Family Office Mistakes in Direct Investing and Wealth Stewardship
In a podcast segment about family office mistakes, Richard C. Wilson addresses family offices, private investors and investment managers.
Richard C. Wilson discusses mistakes he sees in family offices and among newly liquid investors. He covers investment choices, planning after a sale, team coordination, spending and oversight, drawing on examples from clients and his own work.
In this video: Richard C. Wilson (Podcast speaker)
What they said
- Concentration in direct investments. Wilson says families should usually concentrate direct investments in one or two areas where they can protect the downside or are building relevant knowledge. He warns that spreading direct deals across unrelated industries can mean trying to learn too many fields at once.
- Allocation after a liquidity event. Wilson says people who sell a company or go public often start allocating without a plan or a defined investment focus. He recalls clients losing five and ten million dollars quickly after exits of over 100 million dollars.
- Richard C. Wilson on remote team projects. Wilson describes projects that continue for months after a principal has moved on or changed direction. He says regular communication, KPIs and a team rhythm can help prevent that work from being wasted.
- Spending after a liquidity event. Wilson says some clients spent three million dollars on a summer vacation, while others had burn rates he viewed as unsustainable. He gives five to seven years as the period in which that spending could drain wealth.
- Richard C. Wilson on portfolio control. Wilson says families can use sponsors or outsourced CIOs when they want more control, and delegate more of diversified assets to a wealth advisor. He describes activity software taking random screenshots and says he checks activity when performance raises a concern.
In their words
"how to add value to investors you're working with"
"those are three different things which need to be managed and treated differently"
Why it matters if you are building or preserving great wealth
Wilson said a top-of-market home could take years to sell. His example of a client lifting and rotating an 8,000-square-foot house for a sunrise view shows how a specific preference can narrow the pool of future buyers.
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Anu Aga: Focus on one main cause. Her family found its giving more satisfying and impactful once it chose primary education for the underprivileged in India.
- Binod K. Chaudhary: Never chase a deal out of desperation. Stay cool and look at every part of the deal. Have your advisers and your finance team review it critically. Your counsel should review it too.
- Larry Connor: Learn from every mistake. Larry's team owns its failures and makes no excuses. They learn, change quickly, and keep getting better.
See the data
Frequently asked questions
What did Wilson suggest for learning an unfamiliar industry?
In his stem-cell example, he described attending five conferences a year, reading industry magazines and reviewing 50 deals a year. He said that within a year or two, someone could begin separating the very bad deals from average ones.
What example did Wilson give of a costly home purchase?
He described a client who bought the most expensive home in a neighborhood, then lifted and rotated the 8,000-square-foot house 30 feet for a better sunrise view.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.