The Three Parts of a Family Office Portfolio
Richard C. Wilson presents part six of his how to start a family office series and discusses how he advises families on portfolio design.
Richard C. Wilson describes a family office portfolio built around public markets, real estate and operating business investments. He explains how a family's involvement varies across those areas and why each calls for its own approach.
In this video: Richard C. Wilson (Family office advisor)
What they said
- Real estate allocation. Richard says families he works with usually put 20 to 35 percent of net worth in real estate, sometimes as much as 40 percent. The average family he works with puts about 20 percent into real estate development and 80 into cash flow in real estate. (at 0:54)
- Richard on real estate diversification. Richard says most families choose four to seven real estate food groups. He says they spread investments across seven to twelve investment fund providers and sponsors. (at 5:00)
- Richard on trust in managers. Richard says trust matters more than a manager's projections. In his view, families may prefer a trusted manager with lower projected returns over one offering more when something feels off. (at 3:40)
- Richard on operating businesses. Richard says families should concentrate operating business investments where they created their wealth and have a strong competitive advantage. He says these investments are often concentrated in one or two niches. (at 6:24)
- Richard on public markets as defense. Richard describes public markets as the defensive, diversified part of a family's strategy. Most families stay hands-off, with little time, energy or direction required from them. (at 0:00)
In their words
"you pretty much stay out of it if you're like most people"
"unless there's High leverage and then the whole deal gets blown out because it was over levered"
Why it matters if you are building or preserving great wealth
Richard says the same people should not manage a family's public markets, real estate and operating business investments. A family can use separate teams for each area, so each bucket gets the expertise and oversight Richard says it needs.
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
Which operating businesses does Richard say his group focuses on?
He says it focuses on investing in medical practices and dental practices.
What example does Richard give of a passive real estate strategy?
He mentions converting motels into apartments with a team he found by chance.
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.