There is a word we don’t use enough in wealth management: Entrepreneurship.
Despite an undeniable trend toward independence over the past few decades, this movement hasn’t always translated into the freedom to make decisions on an advisor’s own terms. Indeed, some teams have left large banks and wirehouses to join independent registered investment advisors (RIAs), but then find that many of these platforms impose certain constraints on the way they handle clients.
I thought about the concept of entrepreneurship a lot over the past few years. I spent a large chunk of my career providing counsel and guidance to ultra-high-net-worth families at large financial institutions, but, despite all the resources that were seemingly available, I felt like something was missing. It turns out it was an entrepreneurial spirit.
Many ultra-high-net-worth families built their wealth through their own businesses. They took risks. They matched their own capital with sweat equity. And they made decisions on their own terms. Even as the founders transferred their businesses and wealth to later generations, the spirit of entrepreneurship continued to underpin their families’ values.
When my partners and I started Callan Family Office, we did so with the conviction that an entrepreneurial approach was the best way to address the needs of the families we serve. We are entrepreneurs working with other entrepreneurs.
More than independence
What does that mean for us, and for any other advisor who truly seeks freedom and innovation in decision-making, instead of simple independence?
First and foremost, it means that we get to build from scratch.
When independent advisors join a platform, they often are given an off-the-shelf technology platform. Our experience suggests that most broad platforms aren’t equipped to handle the specific needs of ultra-high-net-worth families. Applications that work in general wealth management or even in private wealth don’t always fit with the complexity of ultra-high-net-worth needs.
For instance, many investment applications in tech stacks focus primarily on the liquid portions of portfolios. Given the size of the accounts, and longer-term time horizons and risk profiles, ultra-high-net-worth families have greater allocations to alternative investments.
‘An institutional approach to wealth management’
Which brings up another advantage of starting from scratch: You have more freedom to choose among investment options for each client’s portfolio.
It seems like a basic requirement, but it’s not. We know that many RIAs chose independence because they grew tired of the pressure to recommend investments pushed by their bank or wirehouse. Yet several RIA platforms have a variation of that same theme. They limit what options are available, particularly when it comes to private-market investments, such as private equity, venture capital and private credit.
Ultra-high-net-worth families are accustomed to an institutional approach to wealth management. That means a balance between public and private opportunities, and some opportunities, like direct investment, that aren’t suitable for other types of investors.
This freedom of choice extends beyond investments to services: Putting your own capital in the business means you can build the practice the way you want to. For instance, we started Callan Family Office with an in-house philanthropy consultant and estate attorney, since both areas are important to wealthy families. Some RIA platforms provide these services, but many rely instead on outsourcing. We feel that, as a firm, we want to be able to provide counsel on all aspects of the decisions most important to clients.
Skin in the game
Lastly, being an entrepreneur in wealth management means you can work with the people you want to. Our 22 partners at Callan Family Office funded our business. We all have skin in the game, meaning we all had the appetite and mindset for the risk necessary in any entrepreneurial enterprise. That’s important.
People get into wealth management for a range of reasons, and anyone who has ever worked at a big bank or even a big RIA platform knows that there is unfortunately a wide range of expertise, skill, and commitment among advisors. Starting from scratch allows you to ensure that every person who carries your brand has similar values. In our case, we are all entrepreneurs, and we all came from a background with deep expertise in family wealth. That puts us in a great position to support one another, and, equally as important, to hold one another accountable.
That extends to clients. If there is pressure to grow our business, it comes from our own goals and vision. As a completely independent, entrepreneurial firm, we choose with precision the types of clients we want to serve. We can be selective, without a platform or firm setting growth objectives that might tempt other advisors to scramble for clients that don’t fit.
Entrepreneurship isn’t for everyone. Yet, our experience has been that, for the wealthiest families, the freedom that comes from being truly independent allows us to match our own approach with their entrepreneurial values. That is an opportunity we couldn’t pass up.
Jack Ginter is chief executive officer of Callan Family Office, an independent firm fully focused on delivering precise and objective counsel to families, foundations and institutions.