Michael Zeuner: The Making of an Integrated Advisor

Speaker A: Hello and welcome to the Private Wealth Podcast hosted by the Ultra High Net Worth Institute. I'm Joe Reilly, head of Circulus Group, a family office network based in Greenwich, Connecticut. Today, we are very pleased to be hosting Michael Zuner, co founder and board member of the Institute. Michael's career tracks major changes in the industry, and he applies his background in consulting to understanding where we are are. Today we discuss the shift from supply side to demand side and wealth management, the birth of open architecture, the journey of genspring, and the founding of We Family Offices and the challenges their families face. Michael Zuner is a managing Partner at We Family Offices. He is a nationally recognized leader in the family office industry and was honored with the 2025 Family Wealth Report Outstanding Individual Award for his contributions to the community. He also hosts the Wealth Enterprise Briefing podcast, a platform dedicated to exploring complex topics for investors and families. Previously, Michael served as a senior executive partner at Genspring Family Offices and as global head of wealth Solutions at J.P. morgan Private Bank. He holds an MBA from the University of Chicago and a BA from Brandeis University. Please enjoy my conversation with Michael Zuner. Maybe I'll just ask you where you're from. Where'd you grow up?

Speaker B: I grew up in Bucks County, Pennsylvania, where I spent my formative years in a little town called Yardley, which is about halfway between New York City and Philadelphia. And then When I was 16 years old, my family moved to Boca Raton, Florida.

Speaker A: And where did you study?

Speaker B: I went undergraduate to Brandeis University in Waltham, Massachusetts. And then I did my MBA at the University of Chicago. It was then called the Graduate School of Business, now called the Booth, back in the late 80s. I graduated in 1990 with my MBA.

Speaker A: And when you were an undergrad, you were fascinated with shoguns.

Speaker B: It's funny you say that. I. I, uh, studied sociology. That was my degree. And mostly what I focused on was social structure and the way big governments and societies organize themselves. And when I was a senior in college, I did an honors thesis for my degree where I wrote about Japanese social structure that went all the way back to the days of the shoguns and how Japan transitioned from a feudal society into the more modern society that we know today.

Speaker A: So from the shogun period all the way up to modern day.

Speaker B: Yeah. And how that transitioned. And you did that all in 50 pages, maybe 75. Okay. And, and, and by the way, I used a word processor. Oh, it was about six feet large. Okay. With those big floppy disks. You remember the big floppy disks that you would take in and out. But I did use a word processor to write it.

Speaker A: And where did you, where did you end up working after school?

Speaker B: So I went to work in Boston. I was supposed to actually. I'd been accepted to the University of Chicago's MBA program right out of undergraduate and I was looking for a summer job in Boston and wound up getting an offer from a bank that was called Shawmut bank, okay. Which then ultimately got merged through all the banking mergers, I think ultimately into bank of America, went Fleet, et cetera. But anyway, there was a woman who I consider my first mentor, a woman named Anne Holloway, who I had gone through a temp agency, actually. Do you remember temp agencies? I had gone through a temp agency to find a summer job. And Ann, um, interviewed me. I had been hired to basically answer the phones and it was a business lending group. And Ann said to me, I think you can do more than answer phones. And again, back to the PC. I think it was Lotus 1, 2, 3. At the time there was no Excel, but she saw that I had lotus 1, 2, 3 skills and she said, let's put you to work doing Lotus 1, 2, 3. And then a few weeks later she said, what are you doing as a temp? And I said, oh, I'm just doing this because eventually, uh, I'm going to go to business school. She said where? And I said the University of Chicago. She said okay. She goes, I'll make a deal with you. If you want to work with me for two years, I'll give you real life training. You can go through the credit training program. You can really learn what business is. And then if you want to defer your MBA and get that experience, what do you think? And I said that sounds like a great idea. So I deferred my MBA for two years and worked as a small business lender out of the, actually it was the Chinatown branch of the Shamat bank, working with the lenders, making loans to small businesses including Chinese restaurants, fish companies and uh, taxi medallions was the specialty of this branch. And it was good old fashioned banking, spreading financial statements, doing loan underwriting and credit analysis. It was great training Joe. After B school I started working in consulting and I worked for Anderson Consulting for a couple of years and then switched to Booz Allen. Where, uh, in Booz Allen I was in the New York office in the financial services practice and I spent a few years working back then. This was the sort of early 90s. A lot of the big commercial banks in New York City and internationally were looking to make A transition to become investment banks. And so I did about 10, three years worth of project work with large commercial banks in their nascent investment banking groups, helping them map out that transition and what it would take.

Speaker A: And what did you learn in your years there?

Speaker B: I like to say that what I learned there was a foundational skill set as a consultant that probably not until 10 or 15 years later did I understand how important it was and the implication of it. But what I learned in the consulting days was that essentially as, uh, an advisor. As an advisor, right, A consultant, your job, you work in a team, you, your client is a senior decision maker who has a problem. And your job is to go and ask questions, understand the problem, frame it, play it back, go out into the marketplace, do research, do analytics, look at best practices, talk to clients of the customer, talk to competitors, and basically come back and frame up for that decision maker a series of choices, series of options. And at the end of the day, it's ultimately that senior business decision maker's choice, right? He or she owns the decision. But our job as advisors and consultants was to help them make a decision, right, with a sense of confidence and information and background and context, and to help basically look at different implications to different decisions. And I didn't really recognize this at the time, Joe, and we can talk about this a little bit later, but what was happening in that consulting conversation was that our firm was being paid a fee. And whether that client chose recommendation A, B, C or D, or whether they came up with their own or some combination, our fee was the same. Uh, and I took that for granted. There was a project fee that was paid for the work, irrespective of the outcome. And that was negotiated up front. And then we just went about doing our work and giving our advice. And we never thought about the fee that was being charged or the economics of our firm. Of course we were incented to do a good job and get, give advice and give high quality advice, but it was never about directing them to a particular answer because we needed to earn a fee or that our fee would change if they went with decision A, B or C. I remember building a very large model at that point. It must have been Excel, one of the earlier versions of Excel, for the Chase Manhattan bank, for the investment bank or the commercial bank there to do what was called a share of wallet analysis, where we estimated based on publicly observable facts in their annual reports, in the statements they filed with the sec, what they were spending on financial services in both commercial banking, transactional banking, and investment banking. And then we compared that to the revenue that Chase was earning from those clients. And we built a monster model to predict what our share of wallet was. And I think there was a lot of traction and acceptance of that by the bank as a tool to help them move forward and prioritize where they put resources and how they approached getting into the investment banking market and where their relationships were strong because they had a high share of wallet.

Speaker A: And you liked this world so much you decided to, uh, go work there.

Speaker B: I actually one of our contacts at the Chase Manhattan bank asked me if I wanted to come work for the client. Right? Typical consulting to client move. And he was the CFO of the Chase Manhattan bank. And I spent some time with him and he said, listen, there's someone that I think you should meet who thinks a lot like you, who you would get along with. Now, this was 1994, 1995, maybe even a little bit later, maybe 96 or 7, anyway, sort of mid-90s. And he said to me, go and meet with Mel Laga Messino. And I said, who's he? And the CFO said to me, first of all, okay, it's she. Second of all, her name is Maria Elena, and third of all, she runs our private bank. I think the two of you guys would get along. I think he was right, Joe, because I'm still working with Mel 30 years later. Okay. And I went to work with Mel and I really didn't know anything about private banking. I remember the first conversation that I had with her in her conference room, and again, I was approaching it in a consulting headset. And the job was to be head of strategy and marketing for the private bank that she was leading. And she said, tell me about you, tell me your background, what do you believe, Et cetera. And I said, mel, I said, I've come of age both in business school and in my last five years since business school, where what I've learned is there's really two kinds of companies out there. There are companies that make something and go try to find as many people as they can to buy it. And there are companies that have customers who try to understand what their customers want, and then they try to either manufacture or provide that service based upon, uh, what the customer wants. The first is really a supply driven model where you manufacture or have a service and you go find people who want to buy it. The second is a demand driven business where you go out and you say, okay, we have customers, let's figure out what their demand is. And then let's solve it. And Mel said to me, Michael, I believe the same thing. And what I'm trying to do with the private bank at Chase Manhattan is we have awesome customer relationships all around the world and I'm trying to figure out what they need and I want to build a business that helps them buy things as opposed to tries to sell them what we make. And the really interesting thing at that time, Joe, and I think it was a confluence of factors, but we had just come through the Latin American debt crisis and Chase had just sold its proprietary asset management business, I think to credit sleath as a way out of that, transact out of that situation and to raise some capital. And there was a point in time again in this sort of mid to late 90s where the Chase private bank where there was no proprietary asset management capability, it had been sold. And so when you connect that dot to demand driven businesses, our clients were wealthy all over the world and we needed to go and find them great investment solutions that we didn't necessarily manufacture. Now we didn't call that open architecture in the late 90s, okay. But ultimately that's what it became. And this idea that if you were a private bank, you could bring your clients investment solutions that were things that you didn't necessarily manufacture that somebody else manufactured and you could go out and source the greatest solutions and the best solutions in a way that was driven by what you felt your customers needed as opposed to by what you actually manufactured. Now Joe, that was a very limited period of time and we started merging, right? And the banks got bigger and bigger and then ultimately we wound up with a proprietary asset management capability. Obviously it ultimately became J.P. morgan. But the interesting thing was back in the late 90s we were experimenting, and again we didn't know to call it open architecture, but we were experimenting with this idea of helping families buy the right financial products and services as opposed to necessarily selling or distributing financial products and services that we manufactured to as many families as we could.

Speaker A: What gave you the confidence that this demand side business would be better than the supply side that had predominated forever?

Speaker B: Yeah, I think that was a trend in the late 90s if you looked at uh, probably the best example, Joe, and there was there were a lot of papers and Harvard case studies and I learned this in business school in the strategy classes. But probably the best example of the company, at least back then that was doing this and was held up as the exemplar was there was this new airline called JetBlue. And before JetBlue right? Most airlines were government regulated. They were big bureaucracies. They had planes. It wasn't about service, it wasn't about flexibility. It was. They were basically makers, right? They set their flight schedules and they did what they did. And then all of a sudden comes JetBlue in a deregulated world that says, wait a minute. We think consumers want a different experience. They want to have a little more fun when they fly. They want better service, they want lower fares, they want more convenient schedules. And I'm not the expert on JetBlue, but I remember at that time that there was a huge. And JetBlue was hugely successful in its early years for disrupting the aviation industry. And we look to that as sort of a model, right, for what we could do, maybe in the financial services industry, in the wealth management. What else gave us confidence, frankly. And, uh, this I attribute to Mel. Mel had already been working in private banking for many years. Right at that point, she was a senior leader in one of the larger, largest private banks in the world. She was very close to customers. Her entire career was based on advising families all around the world. And one of Mel's special skill sets is being able to listen and see what customers want. Joe. Or, uh, clients and understand what families were looking for and then try to then take that and say, okay, I'm hearing this pattern over and over again that families are looking for this, okay? They're looking for different kinds of investment solutions. And then she and I would take that and say, okay, how do we build a business system, right, that actually goes out and finds that and sources that. So I think the confidence came on my side from just understanding what was happening in the general business world and on Mel's side from just simply listening to wealthy families and connecting the dots about what she heard they wanted.

Speaker A: Was there internal resistance at the time?

Speaker B: There was some, but not a huge amount. I think from the trust department there was some. But where we started to get the resistance was as we started merging and again as the bank started, basically we were part of an asset management organization that started to have more proprietary. And what had been an unusual situation with Chase because of the exigencies of the debt crisis and they had to sell their asset management, actually a few years later had become more like a traditional financial services company with asset management and private banking, et cetera.

Speaker A: And so tell us about your jump to Genspring and the foundation of Genspring and the massive growth in the open asset, the open architecture industry.

Speaker B: There's really two connects to be made here. One is the open architecture thing and the other is, goes all the way back to that idea that I was talking about earlier, which was demand side versus supply side, beyond just what kind of investment products they were looking for. But that went to a fundamental question about what is advice? And when I experienced the wealth management industry, and I'm not talking about any particular institution here, I'm talking about in general as a structural matter, that the entire industry was calling themselves financial advisors, that was a new term, it was the in vogue term. And when I was trying to, uh, what I was grappling with in my head was, wait a minute, the word advisor, at least as I learned it was, it meant that you were helping people make a decision about something that they were struggling with, but that you didn't necessarily have an economic interest in the outcome of the decision they made, other than that you had to give them good advice. And when I looked at the financial services industry, again, writ large, right? And probably the simplest and best example of this is life insurance, where, you know, somebody, a life insurance advisor is recommending a whole financial plan and sure enough, the answer at the end of the day is you need more insurance. And as the client, you're saying, are you telling me I need more insurance because I really need more insurance, or is it because there's a commission in it, right, from me buying more insurance? And it's probably a little bit of both, Joe. Right. And I think that most financial advisors are operating with very high integrity. They're just, they were just part of a whole business system. That's why I say it's not any one institution, right? It's or one person. It's a whole business system that was set up to manufacture and distribute financial products. And so when you layer advice on that, there's by definition a, uh, direct connection between the advice you're giving and the economic outcome to you in terms of commissions or fees that your bank would earn, et cetera. And I just thought that's interesting and okay, that's the way the industry works, but maybe there's a different model. Uh, and then you connect that with the open architecture vision that we had and that led us to the family office space because we understood that there were organizations, they weren't large, they weren't global financial companies, but they were typically single family offices. And the role of the single family office was to advise the family that they supported in basically making decisions around their financial life. And the people in the single family office didn't earn a commission for the sale of a financial product or service. They were basically compensated to advise, to represent the interests of the family out in the marketplace to help them buy and assemble financial products and services. And we thought, huh, uh, is there a business here? Is there an opportunity to create a business that replicates the single family office business approach? But for many families, right, that was the hypothesis. And that went beyond open architecture. And at the time, again, we're talking about early to mid 2000s, pre global financial crisis, uh, there was a multifamily office that had been founded by a guy named Hap Perry. At the time, it was called Asset Management Advisors. And Hap and his team had built. Actually, it was Hap and Ellen. Perry wasn't just Hap. Hap and Ellen had built a business that they called the multifamily office that was anchored very much in open architecture investment advice, where it wasn't about the products that the company manufactured. They didn't manufacture anything. They went out and they created and assembled portfolios for families that met their strategic needs with financial products and services from all kinds of different places, right? Including at the time, index funds, including mutual funds from different banks and different mutual fund companies, including private equity, including hedge funds. Hap had a deep background in hedge funds, and we found that idea very compelling as. And the other thing that happened Ellen did, and this was Ellen's really huge contribution, was to make it more than just about investment advice. It really was about wealth management. It was broader, it was about the human capital, it was about the intellectual capital, not just about the financial capital. And they built this very interesting multifamily office that was anchored in investment advice that charged an A fee basis points and was discretionary. So the value proposition to a family was, hey, if you're with bank X or Bank Y or Broker Z, and you want a little bit more independent investment advice, you want a little more open architecture, Bring the assets to us, pay us a, uh, percentage of the assets, and we will help you construct a portfolio that is essentially open architecture from the best that's out there. And I think that was the core of the business model and the core of the value proposition. And by the way, it worked like gangbusters, right? They were growing really fast. And SunTrust had acquired a stake in Asset Management Advisors and Hap was looking. The company had gotten big and they were looking for a successor. And Mel and I and another partner from Chase thought, okay, this would be an interesting place for us to go to try to take the business to the next level. Instead of trying to be inside a financial institution and bucking that trend, right. Of uh, closed architecture. Let's actually go to the other side and go into the family office side and see what it's like to be more on the buy side and in an open architecture environment. And There were several MFOs at the time that were really trying to do that. Many of them were bank owned actually. Michael Cole, right. Was at US bank, right. And building Abbott Downing, right. And building a really interesting multifamily office. There was Genspring. PNC was doing that at the time with Hawthorne. Right. Some of these names. I don't know if all these names are around anymore, but at the time there was a group of us pretty much with bank capital, right, with bank ownership that were trying to build out this sort of new business system. And the nice thing was that the banks that were investing in these companies didn't really have robust ultra high net worth businesses. So there wasn't this sort of fear that if we go open architecture we're going to kill the other business. Right? It was no, we want to play in the ultra high net worth space. Let's do it differently than how the big banks in New York are doing it. And that was basically the thesis.

Speaker A: One of the similarities to the period we're going through now and the period back then is uh, a lot of M and A in the space. And Genspring certainly, uh, was involved in a lot of M and A. What lessons did you learn that could help folks get insight into what's happening now?

Speaker B: It was a different time for sure. I think that not so much lessons learned as to what's happening now because I think the drivers today are a little bit different. I think today then we weren't thinking about scale, Joe. We weren't thinking about what does it take to invest in technology, what does it take to invest in talent and the race for talent. Right. It was there, but it wasn't as prevalent as today. I think today there's a thesis that there is a benefit to scale. At the same time, how do we maintain the intimacy of the value proposition? We can talk about that later. But if I think back and of course Hinds Hindsight is 2020 vision, I think back then it was about really trying to get a broader footprint. Essentially. Genspring was an Atlanta and Southeast based organization and we were looking to acquire other similar companies that were in other geographies in the US So that was a motivation for it. And it was this combination of organic growth that was using the bank's network and relationships in the Southeast, where it was very strong and then growing outside of the Southeast by making acquisitions. I do think there were some important lessons learned that I've taken with me from that experience. I'm not sure that they're necessarily relevant to what's happening today. Back then there was not private equity capital in the space. Back then the buyers were, the bank owned MFOs essentially who were bulking up to get geographic presence. I do think it was a little bit of a different dynamic.

Speaker A: What did you learn about integration?

Speaker B: It's hard, it's difficult that you have to have cultural alignment first and foremost. Even before attempting integration, trying to put two things together. And I learned this at Chase as well because Chase was an acquirer obviously. And through the JP Morgan days we had acquired many institutions that the most important headset about integration that I learned was if you go into it saying what do I do? And what is the company that I'm looking to integrate or that we're integrating with do and how do we at the end of the day come, um, out with what uh, we do well and what they do well and create an organization that actually does all of those things and is better than either of the predecessor organizations because it's taking best practices on both, both sides. You have to have that headset. Where I've seen a lot of value destruction is when the headset is my business is better, I do better. You don't know how to do it. So I'm going to come in and tell you how to do it. And then that business just walks out the door. Right. Talent walks out the door and it can be very value destructive. So one of the things that I observed and learned is that really taking this headset of looking for best practices, being respectful, that everybody brings something to the table and then how do we create something better, Greater. Right. More effective? That's really the trick, I think, to successful integration.

Speaker A: I think you folks learned a certain amount of discipline as well.

Speaker B: We learned some discipline, but we also learned, Joe, this was probably really relevant to where we are today. And now I'm um. We're back in the. Just before the GFC, right. 2006, 7, where we partnered up with a couple of organizations that were really doing something fundamentally different than genspring was doing. One of those was a company called Simric, which was founded by Pat Soldano in Orange County, California. And Pat was operating on a non discretionary basis and she was charging retainer fees and she was basically acting as an outsourced family office providing family office support to, I don't know, maybe 10 or 15 families. And we looked at that business model, we thought, that's really intriguing. We partnered up with Santi Uyoha, who's now our third managing partner at we. And he had founded a company called tbk. And his whole value proposition was in Miami, was that there were, for Latin American families who had a fair amount of their wealth being managed and advised in Switzerland or. Or the United States or the Virgin Islands or the Cayman Islands, that they were a little bit distanced from the countries they lived in from where a fair amount of their wealth was being managed. And that distance meant that there was maybe an opportunity for someone to come in and help be sure that what was happening in those jurisdictions was right for those families, even if those families weren't in New York every single day or in Miami every single day. And Santi hit upon a, uh, value proposition that had that, let's really help you as a family manage all of your relationships with the big global financial institutions. It wasn't, leave the big global financial institutions and I'll take care of it for you. It was, you can stay with them, because we know those relationships are important to you, but let us help you manage them. Let us help you make sure that as it all comes together, it makes sense. And here's the really interesting thing. Santi and the woman who runs our technology today, she was the first hire that Santi made back in 2000 when he set up the business. And she basically built an aggregated reporting system back in 2000, because she couldn't find one on, uh, the marketplace. Because all the technology at the time was focused on telling the financial institutions who were providing investment services how the bank did on the portfolio that the bank managed. There wasn't really a robust. Some people were trying. We had some exposure to them back even in the Chase days. We had explored some of that. Some of the big global custodians, software systems were trying it. There was a group called Whitten out of Connecticut that was trying it. There was a company called my CFO that was trying to do that. But none of them had really cracked the case. And Santi said, but in order for me to sit up here and help the family get one piece of paper, that shows them, this is what they have with Bank X, this is what they have with Bank Y, this is what they have with Bank Z. This is the money that came in and out. And by the way, when we roll it all Up. This is what the whole picture looks like. And this is, you know, what performance is, and this is what cash flows are. And so many of these families had all of these bank statements that they would get from each bank, none of which looked alike. They would get them in paper, they would file them in their file drawers. And they never had a sense of what does the whole thing look like. And Santi and um, his company at TBK built a reporting system that did that. Now it was all manual. There was no ocr, there was no AI, there were no feeds. It was just, okay, send us your statements every month and we will key it in to a, uh, database and then we'll create reports for you. And when we partnered up with Santi, I had never seen something as robust as the reporting system that he had. When we partnered up with Pat, I had never seen that value proposition of being an outsourced family office, not necessarily an open architecture environment investment firm. And anyway, all of those lessons from those mergers post the global financial crisis. We started we in 2012 and uh, actually 2013, we started we in 2013 and we took some of those lessons we took at that point. Mel and I had been working together for I guess 15 years around these, these core ideas of what is advice, what is it to be on the buy side? How do you build a demand driven business? What is open architecture? What do families need? We took a lot of that experience and work that we had done, particularly thinking about what we learned working with Santi and with Pat and with Santi. When we started we in 2013, we said, is there an opportunity to really take this idea of being a non discretionary advisor, which means we can work with anyone and families can work with any financial institution. Our job is not to take over control. Our job is to leave control in the hands of the family, leave decision making in the hands of the family. Can we have a robust reporting system and use that to give the entire wealth picture? Can our role be to help the families oversee and manage the financial institutions they work with, no matter who they are or where they are? And can we charge a flat fee instead of a basis point fee? And that was 2013. We had no idea if it would work, Joe. Okay, we had a lot of confidence, but we had no idea if it would work. You asked me earlier, right, uh, what gave us confidence? I don't know. I think it was just being connected to families and seeing that there were these kernels of businesses that were being built, right, Exploring around the edges of all of this and we said let's give it a shot. And that's what became we family offices. And uh, we haven't changed since 2013 with those core ideas of being non discretionary, of charging a flat fee, of being wealth advisors, not investment advisors of which when you're a wealth advisor, investment advice is a big part of what you do, but it's not the total of what you do and of uh, roll the tape all the way forward. When people ask me what we do, the way I answer it and have been answering it for the last several years is we help families who are in charge of very complex wealth enterprises make decisions with a sense of confidence, competence, success and control. And that joke goes all the way back to the beginning of the days of Booz Allen where I learned that the role of an advisor was to help a decision maker make a decision with confidence, disconnected from the economics. And here we are, right, 30 years later. And that's, that is that idea is at the heart of what we is all about.

Speaker A: So that's what you learned as an advisor, but what did you learn going all the way back to Booz Allen about actually managing a wealth management firm?

Speaker B: Not to deflect from that, but I think where I learned what I learned particularly at uh, Chase JP Morgan right through those years was the power of a very robust business system where you thought about every element of the business system, every activity, the people you hired, the way you branded and marketed, the way you paid people, the way you price services, the training and development that you have, right? All of these elements of the business system. And I do think I learned that at Booz Allen because we were really trained to think about business systems. But where I saw that come into play was that when you had a business that had such a, that was so explicit about the underlying business system and all of those activities, uh, aligning around the strategy and the mission, right? With a culture sort of wrapped around that, that held it all together. That's what convinced me that and was the difference between doing what I'm talking about as a practice versus really building a business to deliver that value proposition sustainably, consistently over a very long term, right? Because I think you can do this as a practice, right, With a book of clients. But when you start to conceptualize it and think about it as a business where every single decision you make around who you hire, how you recruit, how you pay people, what the career development path is, how you train and how you market and brand, how you position, how you invest in technology compliance, right, all of the elements of the business system. If you can think institutionally about building really robust, repeatable processes and systems, that's what can build a sustainable business. It wasn't just building a practice with a group of advisors.

Speaker A: Where do efficiencies of scale come in with ultra high net worth clients?

Speaker B: So the way I come to, uh, think about scale is that there are definitely activities that can be scaled in our businesses. Manager sourcing and due diligence. Right. You can do that for one family, you can do it for 50 families, you can do it for 100 families. Okay. And there's scale benefit to that technology. Okay. I think it's important we made a decision in 2021, right around the pandemic that ah, this system that I was describing before, that Santia and his team had built all the way back in the days of TBK, by 2021 there were plenty of firms who had made real progress in becoming aggregated reporters, both in terms of aggregating data and then building a robust reporting system. And obviously exhibit A, there is Addepar. Right. Which really emerged as a company that was thinking about helping advisors give their clients the whole picture, not just a slice. And we made the decision by 2021 to migrate our old proprietary reporting system over to Addepar. And it was one of the better decisions we've made from a business system M perspective. Because the scale, it was very clear to us that what you had to invest, okay. And at that point in 2021, we were probably maybe 10 billion, 12 billion at that scale. We probably had 60 or 70 families. We just were not capable, as an economic matter of investing at the level that we needed to, to really keep up with the companies like Addepar, to keep up with cybersecurity, to keep up with the move to the cloud. Right. There were so many different elements that we knew required scale, that we were trying and we were doing our best. But then it became clear that we could partner with a company like Addepar and benefit from their scale. Right. And so reporting is, and technology,

Speaker A: all

Speaker B: of our operational functions, the sourcing and due diligence, those, those things are scalable. But then you go to the other side and you think about the delivery of the client experience, uh, and how do you build confidence and trust with uber wealthy families to, first of all, since you're not taking discretion to engage them in a decision making process, to have them participate, to learn to build capacity as financial decision makers, not to become hedge fund managers, but to build capacity as owners of wealth and feel confidence in making decisions around that wealth. And to do that, frankly, this may sound a little funny, but it's, uh, a very intimate exercise because you really have to be close to those families. You have to understand them, you have to know what makes them tick. You have to know that this person thinks visually and likes to see pie charts and graphics, and that's what helps them make a decision. But this person wants to see it all in a table with numbers and a spreadsheet, because that's how they think. And this person is a very spontaneous decision maker. So you give them a few facts and they make a decision. But this family is really a systematic decision maker and likes to get everything assembled and go through a very strategic process. These are all different elements of how people make decisions. And frankly, what we felt was not scalable was that client advisory component of the business. It took very senior advisors, seasoned, working in teams, not individually. No one advisor can really deliver this integrated value proposition with lots of support. Right. Almost like a pyramid structure. And that ultimately is just not a scalable activity. Now there are things you can do to make it more or less scalable. You can invest in technology that helps them be more efficient, that has them spend their time on higher value activities instead of. The best example I use is that if you looked at us 10 years ago, our analysts were going into the fund administration portals and downloading nav statements and capital calls and printing them out and then filling out wire instructions or hard coding the data into our reporting system. And if you look at us today, there isn't. There's probably a few portals we can't get into, but we use a system called Canoe. There are many others like it, uh, where it's basically doing that every night automatically, and then using AI to get it into Addepar. And so the analysts and associates in our firm, um, are no longer doing that activity. Right. And that's not really a value added activity. The analysts and associates are building models, they're helping do analysis, they're using their brains as opposed to the administration side. And so I, that's an example of where I think you can get more scale and efficiency. But ultimately, at the end of the day, that advisory, that one on one client dialogue, is really not a scalable activity. So we spend a lot of our time, Joe, thinking about how do we scale what we can and how do we keep the intimacy of the advisory relationship effective. And to go back also to this point about institutionalization that I was talking about, what we do try to do is, even if it's not a scalable activity, like the client advisory side, we try to have institutionally robust processes so that if we work with 100 plus families, the way we think about constructing an investment policy statement is always going to follow the same process. It may have a very different outcome, we may wind up with a hundred and whatever unique investment policy statements and portfolios. But the process of getting there is going to be the same. You're going to start with the sources and uses of cash analysis. You're going to go through a risk assessment, you're going to do a diagnostic on existing positions, you're going to look at tax. Right. If it's a US client, you're going to think about how do we transition a portfolio. We're going to look at fees. Right. There's a whole series of steps that we go through. You're going to run a Monte Carlo analysis. Okay. There's a whole series of steps we go through that we try to institutionalize. So we like to say that we have standard processes with very customized outcomes. Okay. But that's maybe the bridge between a non scalable advisory process with a little bit of institutionalization and business system thinking to how we deliver it.

Speaker A: Great advisors bread or bought bread?

Speaker B: Bread. What we do is so unique, Joe. The way we deliver integrated wealth management, the role we have, which is not to displace any financial services provider, the fact that we're not selling anything, we have no product to sell, that's a skill set that is a little different than what we find in a lot of traditional financial services companies. And we haven't really been successful, at least in our experience in use the word bought. Right. In hiring very experienced advisors and bringing them into our business system, where we've been much more successful, is really growing and mentoring and coaching talent over 5, 10, 15 years to become very competent integrated wealth advisors who know how to buy and integrate and advise deeply and who have the EQ skills and who understand how to ask the questions, how to make the family feel smart as opposed to demonstrate that you're smart. You may be very smart, but the role is, and the objective is to have the family feel smart. And so we think that's a learned skill. We think it's a coached skill, a uh, mentored skill, and not something that you can just buy.

Speaker A: So what do you look for in a budding advisor? Obviously someone who's competent and can listen, et cetera. But there's probably something more to that.

Speaker B: There's baseline technical skills. Do they understand their way around different kinds of investments. Are they analytical? And then beyond that, critical thinking. Can they come in and ask some questions? Can they challenge Third, can they communicate in a way that's framework driven, that starts from a thesis, right, that says, here's what I think the answer is, and then here's why, as opposed to here's every single fact about and a piece of analysis that I've done. And therefore the conclusion is. And in the meantime, as you're going through all those facts and analysis, you've lost the person you're talking to. Right. Halfway along the way. So a comfort level with sort of thinking in a very structured way.

Speaker A: You were on a panel and you said something, I wrote it down that people who do well in this industry are people who like to solve puzzles, they like complicated problems. How do you find those people?

Speaker B: I think you're looking for people who are just generally intellectually curious, who, who ask questions, who are comfortable asking questions, who are comfortable saying, I don't know, but I'll figure that out. Who are comfortable saying, gee, I've never heard that before. Tell me more. Right. As opposed to people who feel that they just have to always be the expert and have all the answers with clients. So I think a lot of it is emotional intelligence, eq, whatever you want to call it, but it's the confidence that they understand that it's okay to acknowledge that you don't know something. And that's hard. Right. Particularly when you're in an advisory business. But I think, Joe, more than anything else, it's not so much how you find those people, it's how you coach and mentor and develop those people, because I think those are learned skill sets to a certain degree. And I think what happens is when someone's working their way up right in, in their career, you can tell pretty early on whether they have the capacity for developing that skill set. And I think if you find that they do, then it's all about coaching and being explicit and giving them feedback and telling them when they do it well and giving them and showing them real time how it's done. I think that's how you find those people. Or I don't think you find people who necessarily have to have that skill set from day one, but I think people can develop that skill set.

Speaker A: And how long does it take before someone is truly seasoned?

Speaker B: Oh, I think at least 7, 8, 10 years. And before they're really ready to be that integrated advisor in the, uh, lead role with the family. It could be 10 to 15, depending on the, uh, complexity of the family.

Speaker A: And what are your thoughts around retention after, uh, you've trained those people?

Speaker B: So here's where I think the retention issue comes in, which is it's in the first two to three years. And the amount of training and learning that happens in that first two to three years is extensive. Okay. And you know, I'm talking about just learning the basics of, um, even financial terminology, right. What is a private equity investment? Right. How is it different from a public equity investment? The terminology of private investing is totally different than public investing. The way you measure it. Right. Uh, everything that we take for granted because we've been doing this for a long time. I think for somebody new, it's like learning how to speak another language. And so we find that it takes at least six months for a new hire into the analyst position to come up to speed, to even just get their sea legs. Right. And then beyond that, it's another couple of years until they really feel confident and competent. Right. With all of the technical language. Now the issue for us is that at that level of one's career, you could go anywhere. You could go to a bank, you could go right to a brokerage firm, you could go to a family office, you could go to a, uh, multifamily office. Your skill set, if you've got it, is pretty transferable. So when we make this investment at the beginning of someone's career for that the first couple of years. This is the link to what I was talking about before, which is that if we're asking those people to be doing a lot of very administrative, non value added activities, they're not going to stick around. They're going to get very frustrated. So we paid a lot of attention, give you some examples. We created a middle office to take all of the functionality having to do with signing subscription and filling out subscription documents and managing sort of all of the mechanics of private equity subscriptions. That used to happen with the analysts on the client teams. But that is really a very administrative activity. It can be very tedious and very complex. And we created a specialized team to do that across all of the advisor teams so that the analysts are getting some leverage in that activity. Add a par.

Speaker A: Right.

Speaker B: I mean, before Addepar, the analysts were spending a lot of their time, not so much reconciling bank statements, but trying to help understand transactions and code them properly in the reporting system and give our reconciliation and operations department spending a lot of time working with them, um, on how to get the statement right as We've automated a lot more. We've taken a lot of that administrative activity off of their desks. We've created a role that we call a wealth management coordinator, which is really responsible for wire instructions, transfers, right, Transactions with banks. Again, to be sure that those analysts are really using their brains and they're developing their analytical capabilities and their advisory capabilities. So how these two ideas connect is that I think in the past we had an experience where we would bring an analyst in and so much of their role was administrative and operational that even after two years of learning and getting into the system and figuring out the new language and all of that, they would just be so frustrated they would leave because it was basically, right, an administrative operational job and we had a lot of turnover. And then you've spent two years trying to develop someone and you've invested two years in training and it can be really difficult. But once, once you get past that sort of two year hurdle, what we do find, and there are exceptions, but what we do find is that the talent, because the culture here is so strong, because the team ethic is so strong, because these folks with their, if they're able, they're participating in client meetings with some of the most interesting and successful families right in the world, right? Once they get past that sort of two or three year hurdle and we can make sure they're using their brains and that they're developing and being coached, they do tend, we do tend to see them stick around.

Speaker A: What do you benchmark your compensation against Market?

Speaker B: We participate in market compensation studies and we look at by role. Uh, even though some of our roles are slightly different, we do our best

Speaker A: to understand what is the market. It's not broker dealers, um, no, it's

Speaker B: other family offices, other multifamily offices.

Speaker A: How have client expectations changed over the

Speaker B: course of your career? I don't know that it's client expectations that have changed, Joe. What I think has evolved over the course of my career, I'm sure clients were expecting integrated advice 20 years ago and they were seeking it out. What's changed is the recognition that integrated advice is actually a profession. Integrated advice is something different than other types of financial products and services and wealth management. And that 20 years ago, I think a lot of people were trying to provide advice in the service of, um, selling more product. I think what's changed is that we, many of us have realized that we can be part of a business system that can really just focus on providing advice disconnected from financial products. And I think what's changed is that if you look at the ultra high net worth Institute and everything that's happening in terms of defining this profession called integrated advice, defining the role, defining the industry, defining the fact that the ultra high net worth space is different and that there is a role for an integrated advisor and that's not the same as a bank or another kind of provider and that those things are not mutually exclusive and don't necessarily compete with each other, that they're complementary and they serve a different function with the family. I think that's what's changed is that idea has come into the mainstream and for families who are really looking for someone to help them on that basis, I think 20 years ago the only choice they really had was to hire someone onto their own payroll and have huh, that happen. I think today they obviously still have that choice but there's also a series of firms that are building business models to deliver that service. That's really what's changed. I don't think their expectations have changed. I think they always wanted that.

Speaker A: What common mistakes do you see families

Speaker B: make post liquidity investing too quickly, thinking that they have to put the money to work without really being thoughtful about what the purpose of the money is for going through an exercise to develop a very robust financial plan, looking at sources and uses of cash. And I've rarely heard a family say oh I'm sorry I invested so slowly. I have heard families say I think I probably went too fast because it's a very different exercise. I think the other, I don't know if it's a mistake but the other challenge that I've seen families grappling with is when they do their estate plans they put in place very sophisticated structures, very complex structures, very effective structures that really um, by effective what I mean is they really are able to minimize right estate taxes, transfer taxes, etc. But I think the challenge with that is those things are very complex and sometimes I think they don't fully think through the implications of those structures. Whether it's giving up control, control over decision making, whether it's having their surviving spouses financial lives be under the control of a uh, trustee who that surviving spouse may or may not be comfortable with or understand. I think it's not so much that the estate planning itself, I think the estate planning is, can be very robust. I think it's that they haven't really taken the time to do the work on understanding the implications, on really doing the cash flow implications, that if I gift these assets I'm not going to have access to the income stream for that. Can I live with that? Is my life sustainable? Yeah, sure. I've saved a lot of estate, uh, tax, but what have I done to my current financial life? So I think that's a challenge for a lot of very wealthy families with complex structures.

Speaker A: How does AI, uh, help you in your sourcing today?

Speaker B: Here's the interesting thing, Joe. You're talking to me and we've had a conversation about sort of the arc of my career, right. And if I go back 15 years ago, I think I was starting to talk and, and Mel was starting to speak and our partners were starting to speak and we were putting out messaging about many of the same themes, Joe, that we're talking about now. I think they've come more full circle. I think they've become more robust. I think we can articulate the role of an integrated advisor. Like 15 years ago, we didn't say that. I think the words we used 15 years ago were fiduciary and. But at the core, I think we were talking about the difference between manufacturing sales and distribution. I think we were talking about buy side role. I think we were talking about disconnecting advice from product. I think we were talking about retainer fees. And we were doing it in ways that were in writing. There were no podcasts back then, but we were doing pr, we were putting out content on our website. And um, to be honest with you, I don't know if anybody was really listening. Okay. Because there's just so much out there and small firms like ours don't really have a big megaphone. Right. It's the big brands that have the megaphone. And about six months ago something started happening where we started getting inbound inquiries from centimillionaire families who we'd set up the first call and I would say, how did you find us? And they would say, oh, I was searching on ChatGPT or Claude or whatever and your name, your firm's name came up and I said, that's interesting. What were you asking? And they said, oh, I was looking. I think I put in that I wanted a financial architect, that I wanted somebody to help me figure out my big picture that I was looking for. Not, uh, a traditional wealth management firm, that I was looking for something different than an A based firm. They articulate it different ways, Joe, but, but they were starting to ask those questions. And when I started thinking about it, and this has been happening now for six months and we've probably doubled the number of inquiries and potential families as a result of adding that that sort of stream of inquiries to our normal stream of referrals. And when I started to think about it, I realized that for 15 years we've been saying the same thing, slightly different words, but very much the same thing over and over. And all of a sudden in the last two years, the machines ingested all of that content and they processed it. And so if you go and ask for language that relates to what it is that we do and our value proposition and everything we've been talking about, the machines have sorted it through. And not just we, but we plus other firms, okay, are starting to get make the list and there's nothing we're doing. It's not like you're buying with Google. Right. Where you're buying search, sponsored search results. Okay. It's just that we've been saying this so clearly for so long that I think what AI has changed in terms of business development is that the machines are now listening and are capable of sort of sorting through all of these different kinds of firms and they're giving families interesting advice about how to find them. And I'm quite certain that people are putting things into ChatGPT and we're not coming up because we're not a good fit for them. Right. If somebody says, I'm looking for a discretionary asset manager to take 30% of my portfolio and manage it this way, we is not going to come up in that search. But that's good because it's not what we do. And so I do think that AI, I almost think about it, Joe, as democratizing marketing and democratizing branding because with our small budget, at our small size, we are visible in, in the searches in a way that we weren't in the past because we didn't spend money on search engine. We spent, uh, a, we invested in search engine optimization, but we certainly didn't do sponsored searches and things like that. And so I think it's having a very positive impact on our business development.

Speaker A: Michael Zuner, thank you for joining us and sharing your wonderful insights.

Speaker B: Thanks Joe. Really good to be with you.