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And now here's your host, Fraser Rice. Welcome back to the Wealth Actually podcast. I'm Fraser Rice. Today, we're gonna speak with Brian Adams, who's a principal at Mack International, the executive search firm. It's all fun and games to have a family office until it's time to staff 1. We're gonna talk about finding executive talent, finding the technical expertise, and making sure that the fit, culturally and otherwise, is
correct. We're also gonna talk about some weird success stories and some difficulties as well. Welcome aboard, Brian. Thanks for having me, Fraser. Good to catch up with you. Likewise. We are on the back end of the home and home that only took a, what, 3 or 4 years to for us to execute, which was, me getting my podcast up and running and, yours accelerating into the stratosphere. It's funny you reached back out because I'm actually relaunching mine and rebranding it under the MAC
umbrella. So I have to have you back on, and we could do we can continue our dance. Excellent. So you're at MAC now. You come at the family office world from really, I think, a pretty cool background. You're involved with your own. You started up funds around real estate, and now you're taking it in the direction of, matching family offices and new situations with the really the most important part, which is the people who staff them and the expertise that
families need. Maybe take us through your background a little bit on that. Yeah. Just kinda briefly. I'm I'm from New York, where you reside originally and met my wife in in college in Connecticut. She's from Nashville originally. So we did the northeast thing for a little bit, and then moved back to Nashville about 20 years ago. My wife's family has a family office here, and she's the oldest member of g 2.
So when I joined the family, I got exposure to this whole world of family offices and private equity, and I I really didn't know anything about it beforehand, honestly. And I went to law school. I practiced for a very brief period of time. It was not my cup of tea. But to your kind of as you alluded to, I spent the majority of my career in private equity real estate as a fund manager and then as a fundless sponsor syndicating capital. Did that for a long time and enjoyed Linda
over a year ago now. It's been, almost 15 months. And I'm now a principal and a partner with MAC as an equity owner in the business and work alongside Linda on everything, and then hoping to grow the business and then continue on the legacy that she's built. So the family office space, a lot of mythology and mystery around it, wealthy people who are trying to determine what functions to keep external and what functions to internalize.
When the when they come to you, and they will get into that a little bit in a second. But when a situation comes to you, what sort of the process did you go through to kinda understand what the needs are for that family office? And then, how much are you really consulting with them as to what they need, which I think can be a gray area? Yeah. We use use it as an opportunity even if it's obviously, if it's a de novo startup family
office, we will go through this exercise. But I think it's also useful when we come come in and engage with the family to refresh a lot of thinking. And and for us, it's really these three fundamental questions of who are the clients? Right? Who's being served? Who's meant to be served by the family office? Because that will will really change family by family if it's spouses and and in laws or only a certain generation or etcetera. So who's being served?
What services are being provided? Right? So what is the expected service menu to those clients? And then what should be outsourced versus in house? And that buy versus build question that everybody asks. And those three questions all kind of linked together because that exercise of going through okay. Well, yeah, let's think through who the client should be here.
What services do we wanna provide? Because as you know, there's a lot of, what I would call, creep in service provision within families oftentimes over the years. And then that buy versus build question really goes goes directly from those first two investigations to understand, okay, what should we be doing here? What would make sense to outsource to a 3rd party? Or what do we even not want to
to do? Should maybe we don't wanna be a concierge provider any longer or investments are gonna be something that people do on their own, etcetera. So those are the 3 fundamental questions that we always ask when we come in, and and that helps really set the table for what the scope, role, and responsibility will be for this person that we're looking for. Let's start with the de novo situation. So a family has determined that,
they've made a ton of money. Maybe there's a huge liquidity event, something like that. How does that opportunity find you, and have they reached out to a consultant first? Have they do they come to you and say, jeez. You know, I I need a family office, whatever that means, and I know I need someone to help build it. Are you part of that solution, or or or has that come a little bit more
fully formed before it reaches you? In the fact pattern of of a de novo startup, usually, the introduction comes from either either a trust and estate attorney that's working with the family to help structure things and set things up, or the tax professional who the family is working with, or one of the large banks. Because, typically, if there's been a transaction, it's one of the large Wall Street banking teams that's working with the family.
And it's they understand that the transaction all the 3 service providers that I just referenced understand that the transaction is a scale and scope that goes beyond what what the traditional banks can handle and manage, or maybe the family has, motivations around discretion, control, privacy that would motivate them to start up a family office, and that's usually how the introduction
occurs. And we have the benefit, and I have the benefit of Linda having done this for 22 years, and she just knows everybody, and everybody knows her. And so we we usually get a phone call there. And on the de novo side, it's typically just a direct relationship. Although, sometimes, there is kind of a RFP, you know, process that we participate in with, you know, some other providers.
Is the opportunity comes to you and you look at what, the mandate let's say they say, we we needed an executive to run this, or we need a controller to make sure that the dollars are going in and out and so on. When you're thinking about that and you're thinking about it in terms of, sort of locating the talent on that, my guess is is that you've got a in many ways, a database of people who are out there.
Maybe you have a search, and maybe the database doesn't have the right geography or it's light on that particular function, and then you have your network of people,
to surface other candidates and so on. How does that process work for those people who are in the industry or are, let's say, part of the adjacent industries like, you know, accounting or law or investments, where they're interested in the family office space, but, these these roles seem to sort of magically appear and magically get filled kind of in the ether. And it can be frustrating from a candidate's perspective. The the challenge from our world is if we just put it out on on LinkedIn,
we would get inundated. We just don't have the capacity to manage the flow that would come from that. And so we have a very regimented and thought out process. We're actually as part of our what we are referring to internally is kinda Mac 2 point o. One of the things that I kind of I referenced earlier, I come from a syndication background, and so I understand funnels and segmentations and campaigns really well. One of the things we're doing is migrating to a new CRM to help us
formalize this process. But but to your question, yes, we have a database that's frankly, the most holistic wide ranging comprehensive database of family office professionals in the country, in my opinion. I mean, it's pretty remarkable what Linda's built over 22 years. And so we will curate a list of folks that would get this opportunity.
And it's a dispersion of direct candidates, folks that we think would do really well here, centers of influence, or people, you know, who just are in that ecosystem either from a service provider perspective or geographic perspective or as you know, in many of these geographic communities, there are family office networks who, you know, will post opportunities or will send it along an email distribution list. I'm also a member of YPO, so I'll
leverage YPO. I'll put it on some of our WhatsApp communities, post it to some of our networks, or I'll kinda directly call into some of the YPO contacts I know and whatever city or geography the the mandate is in to make sure we're going as far and wide as possible to talk to everybody. So it's it's multifaceted. There's also a number of newsletters that we'll post too.
So it's it's curated, but also kind of fairly broad and, and it's it's a it's we're trying to kinda tightened up, to be honest with you. One of the things that I find interesting in in sort of that staffing role, and I see it a lot at the trustee level, but, especially in the family office world. The the technical aspect, I think, is, in many ways, the easiest. The next one is sort of getting the minds to meet as far as compensation.
But then the part that I'm fascinated with oftentimes is is the cultural fit and how you, how you think about that when you've got let's say, you know, the the dollars kinda work, the technical capability and the executive leadership are gonna work, and but then that cultural fit is something where, both sides, I think, are putting on a good show early on. And then, let's say once the once the match is made, how do you try to surface that so
that, people feel comfortable walking into it? Because it seems like it's it's a big risk for the executive because you're going into a place where essentially you have one client. And if that doesn't work out, that that's not only sort of a time problem or a, you know, an opportunity cost problem, but that's a that's that's a weird explainer. And then the families, they they just can't be having turnover. You you create distrust within the family. You you all sorts of issues.
From your side of things, when you're putting the matches together, how do you think about that so that you're not, a, not wasting everybody's time, and then, b, not sort of putting people on the path to a mistake when when other things look like they're gonna work. I think you hit the nail on the head off the off the start here when you talked about culture fit. So for us, the technical skills are table stakes.
Right? We we're working with a a cohort of candidates inside our kind of database in our pool who we know have the requisite trust and estate background or tax background or subject matter expertise and win whatever role we're looking for. I would say, you know, 80% plus of this is culture fit. Is this person service oriented? Are they going to mesh with the family dynamics? Are they going to be able to build deep and meaningful relationships that endure over multiple generations?
And that's where we do view ourselves as consultants.
And we do search differently than other groups, especially the big firms, because we spend a huge amount of time on the front end in these 3 60 conversations with the family office members and and staff and trusted advisers and and other service providers to really hone in on what the family culture is, what the values are, what the dynamics are so that we can be a screen and a filter for folks that they might have the technical skills, but for whatever reason, they're
just not going to be a culture fit. We can kinda save that brain damage and and heartburn and time for the family. That's the big service that we do. And present to them a candidate pool of, you know, 10 or so folks that we we think would be a really good culture fit within them. And that other piece that you referenced, the compensation piece,
I agree. I I think that world's changing though with the work that Botox and some other folks are doing to really professionalize and institutionalize the compensation world so that it's not as much of a black box any longer. And families know what market is. Candidates know what market is. And we always tell families that the market will come to you. Right? We we don't kind of messes them necessarily what we think the number is going to be, But the market is pretty efficient at this point.
And you you you pay for certain things, and you make certain decisions based on that. But I I think we all kind of have a sense of the role, scope, responsibility, and then the geographic area of what it's going to look like. To get back on the compensation for a second, the, you know, the people who would be heading a family office, the that sort of senior executive, they're gonna be used to a salary of whatever level that is, and I'm sure that's pretty efficient.
But the upside component, and equity, or, you know, phantom equity or however that sort of works at the family level, That is it would almost seem to be a little bit idiosyncratic, with respect to each family either to temp depending on, let's say, the family business that's bolted on to the wealth creation of the family or with what they wanna do going forward. How are you thinking about that?
I guess to some extent, the executive can be the, creator of of the business model on which they're gonna hopefully benefit and serve the family going forward. But at the same time, if you're coming from a family that has a tire company or something like that, and that that's still a major component of the wealth and maybe there isn't an exit planned immediately. How do you bridge the gap on that?
Or is that something that it just comes up in the due diligence process pretty quickly on both sides and there it's either gonna work or not? I think the most interesting thing occurring in the space today is, you know, families realized 10 or 20 years ago that they had advantage in the investing landscape because they had permanent capital, flexible capital, and they were largely unregulated in terms of what they could or couldn't do, which allowed them to create alpha on investing.
Families and candidates are now realizing that those same dynamics and factors give them an advantage in the marketplace when it comes to compensation structure.
So you're seeing a lot more creativity around long term incentive plans, carried interest participation, profit share, you know, potentially the family offering up a line of credit accessibility so that these individuals can participate, pair of pursue, on kind of a most favored nation status alongside the family into private equity funds or direct deals, etcetera. So it's really exciting to see that, and it's really helping align incentives.
And I'll actually answer the question that you asked because that just was my commentary, but that's one of the things that we do is depending on the structure. Right? So if they had this massive liquidity event, then, yeah, everything's pretty much on the table, especially if they're gonna be doing a lot of investing. If they still have an operating company, it's an embedded family office. There's not a lot of liquidity. There won't be the ability to that, hey.
If this is going to be from a candidate perspective that, hey. If this is going to be from a candidate perspective, one of the driving reasons you would do this, this might not be the opportunity for you. Right? And so we try to get out in front of those things because we now understand that there structurally are gonna be some challenges here in terms of what will or will be on the table for options for compensation packages. The type of talent that we're talking about is not cheap.
Starting and running a family office is expensive. One of our colleagues, Eddie Marshall, has the sort of, funny bromide that there's sort of a 3 by 3 problem. You spend 3 years $3,000,000 and, you know, then you kinda see what you have at the end of it, and then you probably you may have to change everything all at once, and you may be spending way above that. Costs, how do you have that discussion with people, or do they, quote, unquote, know what they're doing going into it?
Or and are are there situations where all of a sudden they get halfway through and they're going, oh my gosh. What's the the the dollars we're talking about here are different than than what we than what we anticipated. As a general observation, and this isn't just family offices, this is financial services and professional services across the board.
Compensation's going up. There just aren't enough folks who are our age, millennials and and gen xers who have the requisite skill set, the technical expertise, and the experience to step into the shoes of these retiring baby boomers. If you just look at the numbers, there aren't enough people, which is a supply and demand problem and compensation is going up.
What we always what we caution families when we start this, if that's gonna be a huge issue is you need to look at things on a holistic basis as a return on investment. So you can't just look at this salary or compensation package on an isolated basis, and say, well, I'm not getting my money's worth.
Because you and I both know there's are plenty of levers to be pulled by somebody that if they bring in the right expertise from a tax or a trust perspective or they have the right accessibility into investments, if they're saving you 20% on taxes or you're able to now deduct the business expenses of your family office because they instituted a lender model, Mean, these things are very hard to quantify in relation to what you're paying somebody on a salary basis.
So we always caution people look at it as an ROI. The other thing too, which is hard, there's just been this and I referenced this earlier many times. The roles and responsibility of a CEO of a large single family office are just massive. I mean, you're talking about somebody that has expertise and knowledge across private aviation, estate management, bill pay, technology, trust and estate, tax, accounting, investments. It's a big job.
And if to get somebody that understands all of that as the what we refer to as the expert generalist across the various spectrum of wealth management and asset management who also is a culture fit, is just challenging to find that person. They're they're hard to get, and you have to pay for that if that's what you want. So I know that was a long winded answer, but it's multifaceted. And we do try to kind of manage expectations in the front end, but you can't look at things in isolation.
Compensation is going up. And especially because of technology, the C suite folks now have a broader responsibility in that seat than people did 10 or 20 years ago. Sure. I mean, I was gonna talk about the cyber component in a second. But one thing that's I that I find interesting is, you know, you talk about family governance. You talk about bringing in family members either into the family business or into the infrastructure around the family office.
How often do you see families run a search and include family members not only in the decision making, but maybe within the search, to try to inject competitiveness into the process, or otherwise, maybe even help the family understand what skills are and aren't there within the family members so that they understand what they're what they have.
For us, what we're seeing, which is really interesting is, I think, with the institutionalization and professionalization of the entire industry, expectation levels are going up, which is good for everybody, especially service providers. We all have to kind of up our game. But for candidates now, a really big question that we get right off the bat when we send out an opportunity, a mandate search, is talk to me about the next gen, talk to me about the engagement.
How old is the board? What's the average age of folks that are trustees? Do they have independent trustees? How old are they? And these are things right off the bat. And so it's becoming a big issue because candidates are now going into boardrooms, and they're looking around and they're seeing everyone there is 65, 75 plus. And the candidate is saying, well, I want
runway. I want 10, 20 years plus to be in the seat to do it to to execute on the vision that I have and to help really work with the family. And if that's what the landscape looks like today in the boardroom, who's going to be around the table in 5 or 10 years? And so we are now coaching, consulting, talking with families on the front end that, hey. You need to get next gen involvement on the search committee.
And it's not enough that you've got next gens on the foundation board and you're teaching them how to give away money, which has really been the playbook for the last 20 years, not really worked very well. You need to get people in the seats as a member of the board, on the investment committee, as a member of the search committee, you need to get independent trustee succession plans in place so that those folks are in their thirties or forties, and they have 20 years ahead of them.
These are all things that are coming to a head where we spend a lot of time, and I think it's better for everybody. And oftentimes, the search could be a catalyst to force those uncomfortable conversations and actions to take place. To get back to that private board experience, that in that independent trustee experience, How involved are you in in populating boards and and trustee seats?
It's just an interesting question. We talk about this internally because we do get inbounded quite a bit by families saying, oh, we need a new independent board member, or we want somebody to serve on the investment committee. And it's changing, but the compensation just isn't quite there yet. I mean, you're still looking at I'm gonna throw some numbers out there, which is always dangerous, but 25 to $50,000 a year to serve on these boards or in those seats.
And especially as a trustee, I mean, you know better than most, the liability associated with that versus the compensation is a huge disconnect in the marketplace. It just doesn't make as a somebody who's retired their license law license, there's just not enough DNO in the world for me unless I really knew the family and and really understood what the structure was gonna be and the mandate and was papered correctly. Because even in great families, these things happen, right?
So the compensation is not quite there in the marketplace, although that is changing. And that's a world that we would be interested in getting into. But right now, given what families are willing to pay and then what we think is the the risk and liability associated with it in many instances, there's just a huge gap there. So we we hope it changes, but that's kind of we do get that request a lot, and
I think it is changing. But, yeah, it's it's it just people need to really understand, I I think, the the liability and risk associated with it. From a global trend standpoint, what are you seeing, as it relates to size of families where
this process really makes sense. You know, that to me, the number thrown out is 500,000,000, which to me, if I sort of back into, you know, an executive, maybe an investment person, a chief operating officer, some staff, some rent, I mean, that starts to become a meaningful percentage very quickly of 500,000,000 and even the 1,000,000,000. At what point you're in the middle of it, so you see it probably a little bit differently than I do. I'm more on the multifamily office
side of it at this point. But the what what is that size? What are those costs in general, without, you know, as you say, not throwing numbers out because sometimes that's the the it can age like milk.
Yeah. And I'm going to evade your question, and answer so what's interesting is what's happening now is there are questions now happening internal to families, and also candidates are coming in and asking these questions of what are the expectations around the family office as an independent business unit? In other words, what would what would be successful in 5 years
and how are we gauging that success? And what I mean by that is, are we viewing the family office as a profit center, as a cost center, as a revenue driver? Is it a loss leader to achieve other goals that the family has in terms of funding a foundation or maintaining a quality of life or, just having fun. Right? I mean, there's no judgment associated with any of those decisions, but those are the questions that I think are now being asked.
And I talked about leveling up the expectations of the industry. People are now viewing these family offices less as a place where a trust officer comes in, they try to manage the tax and the accounting and the bookkeeping and the reporting. They they're very dynamic organizations.
And so when you talk about the number required for it to make sense, I think it's hard to put a number on there not to evade your question, but to say, I think the real the real investigation is, well, what are we trying to
achieve here? Because we've worked with some families that have much less than 500,000,000, but the rationale behind why they wanna hire somebody internally totally checks the box from a privacy discretion control, or they have a mandate they're looking to execute on, and they have that value and culture with family office, we can help them. Meanwhile, there are some huge AUM folks that, you know, they still have really fundamentally an operating company in every way that you can imagine.
And they approach us and they say, hey. We wanna hire somebody, and we kind of investigate their rationale and why they wanna do it and what the vision is. And we just say, hey. We can't help you. You really need a private equity chief operating officer or somebody who comes as a from a GP background. And that's great. That's not really what we do. Right? We see this in real estate a lot as well.
So there are numbers, and everyone's seen the compensation studies, and we know kind of what the breakdown is on the surveys. But for us, it's more fundamentally, what are we trying to solve for here? To wind up here, it's sort of a 2 part question, which is what happens when there's there's an exit from a family office of an executive, a non family executive? Or what happens if a family kind of looks at things and says, we're subsidizing
a lot here. Can we bring another family on to, avail themselves of this excellence that we've built, but at the same time, help us get back to that breakeven standpoint if their if their vision for the family office has changed. These are conversations that are occurring, I think, across the board. And that's where I'm I'm really bullish on the RIA boutique multifamily office space for a lot of reasons.
And this is one of them because I think that you can achieve efficiencies of scale working together and aggregating capital across the platform, especially when it comes to some of these back office functionalities. So we are seeing that investigation occur. What we're seeing kind of best in class and and what we usually, when we consult with a family, everyone's kind of going through, especially with this advent of technology, and it wasn't trying to internalize these tech stacks.
We really think depending on the service being provided, it could be 1, 3, or 5 years, but there needs to be a regimented process where you go to market and you price that out. You run an RFP and you say, hey. For bill pay, this is what we're paying internally to do it now today, and this is the human capital it takes, and this is the cost associated with it, and this is the quality of service we're getting. These are 3 other options in the marketplace that if we were to outsource, this is
the cost. Maybe we're sacrificing some quality and some control. But on a cost basis, we think relative to what it would be, it makes sense to outsource it. That's what we're seeing. And I go back to these kind of, is this person is this executive a business manager and a business leader? I think those are really healthy conversations to have. It can be frustrating because from the outside, people are saying this family is schizophrenic. Every 10 years, they work with an OCIO,
and then they fire them. Well, things change. Right? Performance, net of fees after taxes, and this changing landscape of the leadership internally, maybe they've decided, hey, for whatever reason, we now wanna internalize investments, or another administration comes in and says, no. Let's go work with an external OCIO, or we'll migrate over to a multifamily office platform for some of our for some of our assets or some of the services provided.
So I think that's part of this why you're seeing such a fluidity in the market as people are now trying to understand what's the core services provided by the family, and then what are these add on a la carte services that maybe we could outsource or bring in a a third party, to help be a more cost efficient service. Last question. We alluded to cybersecurity before and sort of general security matters.
How much is that skill starting to become more and more important, and does it exist within the pool of candidates now? It's a problem. It's a problem for everybody. It's when you talk to principals about what keeps them up at night, and they you kind of take out the black swan stuff. I think cyber is probably the biggest one, frankly, just because of the horror stories you see out there.
The the challenge is unless you're an embedded family office where you have access to an actual team internally who kind of live and breathe this stuff every day or you're a really big family office that can afford to do it, It's just such a fast moving place that even if you have a CTO internally, we really advocate to explore having a 3rd party consultant come in on a monthly, quarterly, annual basis and stress test the system, do a risk assessment, and figure out solutions that you can
bring in a third party for. It's just very hard to have that responsibility internally. And so oftentimes, for the CEO president, we don't expect them to be a technologist, but we expect them to understand what the market looks like and how to run a process and how to bring in what we would call we're often seeing families want, like, a chief of risk officer who's looking at risk across the spectrum. It could be physical risk. It could be cyber risk. It could be investment risk.
That's part of this job description oftentimes. And so we want them to be able to know enough to bring in a third party consultant or service provider to achieve whatever the family needs on that front. Really good stuff. Brian, thanks so much for coming on. How do people find you? And, both from the Mac world and, with the podcast that's being, reengineered? Yeah. Appreciate that. It's always a pleasure. You ask such good questions.
So I'm very active on LinkedIn. Just look me up, Brian Adams, Mac International, or you can go to macinternational.com to our website And, feel free to reach out. If I can help, let me know. Thank you for listening to this episode of Wealth Actually hosted by Fraser Rice, author of the book Wealth Actually and a leading private wealth manager.
Head on over to wealth actually.com where you can subscribe to this podcast, get your own copy of the Wealth Actually book, and connect with Fraser directly. We'll see you next time on Wealth Actually. Fraser Rice is an employee of Next Capital Management LLC. This podcast is not investment, legal, or tax advice, nor does it reflect the opinions of Next Capital Management. Any opinions represented in the show are Fraser's individually and not endorsement of the guest.