who work with other families and individuals at similar net worth with, you know, potentially similar family makeups, whether there’s children or siblings, you know, how are they setting up the trust in the estate? What’s the ideal tax strategy and structure for them? 

So, you know, in deciding on a new family office when they don’t exactly know what they’re going to do, some of them do know that they want to focus on impact and philanthropy, and that makes it a lot easier. But for the ones that don’t, we tend to try and find them who we think is best and do an RFP of three to five different advisors that operate at their net worth and can give them kind of the basics before they really get into what the family office is doing. And then similarly, family offices that are already structured and maybe have gone through a significantly larger wealth event and go from one level to the next, we want to make sure that they’re working with the advisors that operate at that income level or wealth level and not stay with their person. 

If they were worth 75 million and all of a sudden they’re worth 5 billion, that’s not the same tax person that you’re going to work with or potentially even it or security. 

Kyle McDonald: Fantastic. And I guess a bit of a question for you, Harry: When do family offices begin to actually think about outsourcing wealth versus having that capability or wealth management? Should I rather say sort of rather than having that capability in-house and managing that internally? 

Harinder Hundle: Yeah, I mean, I think, you know, again, I. The family office industry is not a homogenous one. And I think, you know, each family office has its own way. I think we do this as sort of as practitioners from an investment management perspective. So that’s our history, that’s kind of our DNA. I think we’ve always said we, in a sense, create the asset allocation, and we sort of implement our investment views, but then we really outsource the asset management. We don’t profess to be the experts in European small-cap equities or be the best credit manager in the US in litigation finance. What we try to do is bring together 15 or 20 very smart asset managers and then monitor them and implement them and frankly exit them when they’re not performing. 

And it’s the same thing, in a sense, we do with our banks and our custodians. So the infrastructure that we use as a private bank is sort of on an open architecture basis, and it’s similar to the accounting we actually have in-house wealth planning. But we never sign off. So we will go to the PWCs, the eyes of this world, and I guess, to Rebecca’s point, work out who the right accounting and legal firm is for that family. And so we don’t have sort of a single firm. We will go to all our 14 families. We will go to different firms depending on their wealth, their jurisdiction and what they’re specifically looking for. So that’s how we engage with other family offices. They don’t go as far as us. 

They will outsource all the investment management and just really start with doing the asset allocation and say everything else. We’re going to appoint a third-party manager. And again, that’s a slight differentiation versus what we do. Right. 

Kyle McDonald: And I guess Lisa is thinking a little bit more about nervousness. Ultimately, a big part of the family office’s journey to maturity is thinking about managing risk. In the beginning, there’s a series of unknowns, and that’s probably many reasons why they might come to you. But then sort of, as they sort of mature in their journey, there’s a series of known unknowns. It’d be great to hear a little bit about how you think, typically about risk, and how you help manage some of that. 

Lisa Cornwell: So we try to take a very systematic approach to risks. So there’s the truism that I’m sure everybody on the call has heard: once you’ve seen one family office, everyone will have their own view on that, I think. We think that actually, when you look across family offices, they are all different, and the families are different, but the risks they face, the areas they’re typically working in, you will see similar risks. So for those existing families, we first of all try to work out, as Rebecca and Harry have said, what they are actually looking to insource and what they are looking to outsource, and then effectively risk-assess those services themselves. So, if it’s something like managing real estate for the family that the family uses, that’s a different risk profile. 

You’re going to be thinking about different considerations for the service provider there, too, such as whether it’s landscaping at the family office buildings or an investment. Let me just. They’re ridiculous, but they’re different types of risk. When you look at a listed entity bank, for example, they will have risk matrices for all of the vendors that they’re working with. And whilst family offices aren’t necessarily as structured as that, having that kind of structured thinking about. Well, when I first start thinking about my known unknowns or my unknown knowns, whichever way around it is, I think that’s a good starting point, is, well, the things that I’m looking to outsource, actually, how risky are they? How sensitive do we need to be? Then, think about the process that you’ll apply to a service provider selection. 

Kyle McDonald: Seem to have lost you, Lisa. 

Lisa Cornwell: Oh, I stopped talking. 

Harinder Hundel: I can see Lisa. She’s there. 

Rebecca McGuire: Yeah, I can see her too. 

Harinder Hundel: Yeah. 

Rebecca McGuire: Did we lose Kyle? 

Harinder Hundel: Yeah, no, I can see Kyle, but. 

Rebecca McGuire: Yeah, I can, too, but I don’t know if he can hear us. 

Kyle McDonald: I’m still here. 

Harinder Hundel: Yeah. 

Lisa Cornwell: Okay. Yes. 

Kyle McDonald: Excellent. We’re back. Sorry about that. 

Lisa Cornwell: Great. 

Kyle McDonald: Well, I guess, yeah, sorry, Lisa, I interrupted you. But thinking a little bit more, I guess, about how family offices can think about sort of what a successful partnership begins to look like. So I guess in your case, Rebecca, you obviously sort of went out into the world and sourced partners and service providers. Some of them went well, some of them didn’t. No doubt that’s the process of running a series of experiments and, you know, building up a series of partnerships you can trust over time without sort of any context or knowledge of your particular circumstances or experiences, but just based on mine, that was definitely the world I experienced. But it’d be great to hear a little bit about it. 

What was it that you think was the sort of steel thread between family office service providers that were really sort of strong and trustworthy over time? 

Rebecca McGuire: Yeah, I mean, I think, luckily, a lot of the mistakes that were made were when I was running a family office. Not, I mean, only because we were just starting out in the early 2000s, and there wasn’t that much data and as much information and knowledge about family offices then. And so one of the things we joke about with our clients is, you know, we’ve already made all the mistakes, so you should just learn from what we already went through.  

I think that during that time between 2007 and 2011, we made a lot of those mistakes early on with the principal that we worked for, who had, you know, more wealth than most people in the world. But in learning who worked well, who didn’t, and who understood the industry are really people who understand that they need to remain dynamic. They need to keep learning when it’s security, even, you know, investment tax, accounting, that they’re staying up, you know, on the, you know, everything new that’s coming out, all of the cutting edge technology, new tax laws, all of those things.

But they also understand that they should be plug and play, that at any given time, the family might decide to bring things in-house, or there might be a divorce, or they might just decide to downsize their life. I had a family that I worked for that decided that they didn’t want accounting in-house anymore. It was just too many people. So they completely dissolved their accounting team and ended up going with Anderson Tax and building it out entirely there. 

And they kept a controller and the controller, but they probably had 25 people. But I think when working with vendors, we want them to be really great at what they do and build the best platform for our clients, but we also want to be able to remove them at any time. And it’s those vendors, those service providers that I’ve always enjoyed working with, and they really, truly understand that some of the decision-making at the family level can be emotional or relationship-based. And they might just decide to switch to a service provider because a family member has a relationship or something like that. So, the ease of the plug-and-play allows them to just plug it in and then easily remove themselves. 

And that’s also how we’ve built our firm and that we can help you establish and put all of these things in place. And then we normally, you know, remove ourselves after we’ve hired you a manager. But I think those are the people that I trust the most and that understand the families the most because they’re not trying to embed themselves forever. They’re really looking out for the best interest of the family. 

Kyle McDonald: Right. That makes a lot of sense. So I think something quite interesting about family offices as well is, obviously, these are quite nimble, lean organisations that move really quickly, but at the same point, they’re sort of people. Sometimes, service providers might mistake them for another traditional multibillion-dollar industry or business, but ultimately, they’re a small team of people. Something there that I wanted to pick up on and pass over to Harry was this idea of being sort of data-led and data-informed. How much are you beginning to see as something that clients are increasingly asking for in terms of supporting decision-making? 

Harinda Hundle: Yeah, I mean, I think sort of one of the key sort of criteria for us often with sort of service providers, whether it’s investment, whether it’s tax consultancy, whether it’s the more niche art advisory piece is actually transparency around price and cost, understanding what they’re getting. And that kind of has to feed through to sort of the total cost of the service that they provide, you know, that they’re being provided through ourselves. So I think there’s a lot around sort of understanding the data there, and then clearly, you know, there’s more. Data analytics, which is sort of on the investment management side, is obviously very important. What’s driving returns? 

And frankly, you know, again, depending on sort of why we’re selecting that service provider and what service they’re paying, it’s like, okay, we just want absolute transparency on sort of, you know, what’s driving the firm and understanding kind of what we’re getting into. And if that needs data, it doesn’t always, but if it does, then we want access to it. And certainly, our families do. I think having everything in writing today and being able to provide that quickly and proactively are key to our families. 

Kyle McDonald: All right. And I guess, yeah, this leads really nicely on to the next section, which is this idea of beginning to think about how family offices begin to actually consider the right partners. What are their selection criteria? And really, there’s always this challenge of balancing trust and privacy. So perhaps again, sort of possible. Back to Lisa. But it’d be great to hear about when you’re thinking about what best practice might be for family offices. How should family offices begin to research which service provider to use? Should they be seeking out advisory first and then sort of looking at service providers? How should they begin to engage to ensure that privacy is maintained? It’d be great to hear about your experience. 

Lisa Cornwell: I mean, I think one thing that comes up all the time is, as he said, the balance of privacy and trust. Trust is really the key thing. How does the family office, and often then the family, kind of quickly, if it’s possible, manufacture trust sufficiently that you can feel comfortable starting work? So, I think the first thing is working out what you are actually looking for and what your expectations are. So it’s one thing if you’re thinking of outsourcing all of your accounting; it’s a different thing if it’s, well, we’ll keep these bits in-house and these bits up, and there’s going to be an expectation that there’s an ongoing relationship and people are talking every day. So the first is being clear on exactly what you’re looking for. 

And then I think it’s very easy to rely on, and I’m not saying it’s wrong, but it’s very easy to rely on existing relationships and start asking around to other families, other family offices and your existing providers. We’re looking for X. Is there anyone you can recommend? And I do think word of mouth and reviews are a really good way to start that process, to start your research with a note of caution that you have to make sure that the people you’re asking understand what you’re asking them and give you the right information back. So you’re all on the same page. I think also if you look online now, to Rebecca’s point, if we were having this conversation 15 or 20 years ago, there was a dearth of data. It was very difficult to know who was strong in this space. 

There was not much kind of thought leadership around, but there’s a lot more now. Simple. I’m not saying it just because it’s a simple webinar, but sources like Simple are really helpful, and there’s loads of information that you can start to use to get an idea of who you’re looking to work with. Obviously, branding comes into play, which is easy for me to say in a global firm because that’s something that we do have. But that piece about brand, you know, for a smaller organisation, that’s where the word of mouth starts to come in again. So there’s this kind of scene-setting, exploratory work, and then we come into the more specifics of actually really hard data points that you want to know, and those data points will be different for different types of providers. 

So you might be interested in the financial strength of an organisation if they do well, you will be interested. If it’s investment management and custody, you might be less interested. If they’re going to be the provider of catering at events, it might be a factor, but less important. So you start with this kind of scene setting and information gathering and then start to get into more specific, detailed information gathering. 

Kyle McDonald: Great. And then, Rebecca, it’d be great to obviously pull on your previous experience, but also your experience now is when you’re thinking about, you know, sitting inside that family office and having to actually do the due diligence yourself. You know, you might or might not always have a huge team at your disposal to support that due diligence process. But at the same point, there is obviously a level of detail you need to sort of drill down into. How do you go about doing that effectively? 

Rebecca McGuire: Yeah, it’s definitely different when you’re in-house versus an advisor. So, you know, when I ran family offices and was in-house, I had to be really nimble and efficient, and a lot of that is what I brought here and used with multiple families. But coming up with processes where during our diligence process having a consistent list of questions, data, information about the firm, references from other families and clients, I think really having strong process around it was the only way I could survive, you know, when building a couple of the offices that I worked for, you know, being brand new and having a really small team, but we needed to grow it very quickly. And I’ll use hiring as an example. I mean, that takes a ton of your time. 

And when you’re trying to find a recruiter or headhunter that can find you, people, you know, I didn’t, in running a multibillion-dollar family office and all of the things that went along with that, I didn’t have all day to be, you know, scrolling through resumes. The process that we use here is what I developed when I ran one of the family offices in Silicon Valley, which was putting the recruiter and the candidates themselves to work. In answering certain questions for me, doing personality tests, filling out case studies, writing samples, I wanted to understand, you know, who these people were and if they could pass a certain, you know, test for me or multiple, then I would speak with them. 

And I think when it comes to other service providers, you know, in asking all the questions that we put out in an RFP, it has the work I would primarily put onto the vendor or the service provider, and then, you know, references from other families and clients were huge. Because, you know, as Lisa said, it really starts word of mouth, you know, between the family offices. Who are you using? What did you do? But in really getting to talk to some of those clients to understand, you know, what went well or what potentially went wrong with some of these vendors, you know, is usually more important. And again, you know, as I referenced earlier, are they dealing with people at your level? 

I think everyone on this call understands that the difference between someone who’s worth 300 million and who’s worth 10 billion is vastly different. And it all seems like a lot of money to people, not in our industry. But when you get that far apart, I mean, things start operating at light speed, and it’s a completely different landscape. So, it’s a really strong process of putting the work on them. 

Kyle McDonald: Yeah. And I think, again, that’s kind of a testament to the service providers you work with. If they have the ability to do the work, to provide you with the right answers and the right support in that selection process and that RFP process, you know, clearly, they’re the type of partner you want to work with. We’ve got a great question that’s come through in the chat from Thomas Nicholson, and I’m going to sort of rephrase this a little bit, but I’m just thinking a little bit about fees. The age-old question, when it comes to anyone thinking about fees for service providers, is, how do we begin if the price is the right price? Or what would you see as potential best practice? You don’t always know which fees are the right fees for the right family office is the price right. 

Kyle McDonald: How do you sort of navigate that world of getting the right level of transparency upfront when the scope of the task might be slightly ambiguous or, you know, you don’t really know the client yet? How do you build that trust, and how do you navigate sort of fee? 

Harinda Hundle: Yeah, is that a question for me? 

Kyle McDonald: Yeah, yeah. 

Harinda Hundle: No, I think, look, I think there’s increasing importance around this transparency point. I mentioned it earlier. I think the more transparent the pricing is, the better the pricing will be than the actual pricing. And I think our role often is to provide explanations and context around how that compares to the service the clients are actually paying for. You know, and in the end, the cheapest price is not the best price often. So we, you know, I think that’s really important. We always, you know, talk about the value of quality, but we try to break it down. You know, we’ll provide total expense ratios on the investment side, and that’s becoming a regulatory requirement. I mean, there’s no debate around that. And we think that’s created the best, better practice in the market. But yeah, no doubt. 

I mean, I think, you know, it’s a fine line. I think that, in our position, it’s important for us to give context and understand which clients are more price-sensitive than others. So again, for those who are more price-sensitive, there’s going to be more explanation around it. You know, if you just throw it out there, that can create some very painful conversations. So you have to be sort of one step ahead proactively. And again, know your clients, not just about what they want from an investment perspective or what they want to pass in terms of sort of assets to the next-gen; it’s actually understanding how they emotionally feel about information. And the price is a big thing. Right. Lisa and Rebecca will be aware of this. 

I mean, again, when people have set up their own single-family offices, they have a view of what it’s going to cost. And you know, that changes over time. Both the number itself, but also their, I guess, their sort of, their emotional and financial view around the value of that. Right. And that’s something we’re sort of constantly debating. I mean, I think we say to our families, in terms of our service, it’s sort of price at a, you know, price. Well, quality at a reasonable price is our mantra. Again, we think it’s reasonable, but some families don’t always think it’s reasonable when we start with that conversation. 

But we say at the end, if you don’t agree with that, you know, if you don’t agree with that statement on a joint basis as advisor and client, then this relationship’s not going to work out over the long term. So it’s always having those honest discussions. But transparency at the end is key. If you don’t give transparency and the client is price-sensitive, you’re going to have a problem. 

Lisa Cornwell: Yeah, I totally agree. We’ve had a case recently where a family office was signing up for some new technology, and they thought they were being given a transparent overview of what it would cost. And once they actually got into it and started transferring data over, it turned out there were multiple hidden costs that you couldn’t avoid. You know, there was a charge to put this asset on because it’s a different asset to the one that was quoted. You know, things like that. And it instantly leaves a really bad taste in the mouth. And if you’re trying to whether it’s to be a plug and play or longer-term support for the family office, you’ve got to have the trust. And the easiest way to destroy it is to not be upfront about the fees. 

One thing we try to do is have a pretty good sense of how much things might cost. There are a lot of tasks that come up time and again, so we can give a fee range. And I think one thing that family offices like is, if you don’t know, being upfront and saying we’re not quite sure how much this is going to take, and once we get to this point, we’ll tell you because then we need to reassess because if we if it goes over this amount and we’re only here in the project, what do we do now? And I think that kind of having, trying to have a dialogue, but I agree completely with Harry. 

It’s the easiest way to destroy a relationship, which is to be transparent on pricing or, worse, do all of the work and then send an invoice that’s 10, 20. That’s something we get burned if we don’t do it. Right. 

Rebecca McGuire: Right. And I think Lisa, to your point, especially a firm like PwC or someone that’s doing, you know, family office accounting, things like that, when you say we’re not sure we think it’s going to cost X, but then all of a sudden there’s a ton of scope creep and if you’re not communicating along the way what that is and then all of a sudden you present this bill that’s twice as much as what you quoted because the client, you know, asked for additional things. I think that communication along the way is so important. 

But I wholeheartedly agree that transparency from the beginning makes sense, especially in areas what I’ve learned where families, you know, especially newer wealth or even multi-gen things like construction or areas where people, they’re not professionals in this and they don’t understand what a change order is or you know, I had an interesting conversation with a contractor where a client thought they were buying one of those mini houses online for like $50,000 and she thought great, I’m going to put this little guest house up at their home in the wine country for $50,000. Well, she’d never built a house before, and she wasn’t a contractor and didn’t understand trenching for power lines, for water, for sewer, all of those things. 

So when she got, you know, the guy went ahead, and he did it. Then, she got the bill, and it was closer to $700,000 because the trenching was very far from the main house. And I mean, it blew her mind. And when I had the conversation with the guy about it, he said, well, I, I mean, I just thought she would know. And I said, well, she’s in the tech world. Why would she understand, you know? So I think even more so the explanation of the transparency of fees, like the education as to what these things cost when, you know, you can’t assume just because they have money that they are knowledgeable about these things, especially if? 

Harinda Hundle: They’ve never done it minimises surprises, Rebecca. Right? 

Rebecca McGuire: Yeah. 

Lisa Cornwell: Yeah, but you’re right. It’s really common for people to assume that wealthy families and family offices do not just know. Yeah, and it’s, I find it funny that’s, that’s an assumption. You’re an expert in this and super successful here. Therefore, you must know all of this. 

Rebecca McGuire: Right? I find investments aside, they assume that because they’ve made all of this money, they actually understand their portfolio and, you know, what liquidity means. And they don’t. And they need that education. But what’s more interesting is they don’t often ask. They assume that their advisors are giving them, you know, putting them into the best possible position, which unfortunately isn’t always the case. But, but yeah, I think, I mean, the transparency and the education is so crucial, and you know, to the person’s question here, I don’t think it opens you up, you know, for criticism or anything. Like, I think the more transparent you can be and kind of educating them as to, you know, why you need, you know, certain margins or how it works, I think is helpful. 

Kyle McDonald: Great. I guess something that’s very sort of interesting, and I think back to that point of, you know, because the source of wealth is from one industry, we kind of tend to assume that they, you know, are hyper-aware of other industries and their models. And I think that’s something, you know, within my sort of previous experience, which was very much focused on understanding that every different industry has a different model of charging fees. Certain might be, you know, better from a commission basis, while others might be better from a fixed fee basis. You really need to understand what the best model for each industry is to ensure you’re sort of optimising for cost. 

Moving on to, I guess, the next section, which is sort of very nicely bundled into this, which is thinking about, you know, once you have actually signed on the dotted line with those service providers, how do you begin to actually think about monitoring and measuring that performance? Obviously, from a consulting perspective, I might pass this one on to Lisa. How do you typically like to think about beginning to actually sort of monitor that process? 

Lisa Cornwell: So I think the first thing, and I think I said this already, so I apologise if I’m repeating myself, but it is a similar point: What are the service providers going to be doing? So I think it’s easier or clearer. Harry might not say it’s easier, but for investment management, there’s kind of, you’ll have certain metrics that you can put in, so X performance or Y income, but whatever the service provider is, what are they going to do? When are they going to do it, and how much is it going to cost? And basically, do they say what they do? They do. They do what they say they’re going to do. Because that’s what trust is. You work with somebody, and they tell you they’re going to do something, and then they do it. 

And so I think regularly looking at what’s happening, and it doesn’t, if it’s a small team, it’s not going to be once a month. In banks, you have people doing this constantly, but every three months or, six months, nine months, they review what they are responsible for and whether they have done that. And then there’ll be things like with tax, kind of my area tax filings. At a minimum, the tax filings were all made on time. At a minimum, the tax payments were all made on time and interest wasn’t incurred. What was the experience like as well? Because if, and Rebecca, I’m sure you had this when you were sitting in a family office if you had to email once a week and say, where are we on this? What’s the status of this? 

That doesn’t leave a great taste, even if all of the other things are right. So there’s a balance between kind of hard deliverables and things that you can actually measure versus that softer experience as well. 

Rebecca McGuire: Yeah, I’d agree with that. I think when you work in one of these offices, you’re moving so quickly that, you know, one of my rules with not only service providers but the staff is once I give it to you, it’s yours, and it’s your responsibility to get it back to me. I can’t, you know, in running one of these offices, when you’re juggling a thousand things a week, like, I don’t have the time to follow up on you, and I assume that you’re getting it to me, on time especially, you know, a tax obviously has hard deadlines. But I think in some of the, you know, more obscure services where, you know, it’s more of a service and less of something that’s quantifiable. One of the benchmarks that I use is how many emails you are getting back. Like, are you getting complaints?

Or is the family, you know, just moving on? They’re like, that was great. Like, in thinking of someone that planned their travel, you know, they go on some big $100,000 trip, and you might not hear anything. And that’s actually a great thing. And like, so for me, you know, and I think it’s difficult when you’re in a family office. You don’t always get the feedback because these things are moving so quickly. So in my mind, you know, less is more like, the less you hear about an experience almost is better, you know, when you can’t, you know, it’s not an investment portfolio where you’re measuring returns. But, you know, I tell teams to listen if you’re not getting any feedback, and they happily got home and moved on to the next thing. You did a great job. 

Because the more you hear back, really, it’s something wrong. And not, you know, not because anyone’s super negative or anything, but just because their lives move so quickly. But yeah, and I think just when we’re bringing on new advisors or putting a new project together, you know, really laying out what we expect from them and where we can put milestones or benchmarks, you know, if possible. But yeah, I’d say, you know, that strong partnership is them really assisting you when you’re in-house and helping you do your job better by, you know, coming back to you. 

Harinda Hundle: Yeah, and Rebecca, I mean, on that. Oh, sorry. I was just going to say, even from an investment perspective, when we’re doing it, it’s happy clients. Like, when performance is great, you don’t really hear from them. It’s when performance isn’t great. Those are the more difficult conversations. And so silence, actually, in terms of. It is a great way to verify that things are working. Okay. I think the other thing I would just add for us in terms of service providers generally is data and all those things, and delivering sort of actually on what they say is key. But for us, it’s also access to key decision-makers. When we sort of select someone we want, you know, things will always, inevitably, there’ll be a period where it’s not going quite to plan. 

We need to make sure we have access to the decision makers, people who can actually, you know, fix things. And actually when you get to sort of selecting reporting providers or there’s some very technical work and it’s technology driven, that can actually sometimes be a bit of a challenge. So that’s really important for us. 

Kyle McDonald: And yeah, I guess another question to you, Harry, is around this idea of, you know, maybe a bit of a baseline or a benchmark around what a family should expect when it comes to updates throughout a lifecycle of a fund or something along those lines, keeping it relatively high level. But how regularly should they have a sort of touch point? What should that sort of relationship be like? Obviously, every family has a different preference, but what would you see as a potential benchmark? 

Harinda Hundle: Yeah, I mean, so for one, I think the first rule must be accurate. So, for any information you’re sending out, it’s better to take longer and provide accurate information than not in terms of the timing and regularity of that. We basically create a customised plan and ask the families when and how often they would like updates on various matters. So when we’re in the early phase, it tends to be everyone gets sort of a weekly update, certainly a monthly one, and then it’s a question of once things have settled in, what’s the appropriate time for frame. We have gotten into a kind of culture where sometimes everyone wants everything instantly. 

And certainly in the investment game or even in the wealth structuring game, when you’re getting really good advice, or you’re frankly just having to work through a problem scenario, rushing things or being obsessed on the sort of daily moves is not the right thing. So we have to kind of manage our families and say, look, some of these things will take longer, and you need to judge it over X period, and some others are shorter than that. So again, I think establishing a sort of rule on day one, as to family one versus family two, can be different. But I also always do it under the sort of philosophy of sensibility, which I think is key. 

Kyle McDonald: Great. Lisa, a question to you, and this is a bit of a one from Tom Nicholson, around this idea of how do you begin to sort of analyse, you know, if you have the right balance of internal capability or whether you should be sort of looking more at outsourcing a series of services. Obviously, over time, you develop a reliance on particular service providers. How do you begin to evaluate that over time? 

Lisa Cornwell: So one approach we take, and it is generally for larger family offices, although it can work for any size exercise, is to do a kind of forensic deep dive into how are your family office staff spending their time and looking at how much that’s costing and then speaking with the family and saying, what value? What do you value most highly that the family office delivers for you? And then comparing the two things and spoiler alert, generally there’ll be a mismatch between the two because if you’ve got a robust payment system in place and over time that’s developed and actually to make a payment, three different people have to review it and there’s a report that goes out and has to be made every month, the cost per payment is going to go up, but the family won’t feel that.

So then having [data]. I like data. I think data is really key for family offices. And so, starting with the available data, you can say, well, these are tasks that you don’t. You’re telling us as a family, you don’t maybe value, but they’re costing you way more than these things that you’re telling us you really do value; that then allows you to start assessing, well, actually, is there a better way or a more effective way for us to insource or outsource something? And I think another thing we see is if key people leave, how do you replace those services? But that’s much more reactive rather than a proactive review. So I think it’s very difficult to say, well, this is the right model because each family and every family office will have different approaches. 

But if you’ve got data to say, well, this is what we’re doing and this is what you do or do not value, that’s a good place to begin. 

Kyle McDonald: Lisa, I remember we had a conversation before this. This is just a spoiler alert for everyone out there. But we spoke a little bit about this sort of key aspect of trust. When it comes to trusting people within your family office, how do you sort of know when’s the right time to potentially think about reframing that trust going forward? 

Lisa Cornwell: Kyle, that’s. If I’d known, you were going to share our conversations. No, I’m joking. I think it’s genuine. It’s a really difficult area for family offices because very often, we see that a key trusted person will be in a senior position in the family office, particularly when it’s a new family office starting. So it might be someone in an accountancy firm, it might be their lawyer, it might be the investment banker they used to work with, it might be a family member or a friend. And I think that’s quite a common way to start. And there isn’t anything wrong with that. But I think it’s difficult to do if you’ve got clear objectives for the family office and clear services that need to be delivered. 

Rebecca’s point is that if you’ve got a thousand things coming in every week and you’ve spent your career in tax, for example, there’s a point where, you know, I know nothing about art. I am out of my depth here, and I need to work with a specialist. But I don’t have a magic solution. I’m interested in knowing if the other two have anything about it. I know it’s a really difficult challenge, and unfortunately, sometimes it’s once a problem starts that prompts the discussion. 

Harinda Hundle: We often say that in-house and out-house are, you know, experts. Right. Do you have the expertise in-house, and actually, how do you maintain expertise? Right. And that always, for us, there’s a minimum level of investment, depending on what service you’re providing that expertise requires. There is a cost of capital. So then, for us in the investment game, you need to have scale. If you don’t have a certain scale, you can’t hire the right people to do those jobs. So again, so, and I guess to Lisa’s point, when it’s a little bit more niche, you know, we’re not going to go and hire sort of an in-house art consultant because we know that’s not something all our families are going to want or desire. 

What we then do is make sure, you know, we go out externally and frankly, depending on the art they want. Is it classic, is it modern, is it contemporary? We go and find that person. Right. So, again, I think it’s, for us, it’s just the core of our business is X. Therefore, let’s deliver that in-house because, essentially, that’s kind of the draw for our families. But then for, so to kind of in a sense a big puzzle, to put all the puzzle pieces, some of those sort of individual pieces or many of them are external providers because they are the individual experts. And that’s kind of what we try to do here at the firm. 

Kyle McDonald: Yeah, that makes sense. Sort of playing, you know, the art being the conductor rather than. Right, yeah. The orchestra itself. 

Rebecca McGuire: And I think that goes for inside a family office as well. Because I think early on in my career, when I worked, I mean, I worked all for single-family offices, and I thought in-house was the way to go. Right. Like having your accounting team be able to send a wire first thing in the morning, etc. And again, it was so long ago that the technology wasn’t the same. You couldn’t, you know, immediately get someone to do something for you, but now you can do that if they’re not, you know, sitting in your office. But I think similar to what Harry was saying, you know, we act, you know, we call it the quarterback here in the US but as the conductor. We act like that because we understand what is needed. 

But we’re not going to say we’re experts, you know, in the security field, but I know who to go to, who is. And same thing on the tax side where, you know, I think inside a family office, what I learned, you know, is once you’re inside because you’re so like separated and the confidentiality and the privacy, you lose some of that collaboration and dynamic, you know, interaction. 

Harinda Hundle: You become siloed sometimes, right? 

Rebecca McGuire: And, like, you’re not the top in the tax world anymore. You’re not insecure. You, like, depending on how big your office is, you might be the top in some of these things because of how your funding is, but you’re no longer seeing, you know, what your colleagues are doing at PwC, who they’re working with and that, you know, so knowing, I think what you don’t know and knowing when to reach out to people, you know, is the best way to do it. And I think I’ve become much more of a proponent of outsourcing than bringing everything inside because of the human capital side, you know, having to deal with all of the interpersonal and political issues. 

When you build a massive single-family office, you know, that’s some of what I hear candidates that we work with complain about, which is that they don’t want to deal with the politics and the drama. They would much rather be in a very lean family office that’s using a lot of advisors and, you know, service providers that, you know, not only are seeing what other family offices are doing and like the best newest strategies but also there’s no drama because you’re not like infighting with people about trying to get time with the principal or something like that. 

Kyle McDonald: Something. I mean, very much I’ve seen through a couple of the family offices I’ve worked with was, you know, for the principal wealth owners themselves as well, sort of having this separate family office to the sort of corporation organisation that they’ve built becomes like having a second-day job and they’re busy enough as it is. 

Rebecca McGuire: Sort of. 

Kyle McDonald: One last question in this section, and then I’ve got one final question, which is a bit more existential. But the last question is, and this is to you, Rebecca, thinking about when you’re sort of on the inside or sort of helping to manage a bit of a relationship with a service provider and things start going wrong, how do you either sort, of course, correct or pull the cut the cord? 

Rebecca McGuire: Yeah, that’s a good question. I mean, course correcting. I think bringing them back to the initial contract is what is expected of them. You know, where are they not delivering? Why are they not delivering? Is it something on our side that, you know, our team isn’t providing? You know, I’m trying to think of someone we had to let go. I would say generally, sometimes these companies come on, and they don’t realise the massive undertaking of, you know, an ultra-high net worth family office and all of a sudden, they cannot handle, you know, the amount of work that’s coming. That’s probably one of the bigger reasons why a service provider would fail. 

But I think in thinking back to people that we’ve had to let go, that would be it where they couldn’t manage the amount of work, and they thought they could, and they couldn’t scale fast enough to be able to service. And then, luckily, we haven’t had too many of these. But you know, thinking back to my early days, we worked with outsourced family office services. They did bill pay, they did, they were kind of like an outsourced controller, and they didn’t deliver on the actual controls in place. They let someone approve some bills that had a personal relationship with a vendor out at a property, and they approved some things that shouldn’t have gone out. And so the controls completely failed, and money was paid out that shouldn’t have been. 

You know, I think when it’s time to let go, it’s pretty clear when they’re not delivering, you know what it is that you need and it, things just start to fall apart. 

Harinda Hundle: Three strikes and you’re out. That’s what we’re saying. 

Rebecca McGuire: Yeah, I don’t even know that it’s three strikes going wrong. It’s really going wrong. And again, like back to that, I would like my service provider and my vendors to be communicating with me. Like I would expect them to come to me and say, hey, we lost people on the team. It’s going to be a little rocky, you know, give us a month to hire or something like that. But again, like the transparency when they’re not sharing with me what’s going on and I’m just feeling the pain of, like, I’m sending out to my IT guys who are outsourced, and I’m not getting a response back or what. I’m like, what is going on? Like, what are you doing? 

Harinda Hundle: Getting ahead of the story. Right. I mean, it’s often that. 

Rebecca McGuire: Yeah, what’s going on? 

Harinda Hundle: Like, again, it’s back to that senior access because sometimes it needs someone to step in and say, depending on who the service provider is and their culture, sometimes you just people who will do stuff, but they won’t be proactive to explain things. And that’s where senior management sometimes has to step in. That’s why often if we’re not getting it, we need to go very direct and have an instant response or a very quick one. 

Rebecca McGuire: Yeah. 

Kyle McDonald: Well, here’s a final question, which is facing most of the future, and perhaps it can. We can do it as a bit of a round robin as the geopolitical situation is obviously quite an interesting one and creating a sort of high level of volatility these days. Family offices, I think, now more than ever, need to lean into strategic service providers. Going forward, it’d be great to hear a little bit about why you think that might be important. So, Lisa, over to you. 

Lisa Cornwell: I think there are two. There’s the negative, and there’s the positive. There are so many risks that we don’t even necessarily understand what they are or how they’re going to impact in the next three to five years. So I don’t know the use of AI or, like the geopolitical context, what’s going to happen in the next one, three, or five years; we just don’t know. So, to have proper risk management in-house and diversify the risk, you need to have that kind of panel around the family office where you can get different insights and viewpoints. I think you can only get that with good, strategic, strong partnerships. 

But then there’s the opportunity side as well because there are things changing all the time, and we don’t know what AI will look like in three to five years, and we don’t know what investment opportunity they’ll be in that space. And you can’t have all of that knowledge in-house. In a family office, you just can’t. So I think there’s the carrot and the stick. There’s the risk that the world is changing so fast at the moment. How we use technology, what data is available, and all of those things mean family offices need to make sure they’re really clear and up to speed on what the risks are; otherwise, they’re going to miss out on opportunities as well. So, I think it’s both sides that mean family offices will continue to work with strategic service providers in the future. 

Kyle McDonald: Rebecca, over to you. Sort of a cheeky one-liner as to why you think it’s sort of essential for family offices. 

Rebecca McGuire: I mean, building on what Lisa said, I think the speed at which things are changing, I went to a talk on AI a couple of weeks ago and the speed at which those things are taking off, you know, around legal, around investment, you know, where all of these things are already going to become automated. I think family offices don’t have the scale, and they don’t have the departments that are building out all of these things. But these bigger firms like PwC, you know, Anderson EY, are actually dedicating people to these things, building on them faster, and they’re just going to move a lot faster than a family office. Even a multi-billion dollar family office isn’t necessarily, you know, allocating money to build out X, you know, platform. 

So I think leaning on these outside companies that are putting money into it and as the industry builds on itself, which I think we’re seeing, it’s just getting more and more professional and people are getting more insight into family office and seeing the amount of money that comes out of it. You know, they’re building on these technologies, and these firms are just going to move a lot faster than a family office can. 

Kyle McDonald: Great. And Harry, over to you, same question. 

Harinda Hundle: I think AI is a huge opportunity for family offices. I just think, you know, it’s basically the next stage of technological innovation. And so I think it allows, I think, family offices to really grasp that, you know, it’s not about necessarily the number of people you have in the future, and it’s more smart work and frankly will allow us probably to scale up a little bit more. So I think that there are, you know, everyone who talks about the threats, but I think there are huge opportunities for firms like us who are independent and want to reach out and provide interesting solutions. 

I think the Middle East and the geopolitics, I mean, you know, again, it’s very much sort of the angle you take and you know, families located, for example, you know, in Israel or the Middle East. I think, you know, there’s that this will create huge, apart from the trauma side, I think it’ll create big planning issues for them. Like it just accelerates a lot of things that they, you know, contingency plans they have, but maybe they’re not activating, and now they’re like, okay, we have to activate them. Then there’s obviously the investment risk. You know, are you exposed to the region? You know, if it’s liquid, you know, what’s your view? You can take a view quite quickly. Can you take advantage of that or not? 

If it’s more liquid, it’s real estate in, you know, Tel Aviv, or you know, we’re looking at something for one of our families earlier this year, which looked like a very attractive investment. Now, you know, people are worried about it. And so you’ve got to manage that risk. So I think it really depends, you know, on your exposure. Some families are frankly much less affected by it, but certainly for those from the region who are invested, it’s a big risk, and you just, we’ve got to try to be one step ahead and understand is it going to spread out or is it going to stay local? 

Kyle McDonald: Fantastic. Well, absolutely fascinating conversation today. I really enjoyed it. I hope everyone else did as well. Jess, over to you. 

Jessica Spiro: Thank you, Kyle. And thank you, Lisa, Rebecca, and Harry, for sharing your wisdom so generously with us. Service providers clearly play an important role in family offices. And it’s exciting to see just how these partnerships are helping to shift the industry. This webinar forms part of an ongoing series where we find new ways to shed light and increase transparency in the family office industry. Our next webinar details will be announced soon, so make sure you don’t miss out on that. If you would like to learn more about the work that we do at Simple, including our high-touch service offering and new products for family offices, please reach out to the Simple team. We can act as strategic discussion partners. 

We can help you solve specific problems like finding the right providers, or we can assist with expansion by connecting you with our network across the globe. Drop us a mail or a note in the comment section here. We would love to hear from you. Lastly, thank you to everyone who tuned in today. The Simple Network only continues to grow, and we are so proud to have such an engaging and receptive audience. Anyone who would like to revisit this discussion can watch the recording right here on our LinkedIn page or via the Simple platform. So once more, a huge thank you to everyone who made today possible. We hope to see you at the next one. Bye for now.