High Trust, High Stakes, Human Risk Inside Family Offices with Mark Somers

High Trust, High Stakes, Human Risk Inside Family Offices with Mark Somers

In this episode, Philip speaks with Mark Somers, one of the most respected voices in the family office recruitment world. Mark has spent more than 20 years advising family offices, wealth managers and private banks on talent, structure and human capital. He's the author of two books on family offices and careers within the sector and sits on the Spears 500 judging panel.

The conversation covers what makes a family office resilient — and what causes them to fall apart. Mark makes a compelling case that human capital, not financial capital, is the most important asset a family office possesses. Without the right people around it, the money simply evaporates.

Mark Somers is the founder and director of Somers Partnership, a specialist executive search and family office consultancy established over 20 years ago. He advises family offices, wealth managers and private banks on talent, structure and human capital. Mark is the author of two books on family offices and careers within the sector, including Working for a Billionaire. He sits on the Spears 500 judging panel and is widely recognised as one of the leading global voices on human capital in private wealth. Prior to founding Somers Partnership, Mark served as a military officer.

Website: somerspartnership.com

https://www.linkedin.com/in/mark-somers-spl/

Transcript

Welcome & Housekeeping

SPEAKER_00 0:01

Welcome to the Diffuse Podcast with host Philip Grendel, CEO and founder of Diffuse, a global threat and intelligence consultancy that blends psychology and intelligence to mitigate threats and risks to prominent people and brands.

Guest Introduction: Mark Summers

SPEAKER_04 0:17

Welcome back to the Diffuse Podcast. As always, if you enjoy the podcast, please subscribe. We also have a newsletter, Diffuse News, which is available weekly. So again, very interesting, very useful newsletter, gets great feedback. So please do subscribe to that. Today, my guest is Mark Summers, the founder and director of Summers Partnership, a specialist executive search and family office consultancy that he established a quarter of a century ago, 25 years ago. In fact, sorry, 21 years ago. So for more than 20 years, Mark has advised family officers, wealth managers, private banks on talent, structure, and human capital, helping ultra-high net worth families build teams that can operate in a complex but high trust environment. He's the author of two books on family offices and careers within the sector. He sits on the SPERS 500 judging panel and is widely recognized as one of the leading voices globally on human capital in private wealth. So, Mark, welcome.

SPEAKER_02 1:28

Well, Philip, thank you very much deal. I'm delighted to be uh on your uh podcast. Uh it's very good for you to invite me, and I hope I can live up to that introduction do my best.

Path From Military To Family Offices

SPEAKER_04 1:39

I know you will. I know what you will having spoken to it. And also having read your book, it's um uh we were just discussing it off air, but I I uh I've read the Family Office Careers one, which uh Working for a Billionaire, which I thought was a really good read, a really good introduction, and explained the characteristics required, the different personalities, the difference between working for a private equity company, if you like, and a private family office. I thought it was really informative. So I certainly um recommend people get a copy of that and read it if they are um uh interested in this world, which uh hopefully by the end of this they will be. But I guess my first question to you then is you know, I I'm conscious that your background uh prior to this world was was coming from the military as an officer. Um, but how did you get into the world of private family officers?

SPEAKER_01 2:32

Well, we set up business 20 years ago, my wife and I.

Professionalisation And Talent Demand

SPEAKER_02 2:37

And um before that, we had looked at um uh the great likely growth areas in in recruiting, which is where we were specializing when we left the army. And uh the wealth management and more recently the family office areas is a has been a very strong growth story. Uh so that was uh an area that we wanted to um uh to get into uh and to grow along with it. Uh and of course, uh within the wealth management and the uh family office areas, one of the most important forms of capital is uh the human capital side. A lot of people think it's about the money on the financial capital side, but really the most important form of capital is the human capital with which you can surround yourself.

SPEAKER_04 3:30

And before we get on to that in more detail, how have family offices or the family office industry changed in the 20 years that you've been going?

Professionalism Versus Trust

SPEAKER_02 3:41

Well, one of the most uh striking uh changes has been the professionalism and the increased uh institutionalization of uh family offices, which has been particularly um uh interesting. Uh and we've been right in the vanguard of helping that help, hence writing that book to help um educate the talent coming into the sector, because obviously we need more talent to come in as the as the number of um uh family offices grow. And also, secondly, uh as the great wealth transfer happens and uh the next generation taking over family offices tend to uh change the staff, uh, which again um increases demand on the total uh amount of human capital uh that's available. So we wanted to help educate um people coming into the sector out. And that also plays into one of the other trends that we have seen, which was from a recruiting point of view, uh in the olden days when we first started doing this 20 odd years ago, it was quite normal for the principal of a family office when normally it was a he uh was setting it up to look around uh his own network uh and find the private banker or the accountant or some other trusted uh advisor that that he had known for a long period of time and bring him in, uh, again, normally as a him within the uh as an employee, uh, into the family office. Uh because the level of trust uh was such that it gave the principal peace of mind, regardless of the ability of that individual to operate within a family office type environment. So one of the other great trends we've seen alongside the institutionalization is actually the um growing realization that professionalism within the uh employees uh is is actually more important initially than the level of trust. Once um the individual has um got into the family office and starts work within it, uh it's their opportunity to demonstrate and uh their um ability to be trusted and earn that trust from the principal and the wider uh family as well as their colleagues. So professionalism is uh the number one trait and trust uh is earned over time after that.

SPEAKER_04 6:22

And from a human capital perspective, what separates a robust family office from one that's vulnerable?

Compensation As A Hygiene Factor

SPEAKER_02 6:31

Well a robust family office is one that um that is in line with the values of the family. So the family has to clearly articulate and define what their values are, uh and also set the purpose of the family office, which again needs to be clearly uh articulated. Because once you have the values and the purpose of a family office having some kind of meaningful relationship between the two of them, it means that then the proposition of the family office uh can um be more easily defined. By proposition I mean what does the family do for whom, by when, who pays, and which order is it uh delivered in. So it's really what does the family office do on a day-to-day basis, what does it deliver on a day-to-day basis? And once you've got the proposition uh um tied down, it means that then you can get on the bit that we find particularly interesting, which is getting the right people involved. And again, there has to be an alignment between the values, the purpose, the proposition, and then the qualities of the people and overlapping interests with the um values of the family, because that again gives meaning and purpose to the employee's uh job. And once you've got the right people around you, you need to pay them in the right way as well. So uh we look at compensation as being a hygiene factor. Uh it has to be right, um, it also has to be structured in the right way to incentivize individuals uh to uphold the values and the purpose of the family office and deliver the proposition. Uh, and pay is very, very important foundation for that. But the reason it's last on that list is because um it's the thing that we address last, but it has to be done accurately. Uh, and incentives and compensation and reward has to um refine, you know, it has to back up uh the um the values and the purpose of the family office in order to make it future-proof and give it the resilience that you were asking about uh in this question.

SPEAKER_04 8:53

And so you know, you've had been advising family offices for over 20 years now. You know, where do you most often see things when they start to go wrong?

Entropy, Governance, And Decay

SPEAKER_02 9:07

Well, where it starts to go wrong is where the the family office detaches itself somehow from the governance framework. And um what we tend to see is that um there's a theory of the the fourth law of thermodynamic thermodynamics, which is the law of entropy. So where you have a system that's set up uh correctly in the first place, um, but then when that system isn't constantly reviewed and examined and modified according to changes in the uh outside uh environment, then that system tends to decay in exactly the same way as a family office um starts to lose its purpose, loses its mojo, decides that it's going to go off in a different direction from the one that the family uh is going in. That's where it quietly and slowly uh goes wrong. So, in order to future proof the family office, um, it needs to be constantly reviewed, otherwise it becomes stale and dusty. Um there isn't any career progression for the professionals within it, uh the compensation isn't reviewed, uh, the governance isn't uh reviewed, um, and um it's where the staff become more interested in their own um uh uh uh situation uh as opposed to serving the family properly.

SPEAKER_04 10:40

And in your book, you you refer to some family offices that have been going for quite literally hundreds of years. Is are they are they successful because of the amount of wealth that's within the family office, or or is it back to the the governance and the other issues that you were just referring to?

SPEAKER_02 10:59

I think it's very much down to the um quality of the human capital that surrounds uh the financial capital. There's also spiritual capital uh and social capital as well. But but of the four forms of capital, um the human capital is the most important because without that, um uh the financial capital um uh dissolves, evaporates very quickly uh indeed. So it doesn't really matter how large the family office is in terms of AUM, uh, for it to be resilient and future-proofed, uh it has to uh be staffed uh correctly and it has to be managed and led correctly, not only by the family, but also by the senior management team uh within the family office.

Human, Social, And Spiritual Capital

SPEAKER_04 11:48

And so how dangerous then is it when too much responsibility or influence is is um owned by one individual? Uh, you know, whether that is the CIO or COO or whoever that might be, uh it it must be you know ultimately it's a family business. It's it's it's it's uh unique in that respect in terms of, as you've alluded to, and the the the wishes and the values and the purpose of the family. But presumably you get some very, very talented people, very ambitious people that come into that world. And with a lot of responsibility, a lot of power to some degree. Uh where's those where's those risks sit around that?

Key Person Risk And C‑Suite Oversight

SPEAKER_02 12:33

Well, I think you're absolutely right. There is a very high level of risk um uh associated with the over-reliance on uh on uh the the uh C-suite within the family office. And going back to my uh earlier point about uh entropy, uh the family office world is particularly uh susceptible and particularly vulnerable to the concept of uh absentee landlords. So the generation that set up the family office need their wishes and their um spirit needs to be uh applied by subsequent generations of the family office, because absentee landlords do not get the benefits or the returns that they expect. And that's where family offices become very dusty and uh and entropy uh sets in if the purpose uh and of the family office isn't continually uh examined and uh the executives within it uh are equally not uh examined and tested. The kind of attributes that we're looking for when we're looking for a C-suite executive within a family office. We're looking for people who are perpetually curious and uh who have a determination to uh their continual uh professional development and will also challenge themselves and their teams uh to make sure that they uh stay as competitive as they possibly can, because the there's very little uh examination of the performance of family offices one against the other, uh, in the same way that most industries uh you get uh good performance data in terms of who's doing well and who isn't. Because the family offices are uh small independent uh groups, uh they tend not to share data and uh particularly well, and therefore it's very easy for um uh for people to become or to fall asleep at the helm.

SPEAKER_04 14:36

So, you know, when you're when you're then recruiting, I mean presumably you recruit across the the the um the entire uh employee base of family offices, not just senior executives.

SPEAKER_02 14:50

We concentrate on doing the senior executives, but uh interestingly, for clients that are setting up their family office, the most important uh uh first uh recruit to get right is actually the EA who is uh uh absolutely essential for getting uh things going uh and uh being the principal's right hand. So unusually not only do we concentrate on the C-suite, but we also have an EA recruiting service as well, particularly for new family offices and ones that are going undergoing considerable transition.

SPEAKER_04 15:30

And do you recruit uh when you're recruiting at the senior level, have they normally got previous family office experience, or do they come from different environments?

SPEAKER_02 15:40

Uh one or the other, actually. Uh so often uh they've got family office experience. Um, so that gives a little bit of reassurance that they understand some of the generic challenges and um attributes of family offices. But because of the growth of the family office uh sector as a whole, uh there is an increasing requirement to recruit from other uh areas um as well. So there is a considerable difference there between working for a private equity firm or a consultancy firm and working within a family office. So we have um drilled down and identified some of the characteristics that allowed a corporate executive to be successful within a family office uh um environment.

SPEAKER_04 16:32

So are you you're talking about personality, are you, as opposed to necessarily competence?

SFOs Versus MFOs: Career And Risk

SPEAKER_02 16:38

We're talking about yes, we're not talking about professional competence because it goes without saying they have to be top of the game in terms of their professional uh knowledge and expertise. But we're talking about the attributes, the personal attributes that um that are different uh working uh in a family office environment from working in a normal corporate environment.

SPEAKER_04 16:58

And can you talk about what those might be?

Traits For Success In Family Offices

SPEAKER_02 17:02

Yeah, they're they're many and varied actually. But they're um the first one is is humility, and and very few people are recruited into corporate jobs for their ability to be humble. Um another common one actually is uh curiosity. Um we're also looking for people that have a very good sense uh of being a steward in terms of their ability to uh be a good custodian and not only just take the decisions and recommend decisions that are accurate and correct for the immediate uh issue that's being resolved, but are also the correct decisions for the medium and long term, by which I mean ten and generationally correct decisions. Uh I've mentioned the curiosity side. Um and um one of the greatest skills that we're seeing, when I say greatest, I mean most important and growingly recognized as such, is the ability to be an excellent communicator, not only verbally, but in writing, using different platforms and new systems and so on and so forth. Because as families grow and become more complex, uh then you have different generations, which obviously immediately implies different ages. Uh, you have spouses coming in to the family, uh, you've got spouses going out of the family, you've got potentially stepchildren coming in and stepchildren going out. Uh, you have um uh people who are financially literate and people who are financially disengaged and really not interested in the financial capital side. And also, I think, uh and we've written about this in the in the other book, uh, there is uh a growing understanding that people absorb information in different ways. So the uh the neurodiversity, particularly amongst founders of new family offices, uh the uh the neurodiversity side means that people uh like to uh receive information in different ways. And the family office executive as the executive, as the hub of communication within the family, within wider stakeholders and within themselves, is the uh point, the nexus at which uh all that communication needs to flow. And so how people are addressed, how information is shared, how it's received, and uh and so on and so forth, is very it's becoming more and more sophisticated. So communication is one of those um very important attributes. And the final one that I have to raise today um is the uh willing suspension of disbelief. So you can be that uh excellent professional that you talked about a moment ago, and you can make very carefully, very considered recommendations about uh the best course of action. Uh but if the principal says, actually, thank you, but we're going to do it this completely in a different way, then you have to uh absorb that and uh uh and have the humility to uh can continue uh with what it is that you're doing and not be upset by this rejection of your advice.

SPEAKER_04 20:23

And I guess you you mentioned humility there, and I I was going to come back to this because it was interesting you started with saying um, you know, very often that's not necessarily a requirement that's spoken about in the corporate world, but very important within the private family world. Um and is that one of the key reasons? Because there'll be times when perhaps your advice is is very good and very worthy, but the family just choose to ignore it and they want they go in their own direction, and you know you've just got to recognize that you are a servant of the family.

Communication And Neurodiversity

SPEAKER_02 20:56

Exactly. This is a business in which you have but one client, um, and the principal and the family uh will look at various courses of action um through different lenses. So coming from a corporate background, let's say you're in private equity or something, it'd be terribly simple. You all you have to do is express uh what you're thinking on a spreadsheet in financial capital terms, and the answer that comes out at the bottom of the spreadsheet is the answer that everyone within the organization would probably um subscribe to. With family office, they they're balancing uh financial capital in the same way as that, but you also have the human capital we've mentioned. Uh you have the spiritual capital in terms of what's the journey of the family, where's it going, what's the purpose of it. Uh, and you also have the social capital as well. So uh that is who the family are, what they're what it means to be a member of the family, their position in society, uh, and so on and so forth. So, you know, a classic example of that where you might find financial. capital coming into conflict uh with um social capital, and maybe spiritual capital for that matter, would might be on the way that uh tax is approached. Some people take great pride in paying uh the right amount of tax uh and um and maybe even veering on the side of paying a little bit too much tax and that may be because they're thinking more about social capital uh and avoiding any reputational damage of doing the converse, which is to try and pay as little tax as possible, maybe taking some shortcuts that are a little bit risky or uh and so on and so forth. So in that particular scenario you would have a difference between um financial capital, which make terribly simple in terms of how you would approach that question, uh mixed in with the social capital side and the potential reputational damage that it would do to the family to be accused of that publicly at a later stage. So I I use that as just one example of of of the need to balance it. And so when you're giving advice if you're the tax attorney giving advice in that area would be very simple about what you would expect the client to do. But the client may decide to do things in a slightly different, less risky way.

SPEAKER_04 23:14

And how is that all complicated when you then look at multiple family offices?

SPEAKER_02 23:22

Oh for multifamily offices um are slightly different insofar as the proposition tries to be as tailored as possible for each of the clients, but clearly it's it can't be that tailored because a one size doesn't fit at all. So it it it varies a bit. The difference between multifamily offices and single family offices from a human capital point of view uh tend to be that you have better career opportunities within a multifamily office.

Servant Mindset And Balancing Capitals

SPEAKER_04 23:55

Uh clients have um uh less uh key person risk because clearly if the CEO of your single family office falls under a bus then there's a lot of um uh readjustments to be made but if your relationship manager in a multifamily office falls under a bus uh there is the greater uh intellectual horsepower and capability um to be able to uh continue the service to that single family office so there are pros and cons for each of the uh each of the methods does it I mean is it is it a different type of person that works in a single from as opposed to a multifamily office or are they very similar?

Recruitment Funnel And Risk Controls

Rainmakers, Lawnmowers, Well Poisoners

Vetting, References, And Digital Footprints

SPEAKER_02 24:37

I think there are more similarities than there are um um uh differences the only the main difference is that if your comp the compensation packages within multifamily offices will tend to be linked to the growth of the assets under management but measured in terms of attracting new clients so essentially they're still they still remain largely on the sell side of the industry. The working within a single family office uh you are very much on the buy side and uh the uh compensation um you can't be too general about this because there's such a wide variety but compensation packages within single family offices uh will tend to be more linked to the growth of the AUM but by doing it organically and making the right decisions from an investment management point of view uh often not always and uh consequently um it's got a different growth metric and there's a different reason for being you know the purpose of a single family office is different from the purpose of a multifamily office. So can we talk about recruitment and vetting which I guess is your kind of um one of your key things and I know you've got your own um metric within the organization that you use um can you can you talk about that a bit you know what are you looking for how do you how do you pick out the best people well we do it in two ways we we look to attract the best people into our process and then uh as the process develops we're also looking at ways to uh weed out uh those that are unsuitable during that process so essentially we our process changes from being a selling process in terms of attracting people into a into our process to being a much more refined assessment and um discerning uh approach to making sure that the people within the within the funnel are the correct people and um making sure that we protect our clients from the risk of hiring a dodgy person. In fact we're very alive to this because we divide the entire uh sector into three types of employees uh 10% so if we we we work in big numbers here say we've got a very large database um so if you had a thousand people that you were looking at or uh working in as FDs within a family office for example or CIA or head of family office whatever whatever it is um we would say that of that thousand uh 10% a hundred of them would be likely uh by our reckoning and our experience to be the rainmaker type candidates um that are curious they are continual professional development they are very good stewards they are they tend to make the right decisions and keep themselves motivated uh so they would be the rainmaker side 10% uh 80% of them eight out of ten uh we would call um lawnmowers so competent but lacking the curiosity in the develop professional development side tender to becoming gatekeepers rather than uh people that are responsive to uh dynamic situations outside the family office so they're the lawnmowers and then the final 10% uh are what we know to be uh the well poisoners and those well poisoners are the ones that are plain dangerous and the reason they we we have to have very strict uh methods to weed them out and protect our clients from them is because they do exist. Um often not always but often uh if a family office uh finds that someone has uh been defrauding them uh has behaved badly um has hasn't upheld the family values and so on and so forth and they decide to get rid of them um in the most extreme cases they tend not to call the police necessarily which would happen elsewhere uh they for reputational reasons often uh they tend to hush it up and get the person out of the building as quickly as they possibly can um and this means that person is then looking for uh another job in a family office uh obviously will not be raising this as a particular reason uh for their departure and they'll do all the best they can to to cover that up um but they've got the taste for the family office world that's what they've got some experience in and they would seek to find another job within it so so the uh the well poisoners are definitely out there and we in class definitely need to be aware um that it is unless they're very careful um there it is possible to employ what they think might be a great candidate but actually turn out to be a a well poisoner and is the industry small enough that those those well poisoners become known and become um you know vetoed within the industry no it's not because the industry's growing um family offices often aren't particularly well networked amongst themselves um there's no industry body uh there I mean there are all sorts of reasons why that kind of behavior would not um would not um become apparent so no that say there isn't you have to have a a very healthy skeptics skepticism we we we take the approach that we trust first and verify second during the process so we use third party betting companies to do that because we don't want to be doing that ourselves we want experts to be coming in and taking a fresh view uh of them uh we like to have their social media um backgrounds um presence is checked uh as well um and the reason for that is because in this rather uh geopolitically uh dynamic uh world where things change very quickly it's really quite important to know what the ones employees um are thinking posting doing uh in their on their in their digital lives uh as well because it does have an impact on their professional office lives as well so so we like to have the the um uh the digital um uh side covered uh we also do the references talking to the last employers uh going back uh quite away uh other um co-workers other bosses ideally the principals some subordinates as well to get a full view from a qualitative point of view about what it was like to work with that person uh the third party vetting um it gives a quantitative view in terms of did this person work from X to Y as per their CV? Did they get the qualifications they're claiming did you know are there any county court injunctions, criminal records, uh other things that that employers should be aware of as well. So there's a quantitative and a qualitative base there. Plus you've got the traditional um uh interview process as well which um is good in lots of ways but we do we are aware that it does have its limitations you have to be aware of that so you in terms of blind spots you need to know that interviewing someone is not a perfect way to get to the bottom of what it is that they are they're really like. So yeah so we use all of those uh slides we also use um comp si-based questionnaires uh which are very very important because you ask for evidence of the various uh elements of the role uh so you're asking so when they had previous experience of doing this between date to date uh what were the uh empirical outcomes of that what did they learn from it what did they you know how did the situation resolve itself and and so on and so forth so you're asking for evidence about this and so if when that's written and then questioned at an interview uh it gives a uh an increasingly reliable uh uh way not only in terms of their competence for doing the role but also um how how um how true that they're being how you know reliable are they so my my perspective has always been that vetting it has its place and it is obviously a value the the challenge has always been for me that people change you know when they're employed um and it's often in that environment that we come across uh what people refer to as the insider threat pit and and you know sometimes that's negligent sometimes it's malicious very very few people according to research go in with the intent of being malicious but subsequently can become malicious are there mechanisms that you use or that you you in you encourage others to use that is like an ongoing betting process that that kind of manages the employee once they're in place yeah that that should be kept up so it's not just a one-off betting process it should be checked from a on a regular basis I don't quite know exactly what that now regular the frequency of that the cadence of doing those checks but they certainly should be done on a on a regular basis because of two reasons one it can identify people that have stepped you know on the wrong on the wrong side of the line but secondly the fact that it's done demonstrates that the family and the and the leadership of the family office think that it's important and that can act as a as a deterrent as well. So people can think twice about doing something because they think that they well the the chances are they are going to get found out about it. So there is the deterrent side and it's also the reason why you know we trust but then we verify during our recruitment process it's why we tell people that there is a third party vetting process to be done if they are uh right at the uh on the on the you know uh at the end of the process and so the people that should remove themselves from the process do do so before they get found out.

Ongoing Checks And Insider Threat

SPEAKER_04 34:56

And do you find then that that the word trust we we you know you you referred to it earlier on in the conversation and and it's obviously a huge part of being a member of a private family office. And yet increasingly you know this insider threat piece is becoming um maybe more talked about rather than necessarily um more widely practiced. But how does that how does that coexist that kind of worrying or that that concern around the insider threat and the importance specifically within the family office world of trust?

SPEAKER_02 35:32

Yeah it's it's a difficult balance uh do that um you know our our our um assessment is that that human capital is the most important form of capital. The interesting thing is that um audits are done very frequently on the financial capital uh and performance in terms of various funds and various uh investment uh processes as well so far far more attention is paid on measuring on measuring that than than actually the the people um and it's always the weakest link in the chain is always people it's not systems as a rule um it's not the passwords it's not all those sort of things um most systems are quite difficult to crack unless uh you've got the um uh unless you've done a fishing expedition or some other compromising uh process to get the passwords or get someone to do something that they shouldn't do.

Cyber As A Human Problem

SPEAKER_04 36:33

So this is something that employers and families should be ever vigilant about in order to make sure that they don't leave the metaphorically the door open uh and that they are they are checking uh that yeah I mean it's it's interesting for me because I I see a lot of um when we're looking at family office from a from the world or from my world in terms of risk and threat the subject of cyber threat comes up a great deal um and I'm of the view that you know most cyber is is a cause by humans um negligent or otherwise doing things they shouldn't be doing and yet we don't necessarily talk about it in the in in the human capital perspective we talk about it very you know sort of um specifically around it's a cyber threat and actually I I agree with you in terms of no no it's a human threat um and it's because of often more often than not negligence or or ignorance or or naivety rather than necessary um military but um you know your world of of of human capital is the most critical phase of any of any risk and threat because it relies on somebody doing something right and somebody doing something wrong. And it's a huge responsibility you have then when if you're if you're um and you've obviously done it well because you should be dicking for 20 years but but that responsibility of of picking the right people for these these key roles um is a is a huge responsibility.

SPEAKER_02 38:04

Absolutely and you know very closely allied to your cyber threat is is is also the digital threat uh as well in terms of what it is that people post uh whether it's compromising in some way or whatever. So so yeah digital and cyber are very closely related but but where that matters is where it then reveals a a a weakness in the physical uh protections and the physical sort of um uh sort of systems and processes that are that are in place. So yeah so one leads to the other pretty quickly sometimes.

Next Gen, Social Media, And Exposure

SPEAKER_04 38:43

And and do you see this in terms of my experience has often been that the younger generation have a different relationship with the internet as an as a kind of broad term and therefore have a different relationship with privacy. And so you may have the patriarch or the or the matriarch as being a private person who who doesn't speak publicly or anything but the younger generations have a much more open view of that subject and and then are inviting risk or inviting unwanted attention and exposure because they just have a different relationship with social media and and the internet and posting pictures and what have you. Is that a reflection of what you're seeing? Oh completely so I mean you might have the the G1 the um founders of the family office and may still have a shredder underneath their desks in order to shred uh the addresses uh from envelopes that they've received uh and other information say the paper security gets uh the paper gets shredded to uh to to protect that kind of security and yet the uh the the you know the grandchildren can have a totally different uh awareness uh much in line with all of their contemporaries as well and the real difficulty there is um is you know things like Snapchat or wherever so you've got the geolocation sites they can see their friends their friends can see them they know who's clustering around which particular activity is great i mean it's it's you know for making friends and you know keeping up with your friends it's it's it can be really really helpful um but obviously that uh brings with it a whole raft of security uh uh questions and concerns as well like the Strava running app as well if you want to compromise your your uh location then that's a that's another pretty good way to do it however um trying to explain that to a young teenager uh is probably rather well we I know uh is is is nigh on impossible and actually why should they not have the kind of uh interaction with their friends that all their other friends have just because they are um the next gen in a family office that's it's a real restriction and and one that's pretty unfair for them and very difficult to uh explain why they can't be like their friends so um that is a very very sensitive uh area um and does require some specialist um uh assistance in your book you talk about um family offices often lasting three generations and there's there's you know I thought really interesting reasons why or behind that theory um is that still something you're seeing is that a still a a a pattern of behavior well actually it's interesting that the clogs to clogs um analogy has come under uh increasing scrutiny actually by some academics particularly in the States uh and uh it's becoming considered to be less of a uh of a feature um than it was before I mean certainly it can happen um but it's it isn't the doom sort of um uh uh story that that a lot of uh advisors would would have it be so um I I I I think that as time goes on people become more aware of this um that it isn't quite the truism that that it was once thought to be can we do a bit of myth busting because um because you know I I see a lot of um um advert shall we say for you know oh you know send you your email address and we can send you a list of all the top family offices and all their email addresses and all this other stuff and and you know my experience is that they're actually quite private people they're not um flamboyant in in terms of giving away their data or their information so you know there's loads of people that that that want to work for family offices because they assume oh they're wealthy so they're gonna be um you know good clients etc and I and but what's the reality about working with family offices what what is you know how how easy or difficult is it how difficult is it to get into the family office world what what's your experience over 20 years?

Myths About Lists And Easy Money

Long‑Term Value And Sophisticated Buyers

SPEAKER_02 43:09

Well to answer the first part of your question uh if if someone's offering you a free lift a free list uh on uh LinkedIn or some other uh app or something like that uh then I think it's ex it's what's true there is is true um in other parts of the digital world so that if it's free um uh it means that you're the product not what they're giving away so they're probably doing it to to uh to create greater traffic and uh they're up their profiles on online so I think that's probably the first myth to bus or maybe not myth to bus but thing to point out um so uh uh and the second is that yes of course in you know family offices have you know got large pools of unregulated uh capital but um what People often advisors, service providers, people that want to get into the sector, often fail to understand is that uh normally that that large pool of capital hasn't uh accumulated because um uh the the the the uh the principal is uh profligate and uh with their money and and not careful with their money. And quite quite our experience is quite the reverse. Our clients are definitely looking for you know a great deal of value for money in services that they acquire. They're very sophisticated purchase of services, uh, they've got very high standards, they are uh uh they are um in a position where you know they uh have their defenses uh are ready to, you know, the alarms are ready to be tripped very quickly. Um so you have to be very clear about what it is that you're doing, you have to be very trustworthy, you've got to be there for the long term, uh, and you've got to demonstrate value at every single stage of uh the process. You know, they are not uh because they have large amounts of money, there is a reason for that. They're very good at uh keeping it, investing it, and and and stewarding that money. So it is not a for a provider in the family of its world, it is not a get rich quick uh uh type approach. You've got to be in it for the long term. Absolutely.

SPEAKER_04 45:26

Um can we just move on to you personally? I mean, you as you is as I read out in the in the uh introduction, you sit on the spur uh Spurs, Spears judging panel.

SPEAKER_01 45:36

What are you looking for? Yeah, so I've done that. Uh this will be my 20th uh year on that uh panel.

Spears Panel: How Judging Works

SPEAKER_02 45:44

Um there for each category there are slightly different uh characteristics that are being looked for. And what happened the mechanics of what happens is you sit in the panel, you're provided with the um information that each of the um firms that are wanting to be considered for that category uh have provided. Uh and then there are different characteristics that we're looking for for each one. Uh so it does vary slightly. And the reason I'm on the panel is that I've reasonably well networked and know the landscape quite well. So we do know quite a lot about um people and organizations within the sector. So there is the extra value that we can add from uh sharing that knowledge in a in a sort of critical uh sort of way. Um but without dodging your question, each category has slightly differently different. Well, no, no, it's not secrets at all. If I could remember, I'd share them with you. But they each they're each they're they're um slightly different per per category. And actually it lines up, I think, very nicely with what is being asked of each of the uh organizations that are submitting their uh information uh for it. Um so there is a there is a link between what they're asked for and what the what the criteria are. And then the debate with the judges, you know, um uh happens in a fairly sort of lively way, really.

SPEAKER_04 47:22

So final question then, to to close with, because uh because I'm conscious of time. Um if you were advising a family office that was new and being built today, I I've suddenly come into a load of money. I'm I'm gonna open a family office. What would you insist that I priorite prioritize from day one?

Blueprint For A New Family Office

SPEAKER_02 47:40

Uh working out and being able to articulate what your values are, uh, working out what this uh office is for, as what it really, really for, what's its purpose, um, and then working out what the proposition is uh after that. Um so it's really getting the foundations in place before uh considering recruiting anybody at all. Um I would also recommend getting the EA first because it's absolutely critical to get a really good EA. Um and I think in terms of what I'd have as an overarching thought when I was putting everything together, would be to try to resist uh entropy as well. So everything I put into place, the governance, the structures, the advisors, and all of those things, would be thinking in the background, how do I resist entropy? How do I resist this going stale? And how do I keep it fresh and relevant uh and changing in a dynamic world? I mean, we only had to look at what happened this uh last weekend at the beginning of March in the Middle East to know that the world can change very quickly, very quickly, uh indeed. So um, and and family offices need to be uh need to be uh uh uh you know alive to what's going on outside the office uh and responsive to it, but but in a way that keeps the purpose true and in line with the values, but but reacts to situation, you know, as the world changes, reacts to those changing situations.

SPEAKER_04 49:20

Mark, thank you so much for that. Um if people want to get hold of you, how do they do that? Where should they uh where should they reach out to?

SPEAKER_02 49:27

Oh, come come via our website, summerspartnership.com. That's S O M E R S. Partnership, uh, like the county rather than the season. Um, and uh come to us via our website or uh or drop me a line. We're pretty we're pretty visible. We like we like people getting in contact. Brandful, wonderful.

SPEAKER_04 49:46

Well, Mark, thank you so much for your time. Uh it's been a real joy uh speaking with you and and and uh get having your expertise and your your perspective on these subjects, which you make sound very easy, but I know are far more complicated. Um but thank you for that. Um just a final reminder to everyone to subscribe to the podcast and share it if you think it's of value and an interest. And of course, subscribe to our newsletter, uh Diffuse News. Uh and on that note, we will say uh thank you for listening and goodbye.

Closing, Contacts, And Subscribe

SPEAKER_00 50:18

Thank you for listening to the Diffuse Podcast with host Philip Rendell, CEO and founder of Diffuse. Please rate, review, and subscribe on your favorite podcasting platforms.