Centimillionaire Strategies by Richard C Wilson - Final

Richard@Centimillionaires.
com Text for Help: (305) 333-1155
Table of Contents
INTRODUCTION 7
CHAPTER 1: BLURRED VISION 13
CHAPTER 2: CONTROL CONFLICTS 25
CHAPTER 3: FEEING FRENZY 37
CHAPTER 4: DEAL FLOW DEFICIENCY 43
CHAPTER 5: TIME CONSTRICTION 57
CHAPTER 6: FAMILY FEUDS 65
CONCLUSION: NEXT STEPS 75
CENTIMILLIONAIRE DATA ROOM RESOURCES 79
i
Richard@Centimillionaires.com Text for Help: (305) 333-1155
ii
Richard@Centimillionaires.com Text for help: (305) 333-1155
Special Note for the

2nd Edition
Dear Reader,
I have invested the past decade in ultra-wealthy families, family offices, and
first-generation business owners. This book provides a concise collection of
insights, lessons learned, and models to pick up and adapt. These ideas have
been helpful to other families who have sold a business or real estate
portfolio in the past, and I hope they will help you as well.
If you get through this book and were expecting help in another area, or
would like us to build out a chapter further please let me know at
Richard@Centimillionaires.com, and we will do the best to get back to you
with additional resources and feedback on your family office, personal, or
investment objectives.
Also, please ensure you register to access the Centimillionaire Data Room we
have set up, which is full of free tools, an assessment, other books, and other
free resources at http://Centimillionaires.com/Book.
Richard C. Wilson
(305) 333-1155
CEO & Founder
Centimillionaire Advisors, LLC
328 Crandon Blvd. Suite #225
Key Biscayne, FL 33149
http://Centimillionaires.com
iii Download Free Resources: http://Centimillionaires.com

Richard@Centimillionaires.com Text or Call: (305) 333-1155
iv Download Resources: http://Centimillionaires.com

Disclosure
Nothing contained in this book is an investment recommendation, or even

guideline as everything you do should come from where you want to go and
what position you are in today. This point is communicated within this book
and emphasized in explaining what a family compass is, or why we provide
the free 50 Kick-Off Questions Tool to readers of this book.
The contents of this book, including any videos presented herein, do not
constitute an investment recommendation. As such, this book does not
contain all information that a prospective investor may desire in evaluating
an investment strategy or individual investment.
Each investor must rely on his or her own examination of an investment

strategy or individual investment, including the merits and risks involved in
making an investment decision. Prior to making an investment decision, a
prospective investor should consult his or her own counsel, accountants, and
other advisors to evaluate the merits of an investment strategy or individual
investment. Additionally, any discussion of the past performance of any
investment strategy or individual investment should not be relied on as a
guarantee of future performance, and no warranty of future performance is
intended or implied.
v Download Free Resources: http://Centimillionaires.com

Richard@Centimillionaires.com Text for Help: (305) 333-1155
6 Download Free Resources: http://Centimillionaires.com

Introduction
The goal of this book is to share some suggested and proven strategies for the
most common and challenges of my clients that are worth over $100M.
Every challenge, model, strategy, and example is based on work I have done
first hand with clients and seen families implementing to address these
issues. I would like to make this book as valuable as possible in fewer than
100 pages so that it is both practical and concise. While I would like this
book to be a must read for anyone worth over $100M, it is not meant to be an
exhaustive guide to ultra-wealthy investment planning, wealth management,
or family offices, nor is it meant to be the solution to every challenge you
may face while ultra-wealthy.
Perspective: My
examples and lessons
learned that are shared
in this book are from
my 11 years spent
founding and growing
the Family Office Club,
a platform for ultra-wealthy families and those that want to build
relationships with such clients. I have helped form several dozen solutions
for holding companies, families, and family offices—and there are
commonalities between these families. Having now met in person with well
over 2,000 family offices in 14 countries, as well as having hosted over
30,000 professionals at our 100+ live events, I see golden threads that tie
together many issues that are core to the challenges of being ultra-wealthy. It
is this bird’s-eye view of the ultra-wealthy forest while working with many
centimillionaires at all stages of life and the development of their response to
being wealthy that provides the examples, case studies, and insights in this
book. I have not seen these ideas taught in a school or provided in a course,
and I hope that this $20 book—along with all of the free resources, videos,
tools, and worksheets—is just as valuable as a $5,000 course or $2,500
consulting session.

There are around 3,000 billionaires and well over 60,000 centimillionaires
globally, according to sources such as the Financial Times and Bloomberg.
However, these numbers are under-reported due to lack of access to data as
well as under-reporting by the families that have wealth spread across several
family members or hold wealth in secret due to fear of media invasion of
their personal lives, kidnapping/ransom, or being the target of potential
government corruption or regulatory actions. In other words, we do not know
how many billionaire or centimillionaire families there are out there—we
never will—but we do know that there are roughly 20 times as many
centimillionaires as there are billionaires. Below is a chart showing recent
figures of how many centimillionaires there are and in what parts of the
world these numbers are rising fastest, which, unsurprisingly, is Asia.
Figure 1: Chart Source: The Visual Capitalist
Mainstream media often talk about and sometimes vilify billionaires, but
most have never heard of centimillionaires as a term. In fact, this last month,
“billionaire” was searched for 49,500 times on Google, while
“centimillionaire” was searched for just 320 times. It is important to shine a
light on this area so ideas can be cross-pollinated, evolved, and customized to
this specific segment and their needs. To show just how little this niche is
talked about, there has never been a book written with the word
8 Download Resources: http://Centimillionaires.com

“centimillionaire” in the title, most likely because it is thought of as too niche

of a market to bother with. As the number of centimillionaires grows, it is
inevitable that more resources and statistics will emerge on this area and that
more tools will be developed to help those with challenges and opportunities
specific to this level. My hope is to start that process, to provide dozens of
tools that will genuinely be valuable and used by thousands of ultra-wealthy
families globally.
Free Video: Throughout this book you will see a

number of free videos such as this one on the future of
the family office industry that I recorded while meeting
with ultra-wealthy families in Singapore. These videos
help supplement the written text, most are very short 2-5 minute videos, there
a few 60 minute webinars included for free as well.
http://Centimillionaires.com/Future
Throughout this book, I am going to cover the top six challenges that I have
encountered while working with $100M+ net worth families. You will see
how each chapter’s suggested actions that could help a whole range of issues
related to those challenges. You will also discover how putting in place a
dashboard, compass, aligned advisors, and positioning creates a platform
through which to design the daily experiences and long-term results your
family wants to prioritize. These are the result of current and past work with
families in manufacturing, real estate, consumer products, technology,
healthcare, and other niche industries; the suggestions provided in this text
are not specific to any industry or source of wealth.
Perspective: I get asked several times a week how I got started working with
ultra-wealthy families. I grew up around my father raising over $1B+ for
hospitals, universities, and non-profits via capital campaigns. I was around
when he met with donors regarding gifts, endowments, and managing their
foundations. Through that, I was exposed to this world early, and after
starting and running five businesses before I had graduated from college, I
was hired at a capital markets firm in Boston. There I stumbled on the term
“family office” and found that it meant a holistic wealth solution for the
ultra-wealthy. I decided I would only meet with and talk to those types of
firms going forward but had a very challenging time doing so. I found that
the only way to learn about them was to meet with them as otherwise I was
relying upon articles from Bloomberg and the Financial Times, and there was
not much even from them back in 2006. From that point, to capture what I
was learning and share it with others and to make sure I was remembering
the insights I was picking up, I started writing about the industry online.
Through writing a few times a week, I got the website up to 1,000 hits/day. I
then purchased www.FamilyOffices.com and decided to write even more on
the industry and what I was learning. I got a book deal with Wiley, got the
front page of the Boston Globe and Miami Herald, spoke at over 200 events
in 15 countries, wrote three more books on the space, and started hosting my
own events. The business took on a life of its own as the family office space
continued to grow and thrive to what it is today. It seems most of the wealthy
that hear about having a holistic, 360-degree solution to managing their
wealth want that in place for themselves. Fast forward a decade, and I now
run a 20-person team that operates the Family Office Club and
Centimillionaire Advisors, which implements discreet full balance sheet
solutions for $100M+ net worth clients.
We have advised dozens of families varying in net worth from $30M–$5B+

in net worth who want less chaos, more aligned advisors, and additional
strategic investment opportunities. Among the families we serve, 80% of our
clients are centimillionaires with a net worth of $150M–$700M, with over
two dozen families under contract as of the time of writing this book. Many
times these families seek help because they are creating a new organizational
system to manage their wealth called a “family office,” and this book is
based on the challenges most commonly found by those who have sought our
help.
This book on centimillionaire strategies is being written

because most people that are ultra-wealthy have no idea
what a family office is but are intimately familiar with
some or most of the challenges described in this text. I
have written three books already on family offices and
how to start them as well as how to manage single
family offices, but the most common barrier to helping
potential clients is their hang-up on what a family office
is, whether they have one already, or if they even need
one. In short, anyone who is worth over $30M most likely needs some sort of
virtual family office or family office solution, and anyone worth $100M or
more certainly needs family office quality solutions in place.
With that said, in this book, I want to focus on the specific common
challenges directly and then the respective solutions for each of them. If you
want to dive into 500+ pages of content on family offices across my other
books, those are available for your consumption, or we can connect directly
to answer your specific questions, but I do not want to get hung up on
terminology, as it distracts from what is needed and limits effectiveness. You
can download PDF versions of our other books within the Centimillionaire
Resources Data Room, which is free to access at
http://Centimillionaires.com.
This book is short by design. I want you to be able to digest it during a

commuter flight, train ride, or single sitting elsewhere. Every chapter will
include quotes, example case studies, videos, audio interviews, or tools to
leverage and use in order to make this book as dense as possible while still
being concise enough that the busy executive, or those with these types of
challenges, can at least take an hour to hear about how other families of
similar wealth have been employing strategies both simple and complex to
become more effective and focused.
If you have any questions while reading this or afterward or wish we had
included more details or examples in a certain area, please text me at (305)
333-1155 or email me directly at Advisory@Centimillionaires.com.


Chapter 1: Blurred Vision

You must develop your own proprietary strategies and
combination of mental constructs that will serve you best.
There is a forced evolution that comes with the territory of becoming ultra-
wealthy. Similar to when you first started your business or real estate
portfolio and then had to elevate your actions to work on your business
instead of just in your business, at some point you also need to focus a
portion of your energy on your portfolio of holdings and broader vision.
Typically, this evolution is forced most clearly upon the sale of a business or
real estate portfolio, when a company is taken public, or when an inheritance
is received. I have also seen it happen more gradually for those who have
seven- and eight-figure income levels for over a decade and then look around
and realize they need to elevate their mental models, strategies, and solution
providers.
With the exception of inheritance, most of those who are ultra-wealthy that I
work with have been in control of the appreciation of their wealth. They have
run the operating business or part of it. They selected the real estate assets or
developed their portfolio of holdings through careful decision making and
iterating on lessons learned over time to accomplish their goals.

This same mindset can be helpful at the holdings level for you, but many
times the complexities grow exponentially when you become ultra-wealthy,
and these changes can come suddenly. To make matters more complex, you
may have developed a team of 30, 100, or 1,000+ employees to support your
operating or real estate holdings, but at the portfolio/holding company level,
you may have nobody but a CFO or spouse to support you or provide
feedback on ideas you have.
The result is blurred vision when it comes to where to head next and often a
splintering of attention, meetings, deals, investments, advisors, and time
allocations. This is the first challenge to be discussed in this book.
For investors today there are more valid possibilities of size and industry than
ever before, so your screening must tighten exponentially to keep your
strategic focus. Without an explicit decision on what will be focused on,
everything else will take up your time, and you will be time and energy
bankrupt due to 1,000 inquiries and meetings.
I have seen the full spectrum, from highly organized and focused families
with a very clear vision to a newly liquid family that is starting with a clean
slate and everything in between. Some of my clients have over 100 LLCs
invested in a few dozen industries, while others are focused on just one to
two areas of direct investment with a dozen or more core holdings in that one
space.
One client we have onboarded recently through Centimillionaire Advisors,

LLC had no strike zone, no clear one-liner on their focus, no values
documented, and no direct investment focus despite having 27 assets in their
portfolio worth over $300M. This more common than one may think, yet just
having this conversation can help move families in the right direction I have
found and focus 80% or 95% of their direct investments in an area which
could be most productive long-term.
For decades, the mantra of wealth management and financial advisors has
been diversification to the extreme—and for good reason. The average HNW
person relies upon their income and job to create their wealth and trusts their
wealth advisor, in many cases, to defend them against market fluctuations

and earn a fair return. Centimillionaires have no “job” typically; their

portfolio is their source of wealth creation and defense, and that is why
different parts of it must be treated differently and typically managed
separately. We will discuss that in the Deal Flow chapter, but most important
for this chapter is to know what is common among effective centimillionaire
families.
Over time, many $100M+ families develop a three-prong approach to their

portfolio using traditional diversification strategies which may include fund
managers, ETFs/Index funds, and the public markets for a percentage of their
portfolios. Second, they have another portion with a bit more direct
transparency and control focused on cash flowing real estate assets and,
finally, a third area of focus on investing in one to three industries to acquire
or have direct interests in already profitable businesses. The percentages can
vary drastically and are based on dozens of factors, including risk tolerances,
time horizons, the family’s resources and skillsets, etc., but the most
important shift is to realize that all three of these types of assets are typically
in the most effective families’ portfolios.
What I have found consistently over time is not that there needs to be a
certain level of focus or broad diversification of assets but that the family is
very clear on who they are and what new reality they are attempting to create.
Know Yourself: No book, advice from a high-paid consultant, or solution

can be implemented with conviction without knowing exactly where you
came from, what you stand for, and what you want in the future. The families
that are not effective typically do not discuss and have not documented where
the family would like to go in the future and their background that success is
based on.
The families that make the most progress each year are crystal clear on their
values, mission, objectives, and story of where they are headed and why.
This ensures more synergy at many levels and keeps everyone aligned,
effective, and focused.

Some questions to ask yourself regarding your progress in this area may
include the following:
What are your top five core values?
1) ____________________ 2) ________________________
3) ____________________ 4) ________________________
5) ____________________
What new reality do you want to create moving forward for yourself and/or
your family and team?
What are your top three objectives in managing your assets moving forward?
(If one of them is to grow your wealth from $200M–$400M or to become a
billionaire, make sure the other two are focused on why you want to do that
or what you expect to get by accomplishing that goal.)
1) ________________________________________________
2) ________________________________________________
3) ________________________________________________
What is your mission?
______________________________________________________________

Many families of significant wealth have never taken the time to write out
even that much about their goals and focus and have not been clear with
themselves and others around them on what their goals are. If you find
yourself skipping over this exercise, please grab a pen and just draft up some
answers here in the book or in a notebook if you are reading this on a Kindle
or listening to it via Audible right now.
I always start working with ultra-wealthy families

by establishing their family compass, which is the
collection of all of this information that helps
direct the family’s energy. Without it, every
meeting taken, investment made, advisor selected,
or team member hired could be wrong and in
conflict with your values or end goal. There is no
way for your advisors or team members to truly serve you if you yourself are
not crystal clear on where you are headed and why.
Benefits of a Clear Vision: Once you have a clear vision of where you came
from, your strengths, your values, your assets, and what new reality you want
to create, you can sift through everything faster. Through documenting this
explicitly and communicating it with your team, advisors, and family, you
can avoid waste-of-time meetings, proposals, and requests for your time that
are clearly not a fit for your goals. This allows your assistant, portfolio
manager, or CFO to say “no” for you with conviction, and it gives you a
polite strategy for turning down your brother-in-law’s latest crypto-cannabis
fintech solution or whatever it may be.
Proprietary Strategies: Recently I had dinner with the head of a family

office who represents a Saudi prince and a $100M+ family out of Singapore.
In both cases, they were highly sophisticated but trying to figure out the best
way to manage their portfolios. There is no one-sentence answer; the truth is
that you must develop dozens of nuanced approaches and reactions to market
and industry events, use structures and strategies aligned with where you are
going, and adopt methods that would allow you to be, as Nassim Taleb would
say, antifragile so that you can become stronger through industry changes
and not worn down. As Petyr Baelish says, “Chaos is not a pit; chaos is a
ladder and the climb is all there is.” In other words, family offices are
climbing through the chaos of not knowing how to manage their capital. The
journey of deploying it appropriately is rewarding, and sorting through the
inefficiencies is where the rewards are.
It is the combination of your family’s past in business, natural strengths,

industry focus, passion, resources, and strategies combined that result in a
proprietary and effective approach.
Multiple Mental Models: Charles Munger discusses the idea of using

multiple mental models to navigate decisions, life, and investments
specifically. He also talks about how the combination of several working
models can sometimes result in an exponential outcome. I have found this to
be highly relevant to my work with families as one of the greatest values I
can bring is the cross-pollination of mental constructs, models, or processes
that act as little machines. These mental models can be applied to investing,
dealing with family dynamics, sourcing deals, etc. It is identifying,
developing, and improving these models that keep my work fun since many
times when speaking to families, I pick up approaches and strategies I should
be applying to my own team.
Free Video: I recently was asked

to speak in Monterrey, Mexico to
family business owners who each
had hundreds of employees if not
over 1,000 each, and were looking
to formalize their family offices
and I talked about the importance
and multiplier effect of layering on mental models on top of each other by
trading operational and investment ideas with other family offices and
investment firms: http://Centimillionaires.com/Models
This chapter includes several mental models or strategies that my clients use
to build their wealth, but without a clear vision and understanding of what
you want, none of these ideas will work. These are structures that I have
developed, have picked up from clients, or have seen examples of from the
5,000 investment professionals a year that come through our live Family
Office Club investor summits.

Strategic Assets: In every industry, there are bottlenecks, a limiting

resource, a most visited website, a top thought leader, an operational
challenge, or a high cost that everyone faces. If you have a clear vision,
you can acquire resources to help turn what is a challenge for
competitors into a source of revenue, reduced cost, or additional insight
for your team. For example, a manufacturer may find that consistent
access to a certain raw material or tooling technology is sporadic and is
slowing down their ability to meet deadlines. Investing in niche
intellectual property or exclusive access or owning a small percentage of
an operation may grant them more consistent access to this resource.
This could in turn lower their overall costs or improve their profit
margins. In addition, many companies are willing to sell to industry
leaders and have them on their board as strategic investors because of
control of distribution, raw materials, or connections that can open doors
at a moment’s notice. None of this would be possible without a clear
vision of where you want to go and what has made your family
successful to date.
Whitemail: This strategy is one that is friendly and the opposite of

blackmail, which is the threatening of actions against someone unless
they comply with your request. With whitemail, you are seen as so
strategically helpful, so valuable, and such a strong leader in your market
that others make offers to you, concede in negotiations with little effort,
or offer you investments first, exclusively, or at a discount due to your
strategic value in the industry. This typically only happens at the
centimillionaire level when someone knows themselves well enough to
know what game they are playing and to press on the gas of having
information released publicly, which helps build this position. Creating a
situation where opportunities arise because of your effectiveness to
operate in a niche can help propel your wealth and be a good offense,
which I have found is the favored defense for many of those who are
self-made, ultra-wealthy families.
Royalties: One example of a structure I have evolved over time is that of

earning a royalty on investments as a minority investor versus getting
paid out a percentage of profits based on my equity position. I
successfully put this into place when I purchased a 33% equity stake in a
fast-growing organic skincare company. The CEO of the company and I

knew that the company had always made a 21%–26% profit margin, so
we thought it would be reasonable to assume a long-term 20% profit
margin for purposes of calculation; my 33% equity stake would give me
rights to a third of that. So essentially, for every $100 of revenue we
make, the business should produce $21–$26 if it does as it historically
has, but for this purpose, we calculate a $20 expected profit long term.
Then my 33% equity stake gets me $6.66 of that…so I am due a 6.66%
gross revenue royalty each month. This is superior to me as a minority
investor as otherwise the CEO could pad expenses, get an expensive
company car, pay themselves more, hire her sister and overpay her, and
go to expensive events in luxury locations all on the company dime, and
I would suffer more than she may have in those cases. It is important
over time to develop such approaches for your style of investing that is
acceptable to those you negotiate with and that encourage alignment,
transparency, and accountability. I continue to think that royalties are
under-appreciated in the family office community, since first writing this
book we have closed another royalty investment, in a company called
Better Bath Better Body, and we are now negotiating two additional
investments in separate companies, both using gross revenue royalties.
Free Video: Here is a short

video recorded in London
recently where we hosted an
event on how I have invested
in royalties from my own
balance sheet and the trade-
offs involved in doing so:
http://Centimillionaires.com/Royalties
Real Estate Debt + Collateral: I recently had a private family office

dinner with 23 single family office friends and clients, and a topic that
came up several times that my clients have used dozens of times is
making a debt investment with strong real estate collateral behind it. For
example, there may be an apartment building that is cash flowing that is
valued at $7M, and someone may need $2M to renovate the property.
They may ask you to invest for a 11% return per year on your investment
over a three-year term and put their apartment complex up as collateral.

Families call this a downside risk, but it is really just a messy upside. In
other words, if the real estate investment professional defaults and does
not get back on track on time with payments, the interest rate to you
could potentially go up to 17%, or they have to hand the property over to
you, and for $2M, you acquired a property worth $7M. Some of the
wisest investors I know, the most sophisticated play heavily on the debt
side of the balance sheet.
Operating Business Debt Investments: The same is true with operating

businesses, but due to their nature, a higher interest rate is typically paid,
and conservative underwriting is typically desired. We are looking at one
investment now for a client where the holding company is looking to
acquire equity stakes and would pay out the investor 15% on their
investment over a five-year term; if payments default past a grace period,
the investor then owns the business, which serves as the collateral or
safety net. The reason families like this is that they know most CEOs or
entrepreneurs will not let that happen and will instead find a way to get
them paid through a new investor, secondary market, or higher interest
rate loan elsewhere; if it was just a simple equity investment, they may
be more tempted to just say, “Sorry. Things didn’t go as planned,” and
move on.
Negative Controls: Many times it is challenging to have a CEO be

motivated to still run their business well when they have less than 50%
equity if the salary or profit incentives cannot motivate them for
whatever reason. In these cases, some families have developed negative
controls, veto power, and the right to stop a sale or stop certain types of
actions, such as a dilution of their shares, shutting down of a major
division, going public, etc., to protect themselves from abuse of that
majority equity position. These are specific to the types of investments
and types of risks that are potentially most damaging and all of the types
of negative controls you want to have in place; how you word those in an
agreement and communicate those to a counterparty is where it becomes
100% proprietary.
Niche Domination Strategy: Many families want to get ahead of the

curve on new trends and invest where things are expanding and changing
quickly. These fast-growing markets or changes within old markets lead
to inefficiencies and opportunities. Many families I work with look to
lock up intellectual property, real estate, research, access, or control
infrastructure in these areas so that as the industry matures, they will be
positioned exceptionally well to monetize that trend. While you should
speak to an attorney before attempting to do anything that the
government would consider a true industry monopoly, many families
buy every piece of real estate on a single street, buy any property under
$1M in an area and then relist it higher, acquire every business of a
certain type in a region to control dynamics, or quietly acquire all of the
patents or IP in an industrial or manufacturing niche. We have seen this
niche domination approach within niche areas of government
contracting, hospitality assets around a single airport, consumer product
assets in a small niche area, and we are actively helping a client with this
strategy in a functional clothing niche and applying it to our
http://PitchDecks.com investor relations agency operating business as
well.
Chess Board Mindset: The final strategy I want to bring up here is

having the mindset of playing a long-term game of chess. Some
investments may just grow your net worth, others just provide income,
while others may provide you with valuable byproducts. I saw clients
thinking this way, and it is in part why we run the Family Office Club
investor summits. We bring in several million dollars a year from them,
but we also have more direct investment deal flow, more unique
investment structures and strategies to emulate, and more relationships
after each event we host. One of your business assets could serve as a
pawn, while another is a knight or rook that helps in unexpected ways,
such as insight on what is coming in the marketplace. An example of this
is a $1B+ real estate investment firm that focuses on a one-square-mile
area, buying expensive office buildings in this area. To give themselves
an edge, they also do leasing, brokerage, and commercial management
services of buildings in that area, so they know when leases are soft and
when maintenance is being ignored; they get to see deals first because of
their focus and business assets acting as feeders or sentries for their

portfolio. These strategies can be combined, layered on top of each

other, offered to others shy to be your minority partner on a deal, or just
understood for use in your toolbox at some later point in managing your
own wealth. This is, in part, what keeps my work interesting. There are
always more structures, processes, strategies, tools, and positioning
options that are cross-pollinating through our work with
centimillionaires, and implementing the right combination of these is
what is fun.
While this chapter on having a clear vision and the benefits of doing so is
building the foundation of this book, the next chapter is on control,
governance policies, and why there are likely inherent conflicts embedded in
the setup and operations of your organization and advisors.
Centimillionaire Case Study: We are under contract with a

$100M+ net worth part of a $500M+ family. They have been
formalizing their family office, but even after years of operating with a
full-time team and office, they had no mission, no values documented,
no objectives, and no investment strike zone. Due to not having a focus,
their best ideas came somewhat randomly through introductions,
referrals, and connections made locally. We put into place a 12-point
criteria for any deal they look at now, and they can clearly explain to
their advisors, team members, and other family members what they will
take meetings on, what they will consider, or what they will be
proactively seeking out for investment. The difference is going from
being spread out thin on 40 different learning curves trying to understand
different models and industries to being highly focused on a single or
just two to three industries and quickly moving up that learning curve
with great conviction. When you have blurred vision, things are
frustrating, conflicting, and not aligned. When you try to invest without a
clear vision, you become slow to conduct due diligence, struggle with
valuation, do not have specialist advisors, cannot leverage past financial
models or insights, and are not cross-pollinating ideas or sharing client
leads between holdings.
Summary: Some suggested actions for helping address blurred vision from

this chapter included:

1. Document your core values so you and your team know
where your decisions are coming from.
2. Define your top three objectives, and share your mission
with others.
3. Identify, focus on developing, and look for new core
strategies to employ that are appropriate for this level of
wealth and success.
4. Spend time thinking about exactly what new reality you
want to be operating and investing within.
5. Develop and evolve your own proprietary structures,
strategies, and filters to become more effective.
Free Webinar: If you are enjoy video

content more than text/book formats,
please see our Private Investor
Advantage Recorded Webinar, it
provides you with 17 strategies to be a
more effective private investor, and I
think it is the most valuable 1 hour of
content I have ever created for ultra-
wealthy families looking to optimize
their investment approach.
This webinar can be streamed for free here:
http://Centimillionaires.com/Webinar

Chapter 2: Control Conflicts
I know many families that are worth

over $100M and yet do not have
any solution providers working with
them who exclusively serve this
marketplace.
Many families are not sure where to

turn or whom to trust beyond their
CPA or internal team when they
become ultra-wealthy. This in turn leads to feelings of isolation and a
relatively closed-in culture of not having many peers to compare notes with
or get fresh new perspectives from. This is, in part, why we are publishing
this resource to share case studies, examples, and best practice models for
you to emulate.
There is a central conflict between the way most wealth is created and how
wealth management solutions operate today. On the one hand are those who
are first-generation wealthy or still entrepreneurial families after several
generations—those who created their wealth through control of their own
destiny in business or real estate assets. They had to steer the ship through
storms, close deals, retain clients, and negotiate with investors or companies
to acquire, and they saw the direct result of those efforts compounded over
time. That is what has worked to make them ultra-wealthy, and it is almost
the polar opposite of giving all of their money over to a private banker or
wealth manager to control and manage on their behalf.
Most business owners know that without complete transparency, key

performance indicators, dashboards, accountability, and the ability to quickly
fire and replace key executives, things go sideways. Without aligned
incentives, rules, policies, and an excellent executive team that you are
always pruning and building, people grow complacent or less effective.

This leads to a conflict, where most wealth preservation and investment

advice come from financial advisors. You have no ability to prune your team,
you always have limited transparency, and your ability to hold them
accountable is limited to the scope of the contracted relationship since they
are not physically in your office and on your team as a full-time employee.
As brought up in the previous chapter, the result is a need to split your
portfolio into various parts so that you give up control where appropriate and
have additional control and transparency where it makes sense for your
family.
Since entrepreneurs are used to being in

control, most self-made centimillionaires are
used to being in that position. They often feel
a sense of unease or fear around who is
managing their wealth, and they wish they had
more transparency. At the same time, most
people realize that to scale and get things
done, you need to find the best professionals
to trust. This leads to a preference to invest
directly where practical and a preference for
independent sponsors over investment fund
managers. Independent sponsors are
investment firms that allow you to select deal-
by-deal investments instead of blindly
investing into a fund with a particular strategy.
Supporting this trend is the graph to the right
from a Knight Frank Wealth Report showing
that 92% of ultra wealthy investors surveyed
have started to take more active control over
their wealth over the past 10 years.
Typically the reality of what should be kept in

house or outsourced should come from your
background, your history, how you have
created value, and where your wealth was
created. I believe in using private bankers,
multi-family office solutions, or outsourced chief investment officers for
portions of your portfolio that you do not want to have to manage and do not
have a strong background in creating outsized gains in. That is the only way
you can survive the flow of opportunities coming toward you and execute
well on the most valuable contributions you can make in your industry. This
is why we needed to start with the challenge of having “blurry vision.” Once
you have clearer vision, you can decide where you are okay with the cost of
having a control conflict because it is not an area of your expertise and the
counterparties’ expertise far outweighs your own. It is in the areas where you
want to grow your expertise directly or feel you can manage yourself with an
edge that may be worth considering being done in house by you and a
dedicated team.
There is a natural conflict in place with many advisors that is a challenge for
every client I work with. The issue many families face while putting together
their family office is that those who can help most in any niche of your
investment portfolio are often incentivized to sell you on a solution that may
or may not be in your best interest. Here are several examples of this in forms
you may recognize:
 An investment banker may be able to find you deals in the

marketplace but may be more likely to push those he represents so he
gets double the fee or an increased fee, similar to how some private
banks push their own products into their clients’ wealth advisory
channels.
 You may not know many people who can thoroughly explain various
life insurance options; the person you do know who is an expert
suggests you purchase a very large and expensive policy that is
complex and hard to understand.
 Your wealth advisor markets themselves as being “on your side,” yet
when you want to invest in an apartment building or purchase a
company, they are not typically equipped to help. Most of the time,
they suggest you just keep your assets on their platform and allocate
to publicly traded apartment building REIT or a publicly traded
company in the industry you are looking at investing in. This way you
get liquidity and they get to keep a higher share of your wealth under

their fee model. While fiduciary wealth advisors must offer you what
is in your best interest and not what has a higher commission for them
as an advisor, that typically does not mean that they will advise you to
take assets off their platform and invest, for example, in some cash-
flowing commercial real estate—at least not in my experience.
In each of these cases, the advice may be sound and it may be the right move
to follow their suggestions, but it is a conflict in that your “advisors” may be
directing you toward the solution that is best for them while also being good
for you. A skilled solution provider will only suggest things that legitimately
make sense for you, but most will not want an in-depth solution about
options that involve not working with them at all, even though that may be in
your best interest. This natural conflict runs rampant throughout the financial
and wealth advisory industry.
The truth is that most wealth management firms do not serve the ultra-
wealthy or centimillionaires exclusively as a focus, and that is why most are
at complete odds with what this market needs. This is why many individuals
worth $30M or more, especially when their worth is over $100M, create their
own systems to manage their wealth. They likely leverage one or two trust
companies, wealth managers, or private banks, but they also build up their
own reporting, dedicated teams, and investment managers they know well
and trust to give them a variety of brain trusts and levels of strategic
influence, control, fees, and transparency.
In order to remain in control of some of your portfolio, you need to assess

who to add to the team and who to trust as a solution provider. Interestingly
enough, everyone in the investment industry says team is most important;
pedigree is critical; and deep experience, trust, and integrity are central. In
other words, many point to the subjective measures as the most important,
even in an industry driven by metrics, performance fees, track records, and
Sharpe ratios. To make it more concrete as to what to look for when building
out your team to manage your wealth, I have come up with six objective
things that you can look for. We do not have the space to go into great depth
on each of these six areas, but most are intuitive and self-explanatory:
commitment, consistency, can provide references, a confident listener,
centered, and contributing. In other words it suggests when identifying the
right team to trust your investments with that you only work with providers
who are committed to their work, are consistent in their execution, can
provide references, are confident but humble listeners, are centered human
beings, and are contributing to their industry and your organization.
I have found that if you review your internal values and compare them with
those of the organization or individual you are deciding on while also
considering these six areas of character analysis, typically the truth of
whether it is a good fit or not will reveal itself. If you are uneasy or just do
not feel comfortable with the fit, it may not matter why you think so; it may
be a mix of multiple things not being a good match. If you are unsure about
someone, it may not matter why you feel uneasy; my experience has been it
is best to simply move on and trust your gut on that feeling.
One way to ensure you have the right level of control for your family office
is to constantly be interacting with peers, family offices, and other savvy
investors to see what models they have adopted. I tend to put a lot of case
studies, video clips, and examples in our books because we have found that is
not only makes what I write clearer but that it is only the practical application
of the ideas to different industries and families that adds any value. Whether
it is through live events, one-on-one meetings, private group dinners, or
resources such as this book, it is important to always be finding the most
effective way to have the control level you desire while reaching the portfolio
results you want to achieve within the confines of the life you now want to
live.
Connecting in peer networks, like the Family Office Club, YPO, or SC, or
trying to figure out how to identify the other business leaders in Chicago,
New York, etc., and networking with them can help. We also have a free
webinar that we are happy to share on centimillionaire strategies. These are
the business strategies we find centimillionaires use to create their wealth and
are using to sustain their wealth over time. Even if you are not worth over
$100 million yourself, I think that these strategies can be used by small and
medium-sized operating businesses and firms as well.

Optimized Control Levels: It is important to address what goes into making

an investment at a high level to know what comes with control versus
outsourcing an investment function. This is important for having an informed
discussion about what the family should and is willing to take on themselves.
We have had this discussion lately within our own family about our holdings.
We recently made two investments; one went well and one did not. We
looked at why and have developed new rules about what our own strike zone
for investments will be and what we will take on ourselves. Many families
want control, but having control and operating a business is different than
having just equity control but not operating or having a minority position
with protections in place, such as the royalty setup explained earlier in the
book.
Six Levels of Potential Control
Every investment you make typically is made up of the following types of

energy and resources:
1. Strategic Planning: Investment Focus + Designing the Portfolio
2. Sourcing of Investment Opportunities + Originating Deal Flow
3. Screening of Potential Investments
4. Due Diligence + Research of Opportunities
5. Negotiation + Structuring of Investments
6. Management of Holdings + Exits/Sale of Assets
Many families come to me asking what other families are investing in and
how they think about their portfolio. While the size and industry focus differ,
the most consistent approach I have seen is taking three levels of outsourcing
and control and diversifying across assets and control levels. It is challenging
as no generic investment advice is ever possible or appropriate to give, but as
a general framework for breaking it down, I typically see families dividing
things into three simple buckets:

A. Diversified Market Exposure Segment: Many families will hire an

outsourced chief investment officer (CIO), private bank, or
multifamily office for this allocation. They will help design the
strategy with you and you may help originate some investment
opportunities through your own connections, but most of the six
layers mentioned above will be carried out for you by this wealth
advisory solution. This segment is typically seen as a way to generate
some income in the portfolio while also serving as a defensive buffer
or a way to track beta market exposure in case you need liquid or
semi-liquid assets somewhere to at least beat inflation while you
allocate to direct investments further. It is important to note that the
best multi-family offices can help with holistic trust and estate
planning in house and with direct investments, but a firm capable of
helping greatly in both areas is hard to find.
B. Conservative & Cash Flowing Commercial Real Estate: Most

families of significant wealth separate this from the wealth advisor
above and like to own assets more directly than is possible when only
allocating to the public vehicles often offered by wealth advisors or
outsourced CIOs. In this area, many families buy some properties that
are small or local directly using a property manager to oversee those
assets. They then get to know and allocate through 5–10 investment
firm boutiques, which allows them to select deals on a deal-by-deal
basis so they have transparency on exactly what deals their capital is
going into. This segment is also served by real estate investment
funds, but many families do like to invest deal by deal first while they
are building trust with an investment manager. The result is typically
a focus on just one to three cash-flowing real estate asset types
diversified across regions and sponsors. This results in having various
levels of control, transparency, fees, and flexibility on what levels of
debt you apply to properties in your portfolio. This segment is
typically seen as a vehicle through which to grow net worth steadily
over time while producing income and is viewed as a conservative
portion of the portfolio and very long-term minded.

C. One to Two Niche Industry-Focused Investments: This segment is

where most families retain the most control in house as they typically
created their wealth in this space they are reinvesting in. It is their
reputation, knowledge advantage, distribution advantage, or assets
still in place that allow them to move more swiftly through valuation,
due diligence, and opportunity sourcing stages of investing. Families
invest in this area as they have high conviction that they are superior
managers of these asset types against competitors and they have
proven that to date. This is typically the most aggressive portion of a
family’s portfolio. We have found families can use help in originating
deal flow in these areas and working with other like-minded families
as well as some help with structuring deals, but otherwise it is an area
where they enjoy maintaining a lot of control.
You can see from the descriptions above that A typically leverages others in
almost everything, B has some outsourced investments and some managed in
house or selected directly at least, and then bucket C is where families
typically outsource the least. This is different for each family, and areas of
focus will be different per family, but this approach helps provide a
framework of discussion on where to focus the most energy internally.
The diagram below shows these three areas of investment that typically are
treated separate from each other on levels of control required by the family
and the amount of risk or investment goals of that general area of their
portfolio. The most important thing to consider while reviewing these three
areas is, which of the six levels of potential control do you want to retain for
each of these three areas of investment?

Exercise: We just covered something typically discussed in person. To make

sure we do not blow past it here without capturing what this means for your
family, it would be worthwhile to draft out your approaches to these three
areas and which of the six levels of control you may want for each of these
three areas in the short table worksheet below. For example, the first table is
for a client we are setting up a virtual single family office solution for now.
Responsibility Diversified CRE Investments Operating Businesses
Strategy Co-Created Co-Created Co-Created
Sourcing Co-Sourced Family Office Club Family Office Club
Screening Outsourced CIO Family Office Club Internally Completed
Due Diligence Outsourced CIO Family Office Club Internally Completed
Negotiation Outsourced CIO Family Office Club Internally Completed
Management Outsourced CIO Family Office Club Internally Completed

It may help in your case to think through what advisors and parts of this
portfolio equation you may want to keep 100% control of versus outsource.
Please write in your answers below:
Responsibility Diversified Cash Flowing CRE Operating Businesses
Strategy
Sourcing
Screening
Due Diligence
Negotiation
Management
If you have questions on how to use this table or would like to email or text
me a picture of the completed table at Team@Centimillionaires.com or (305)
333-1155, I would be happy to discuss how to interpret this for your needs.
Centimillionaire Case Study: We are working with a family going

through a leadership transition that was facing control conflicts. This
$170M net worth family had a CEO who was being paid $425,000 a year
plus incentives, accounts open with three wealth management firms, and
no reporting or analytics. The $1M a year in overhead team that oversaw
the wealth management firms and investments had no reports, no
performance calculations, and no clarity on what the overall investment
strategy was and how that fit into the family’s goals. The family is upset
because they have no accountability, no transparency, and no control
over what created the wealth in the first place, and they just feel uneasy
about trusting these third parties of various types. They were lacking a
dashboard and documentation on their direction, and because of that,
their desire for more control was hard to act on. They also simply did not
like having multiple wealth management firms in place that would not
give them the transparency they needed to feel like they were in control.
Without knowing the details, they could not know if everyone was doing
a great job or even what fees they were paying. This is currently being

corrected in multiple ways, and step one is making sure that their level of
desired control and objectives are being established first and everything
else adjusted to that new reality that they want to be operating within.
Summary: Some suggested strategies to address control conflicts from this

chapter included:
1. Consider what level of control is appropriate for your

situation. Consider completing the 10-minute quiz and 50
Kick-Off Questions document to help orient your thinking.
2. Use the 6 Cs tool to ensure others are in line with your
values and have a high quality of character.
3. Complete a draft version of the three investment buckets
plus six levels of control table for your own family.
4. Discuss the control preferences you have with at least two
members of your family and five individuals total to refine
your ideas and reasoning for decisions.


Chapter 3: Feeing Frenzy
Do you have a dizzying

sense of being pitched
at every family event,
business meeting, or
social circle you are
involved in?
Do you often feel that

everyone around you
charges you far above
the market value as
soon as they understand
how wealthy you are?
Many wealth families have an ongoing pain point of overpaying for

everything everywhere they go. I live on the island of Key Biscayne, where
there are well over 100 family offices. It is a small, wealthy community near
Fisher Island, about 10 minutes from Miami, and locally, we refer to this
effect of being overcharged as “Key Biscayne” pricing. It sometimes seems
that everyone is giving you the Hamptons’ price once they know your $12M
home is waterfront there.
One ultra-wealthy family that holds 1,000 commercial patents that we have
gotten to know has a famous story they circulate internally of one of their
founders washing out Ziplock bags in the company headquarters’ sink so
they could be hung up to dry and would not go to waste. While on one level
it is of course not the best use of their time, at the same time, it shows the
thrifty, resourceful, prevent-waste attitude that is common among business
owners and yet not respected or understood sometimes in the marketplace.
This is similar to asking why the person who is in excellent shape cannot just
have a piece of pizza. “Why not enjoy three pieces? You won’t ruin your

health,” someone may say. While that may be true, they did not get to that
exceptional level of fitness without a respect for health and nutrition, and the
same goes for most ultra-wealthy families. Many families, as they grow past
$30M and $50M net worth, do have their monthly spending, overhead, and
costs rise significantly. My most recent cold call was from a $250M+ net
worth family that just bought their fourth jet, for example. Still, most families
that are ultra-wealthy and are self-made want to know they are getting value
for their money paid, whether their overhead for their personal life is $30,000
a month or $300,000 a month.
The principle of it is at the core of why fees are important to families of

significant wealth. They would not feel good typically spending all of those
years building the wealth to then treat it with disrespect, and to let others treat
it with disrespect is insulting to their past efforts and principles as a person as
well as what made them successful in the first place. When I am
documenting the values for families, they often put down industrious,
resourceful, value-driven, and entrepreneurial as their core values, and this
comes out in how they appreciate not overpaying on fees to third-party
wealth advisors or fund managers.
Free Video: I was invited to

speak in New Delhi & Mumbai
recently on the family office
industry, and while there I
recorded this video on family
office fee structures and alignment
in front of the Taj Mahal:
http://Centimillionaires.com/Fees
Leverage: In short, you have more leverage as an ultra-wealthy individual

than you realize or imagine. This is not about being cheap or paying less; it is
about getting the most compounded and effective return out of your capital
invested and not wasting it. Many hungry investment fund managers and
investment firms would like to attract more clients of your stature, and they
would like to earn your business, even if that means discounted fees or a
creative structure that aligns you both. Also, many times it may be more
beneficial to not ask for reduced fees but instead for performance-only fees
so you are not paying for their services when they lose you money or lose
you money relative to a benchmark that you establish together. I asked a
discussion panel full of real estate investors recently at our 250-person
investor summit in New York City about performance fees, and one
investment manager on stage commented how, in his opinion, fees should not
be so central a part of a discussion. He suggested that it would not be smart to
select a heart surgeon, for example, based on the lowest fees available. I
responded that I would feel better, however, if the heart surgeon got paid
nothing if I died on the table during his handywork, the point being that fees
should mostly be paid for positive results, not just for showing up with the
credentials. Everyone will show up and want you to pay for just being in
existence, but that is not where the out-sized value is.
AUM-Based Fees: One area of

getting overcharged for services
is when someone wants to
charge you based on your
Assets Under Management
(AUM) or net worth, despite
that impacting the complexity of
your work. In some cases, it is
valid to charge based on AUM,
but in the investment space,
almost everyone wants to charge you 10 times more if you are worth $300M
than $30M, even if it is just three times as complex or five times as much
work as the $30M family to serve. This is partially because they know
complex situations can arise, and partially, they just know you can afford it.
It can be a great business to charge based on AUM, but it may not always be
a nice feeling on the receiving end. The best example of this would be in
software reporting or asset reporting software solutions. I have done research
for multiple providers in this area, and nobody that I know of provides any
pricing guidance on their websites; they do ask what your AUM size is, what
industry you are focused on, what type of organization you are, etc. As soon
as I reached out to them, I felt like the Caucasian shopping at the Moroccan
street bazaar asking how much a trinket is that does not have a price on it. I
am sure the price was more for me now that I had to ask. This approach leads

to mistrust, and over time, as our industry matures, leaders in various solution
provider niches will emerge that earn the respect of ultra-wealthy families
and family offices that appreciate transparent pricing and fair solutions that
deliver a great value for the price. This will also be feasible for providers to
do as they scale and reach critical mass and are able to better predict their
own costs of delivery.
Return on Investment (ROI) on Organizing Your Wealth: One way to

view the overhead and costs that may be associated with addressing some of
the challenges that come with becoming ultra-wealthy is through the
recovery of fees otherwise paid. In my experience, roughly 25%–50% of the
total cost of operating your own team or solution for managing your own
wealth can be covered through reduced fees alone. This is comforting for
some who feel that the best thing to do is throw more money at having a
more effective system in place.
Standard Fees Warning: One issue families experience is costs going up

rapidly while everyone assures them their fees are industry standard yet are
far from that. I have a few examples of this. The first is a local family office
here in Key Biscayne that explained that they paid an attorney $152,000 for
some legal documents when they arrived to the country to register their
business in one state, yet after seeing how simple that was, they now pay
someone $50,000 a year to register them in 30 states. The second example is
that I have heard that with apartment building investment firms (independent
sponsors), a 50% profit share after a 6% return hurdle is industry standard,
while another manager takes 20% of profits after a 10% return is earned for
the investors. You should prioritize investments where the structure and fees
align your wins with the wins of your investment manager or wealth advisor.
There are middle-of-the-fairway average fees—a well-informed person can
provide guidance on those—but be slow to buy it when the suggestion is
coming from the mouth of someone selling you an investment.
Centimillionaire Case Study: We have dozens of case studies for

this area, but my favorite is that of a family that was negotiating
compensation with a family friend. In this case, it was a large family,
well over $500M net worth but under $1B, that was being asked to share
25% of all investment returns (with no hurdle) with this executive, who
wanted to earn $800,000 a year. The family was considering saying yes
to the individual, who was putting pressure on them to decide quickly
before he became unavailable. In this case, I advised them that 10% or
5–15% above a benchmark of reasonable returns and only earning a
carry or performance fee as the head of their family office on one or two
specific areas where he would be spending the most time or adding the
most value would be more in line with industry standards. Some families
like to pay lower salaries and higher bonus and carry—it just depends on
your values. Listen to your gut if something seems not right, too rushed,
too expensive, or not aligned. Families get labeled as “cheap,” or family
office team members will complain to me that their $100M+ net worth
boss is too “thrifty,” but it is always about the exchange of value, not the
cost of the item at hand. The more aligned you can design the
compensation of investment managers, staff members, family members,
and those that serve you, the less you will worry about the total cost of
them because you can afford to be generous as long as there is a
consistently high ROI.
Summary: Some suggested actions for feeing frenzy from this chapter
included:
1. Identify from the table in the previous chapter (You did
complete that table, right?) where you will be keeping
control internally, and ensure your team can support your
focus on those areas.
2. Make a point to develop your own proprietary structures to
align yourselves with those you invest in over time.
3. Evaluate each service provider and team member based on
their value and degree of alignment versus cost.
4. Identify one or two service providers you pay high fees to
yet do not believe are aligned, effective, or providing you
with a high ROI for the money they are receiving.


Chapter 4: Deal Flow

Deficiency
The well-positioned family that is intentional about their
investment opportunity set and deal strike zone will see compound
benefits of seeing deals first, exclusively, or at a superior
valuation from other families.
One consistent issue across wealthy families is finding high-quality deal flow
in enough volume that they can allocate their capital in a way that is high
conviction and is in line with their long-term goals. Many families fail to
attract the right types of deal flow, so they settle for less optimal minority
stakes in companies, give up control, invest in more fund managers than they
would like, or sit on lots of cash even when they want to be allocating. This
chapter is the most fun to write because so much progress can be made—and
leverage applied—with so little time and so few dollars invested.
Interestingly enough, many families do not realize at first they are even
facing this challenge. They may experience it through frustration with
investment opportunities or complaints of lack of control or fees, but some
families I work with do not realize how few opportunities they are seeing
relative to other families of significant wealth. Some have literally told me
that they have seen 40 deals over the past three years, while others get sent
several deals per day.
Typically, when I ask a
family directly what their
strategy is and what themes
or thesis they are
developing, they do not
have a clear answer.
Sometimes newly liquid

investors say they are open

to any type of investment, but they are not. It is like someone graduating
from college saying they would like any business job, but they quickly learn
what they do not like. Just as the investor does not actually want to invest in a
mobile app in Zimbabwe or biotech company in Boston, most investors have
many preferences; they just have not written down and voiced them yet. The
first step to improving your deal flow is to quickly sort it out at live events
and your email inbox. You cannot thrive in the flow of investment
opportunities as an ultra-wealthy family if you do not have a good strike
defined for your allocations.
Free Video: Here is a short recording

done from London on the importance of
not moving too quickly into deals after a
liquidity event, you need clarity, focus,
and to see many deals before moving
forward on one:
http://Centimillionaire.com/Guideline
There are dozens of potential areas for consideration, but at the very least,
your team and those that visit your website (once you have one) or interact
with you should be screened out in various ways, including by the industry
the deal is in, how credible the materials are or interaction is, their multiple
of profits or valuation, the size of the transaction, where the company or asset
is based, whether you will have control in the investment or be an LP or
limited partner investor in someone else’s deal, and how excellent or average
the team is.
These are first-round screening details that you should think on carefully to
weed out 80% or more of the deals being pitched to you. A head of direct
investments, an analyst, or a portfolio manager can help take a first cut at
deals, and keeping yourself honest in your planning dashboard to only the
best of potential deals will mentally keep your brain focused on deals that are
set up to go well for you. Below is a table that can also be found in the
Centimillionaires.com Data Room—a more detailed listing of additional
criteria that you may want to consider while evaluating a team, asset, or
company for potential investment. These criteria are not exhaustive; in fact,
they are just high-level filtering items, which, if customized for yourself and
your team, again, will save you time and money in due diligence fees, travel,
team resources allocated, etc.
One truth I have found is that not all deal flow is created equal, and nobody
wants just lots of investment pitches of any quality or location.
Everyone wants more highly focused and

qualified deal flow. All else being equal, if your
family is seeing 50 deals per year, then you may
only be focusing on the top 10% of those deals—
the top five for any sort of due diligence or serious
consideration. Imagine, however, if you were
seeing 300 deals per year. You could focus just on
the top 2% and be conducting due diligence on six
deals a year perhaps. As long as the quality of
those investment opportunities stays high and as
focused if not more focused, then your chances of
finding an anomaly among the deals available is greater. I like to visualize it
as a deal totem pole—with the best deals on top—and if you can work your
way through those in terms of due diligence, valuation, and getting your arms
around the details, then you can work your way to less exciting or less
aligned deals farther down the pole. The more high-quality deals, the better.
One way to visualize this is to imagine your deals competing against each
other. The more you have in competition, the more the top of the stack will
beat out those deals that are not as
great.
If you have been wealthy for some

time, you most likely have a
consistent stream of investment

offerings coming toward you. Most of my clients are drowning in normal.

They get inundated by investment funds, investment bankers, and real estate
syndicators, who all have deals that look good but few that look exceptional.
If you are similar to my core clients, you are looking only to spend your time
on the deals that are two to three standard deviations away from normal and
that are hopefully unique in both structure and focus, or in alignment, as well
as geographical location, etc. If you want to find these anomalies more than
once every three to five years, you have to see a lot of deals.
We have found that the investment firm or wealthy individual with the
exclusive, better priced, first look, or highest volume of quality deal flow has
a compounding advantage for investing. When you combine the deal
origination strategies in this chapter with having a very clear vision on where
you want to go and aligned service providers that know your values and
goals, then you will waste less time and are more likely to do well with your
direct investments in businesses or real estate. Being focused and clear about
what you would like allows you to be nimble and agile while others may be
slower to take advantage of opportunities.
Systematic + Holistic Investment Sourcing: We have found that taking a

multi-pronged approach is the best mindset to use while attempting to
increase the quality and quantity of your investment opportunities. The
following diagram shows the major components of what can attract more
qualified deals. These components include being involved in the right social
and business communities, positioning yourself and your team for qualified
deal flow, utilizing proactive reach outs or data runs on a niche, acquiring
strategic points of leverage or choke points, and operating within the niche
you are looking to acquire assets in. Importantly, we have found that it is the
combination of these strategies that compounds and creates an unfair
advantage in the marketplace for you when competing for deal flow and
attention from companies that you want to approach you regarding an
investment.

This level of effort really is required by your team, if not yourself, if you
want to maximize your returns and investment opportunity access. Essential
to getting these components working for you is to flip your thinking on how
most individuals consider getting access to deal flow. Typically, based on the
40,000 professionals who have attended our live events, I have found that
individuals receive deal flow through their relationships, peers, and service
providers and then sometimes through reaching out to a company.
If you can, in addition to those sources, think strategically about how to

maximize deal flow. I have found that you can do so in multiple ways. You
can get brokers to fish for deals for you in specific sectors or build a net or
asset that captures potential deal flow through valuation work or a service of
some type. You can then find where potential deals congregate (barrels of
fish) or position yourself like a bear on a waterfall so that when those in your
space need capital, they come jumping straight for you as a potential partner.

Above is a diagram showing some of these ideas in a simple cartoon format.

It can be worthwhile to think through these strategies and how to best apply
them to meet your goals.
Mental Constructs: Earlier in this book, we talked about mental constructs,

or machines that you can set out into the world or a business situation that
you know will work. We have closed deals, attracted $100M+ families, and
brought in millions in revenue from these strategies of finding barrels of fish,
buildings nets, identifying waterfalls where fish (deal flow) are jumping
toward us, etc. Each of these areas deserves careful consideration,
understanding, and application to current or future situations where you are
looking to attract clients or deal flow.
Positioning for Investments: Most families are private by nature or have

learned to be private due to media inquiries, competitors, and pitches that
come in that may not be desired. As a family becomes wealthier, though, and
builds a team, it is important that you consider what you want to be investing
in and discuss the potential of creating a brand name for your investment
efforts that protects the level of your family’s privacy that is desired while
also attracting additional opportunities.
For example, in my case, if I did not want to create Wilson Family Office or
Wilson Investment Holdings, I may instead create something like
Manufacturing Investment Holdings or a more interesting name that speaks

to the family’s history and focus on investing in the manufacturing niche.

Many families don’t even spend five minutes considering the best name for
their organization that would maximize their opportunities, but in the future,
this will change as families face increased competition for valuable assets.
Free Video: Here is a 3 minute video on

how a very small % of all family office
investors get the most qualified deal flow
systematically:
http://Centimillionaires.com/Multipliers
Saying No: A lot of families come to me regarding different potential

investment opportunities. For instance, perhaps a family has found what they
believe to be an exciting investment in the Bahamas comprised of a dock
marina with a restaurant attached to it. However, they made all of their
wealth in consumer products or food. They have not thought through the fact
that when they allocate and make an investment, there are going to be
strategic fruits that come from that. They are going to have to move up the
learning curve on how to do due diligence on the marina, how to make it
more profitable, or how to manage the staff.
And if they are starting that far down on that learning curve, then they have
to decide whether it is worth all that effort. Is investing in marinas something
they really want to be doing long term? Or is this just an exciting deal
because their peer brought it to them and it looks like an exciting investment
to brag about and to go visit sometimes? I think realizing that every
investment is going to produce strategic fruits is very important, and possible
investments should be screened
by that metric.
Many families pay over $10M

for tuition by learning the hard
way that you magnify your
investment opportunities when
you narrow your field of options.

Laser Focus: It is critical that your family develops a unique capital

proposition so you do not have to pay market prices for assets, or at least so
you get to see opportunities early and often that are most qualified for your
investment. Without a unique proposition of how you could take an asset
where other investors cannot, you will be shown deals after more strategic
investors have been visited, and you may end up paying a non-strategic
HNW investor type valuation versus a more strategic structure or alignment
that could have been possible. In other words, you should strongly consider
branding your private investment holdings so that you stand for something
among peers, company owners, real estate asset owners, etc. If you say we
invest in seven areas, nobody will remember all seven—not even your team
members, advisors, or spouse perhaps. The more you focus what you want to
invest in most and communicate that to the public, even if the portfolio itself
has multiple types of investments, the more quality deal flow of that type you
will get.
What really drives this strategy home is if you can develop a single sentence
that makes it crystal clear what your investment team is looking to acquire or
invest in and how you add strategic value. If you can do that, you are much
more likely to find yourself considering anomaly-type deals. I enjoy helping
families on such projects, so please email me if you are stuck on how to do
this and where to start or if you are hung up on your description being
paragraphs long. This is a critical step that costs nothing to complete, so it is
important to get into place.
Since most families are too private to ever consider having a website, do not
see the power of positioning for deal flow, and
really do not want to say or do anything public, you
will stand out from others by implementing this
advice. It is the fact that many families do not do
this that makes it powerful and effective to use.
Proactive Data Runs: One strategy I want to share

here is conducting a deal origination data run on a
specific industry or niche. This is where you decide
what deal flow you would love to see more of and get and

then run a process so that you can see more of those deals that meet your
criteria. Instead of trying to attract the deals, in this case, you reach out to
asset owners or company CEOs and attempt to engage them in starting the
process of considering an investment from you or to consider a sale of their
business to you. This is one of my favorite strategies because it is used by
every large private equity fund but by almost no family offices that have less
than $500M in assets. To use this strategy, you need to do the following:
1. Choose a niche, such as dry cleaners in the state of Nevada.
2. If you only are interested in three to four cities, then you have
someone help you build a database of the 400 dry cleaners in that
marketplace.
3. If you have more criteria to apply, such as years in business or

volume of business, in some niches, that can be done to filter the list
down to just 100–200 leads, but sometimes that is not possible.
4. Next you draft an email that is very short, right to the point in one to
two sentences about why you would like to invest in or acquire their
asset or business and suggesting two or three different times for a
phone call.
a. It is critical that you attach your investment strike zone in an

attached PDF and/or describe it right in the email, which
includes their type of company or organization, so they know
it is not a waste of their time to speak with you due to their
focus or size.
b. The email must also be from a professional email address,

such as Richard@Centimillionaires.com, so they can see your
website if they are curious about who you are.
5. The next step would be to have phone calls with as many of those
leads as possible. This enables you to learn a lot about the
marketplace, to see the personalities behind the assets, and to keep an
ear out for anomalies.

6. To make it all real, you then pick the top three to five leads out of the
20–30 phone calls you completed to meet with them in person, talk
about valuation in depth, and build a relationship with them. These
are hopefully all leads that you may be interested in long term, even
if there is no acquisition to be done in the next one to two years, so it
is time well invested.
I have used this process to originate deals for families I represent and have
recently closed two deals using this process, with a third I expect to close
with a family in 2019. This systematic way of uncovering direct investment
deals can be applied to various industries and carried out by a relatively
small, nimble team. If you want focused deal flow, it is a great way to
originate it. Our most recent two clients, at $200M and $300M each in the
manufacturing and technology industries, are already applying this to their
strategies on how to source deals they wouldn’t see otherwise.
Additional Disclaimer Note: The following is not financial advice but

simply a warning that taking the diversification strategies built for the public
markets and applying them to your direct investments could increase your
risks. Please see the disclaimer at the start of the book regarding not taking
any actions before assessing your situation and needs.
“Diworsification”: While this idea will not be liked by some and has to be
understood in context, in some scenarios, diversifying every part of your
portfolio can hurt your ability to perform well. As mentioned earlier in this
book, many families group their investments into fund managers/public
markets exposure, commercial real estate investments, and direct operating
business investments. Not all families have these three areas of focus, but in
my experience, most do develop activities in these areas over time with a
connected yet separate strategic approach to each area and within sub-areas
of these broader buckets. Let’s say a family is highly diversified in the public
markets and fund managers, they are highly diversified in commercial real
estate that is cash flowing, and they are first generation and wanting to grow
their wealth. There could be two different ways of approaching this:
- Family A: This family has been told their whole life by every person
in wealth management that diversification is key. Due to this and their

desire to invest directly into operating businesses, they start investing

in mobile apps, restaurants, gas stations, food product companies,
REITs, and multifamily properties. The due diligence is challenging
on these various industries, and it is hard to find the expert to go to
for each area or learn what their checklist should even be, so they end
up using a generic due diligence consulting firm. And since they are
new to these industries, they are not sure how to add strategic value
except through their network. That is fine to the family because they
are diversified now and have placed their bets on over two dozen
companies in these various industries.
- Family B: This family has the same level of high diversification in

their fund managers and publicly traded assets as well as their
commercial real estate holdings. They differ, though, on their direct
investment portion of their portfolio in that they are focused 100% on
investing in manufacturing businesses. Since they created their wealth
in this area, they already get a lot of deal flow, know what
conferences the top players consider credible and attend, and are able
to more quickly conduct due diligence on companies that they have
already been aware of for years. Since they know what drives success
in a manufacturing business, they know what metrics to look at while
coming up with a valuation, and each time they complete an
investment, they are growing their reputation to close and their ability
to add strategic value.
When you look at direct investments, you cannot look at them exactly like
you would a public markets portfolio. You can never give blanket advice on
investing in a book, of course, and say, yes, you should be diversified in this
portion of your portfolio, or no, you should not…but you can see in some
cases that it creates much more risk to diversify your bets all over the place
versus being focused on an area so that as strategic fruits come available
from your past efforts, you can use that momentum to make more effective
progress. A few years ago, I invested in an ice cream retail business concept
that seemed to be taking off. I made the mistake of being a minority investor
and not having the ability to take the business over, buy out the founders, or
operate it with my team, and I was left without a chair when revenue growth
slowed. I have since sold that position and have invested in a company called

Better Bath Better Body, which produces functional bath salts and leverages
Amazon to sell directly to consumers. In this case, I have a clause to buy the
company should it come across trouble, and it is in an industry where my
team could, in theory, come in and help operate or run the business, if
needed. We have invested in direct to consumer companies before and own a
few still now, so this was a much wiser investment for me to make.
Free Video: Here is a short video further

discussing this topic if it is something you
want to learn more about and understand in
greater context:
http://Centimillionaires.com/Diversified
This has come up numerous times on stage with single family offices
discussing their approaches, and typically those with $30M–$500M of net
worth have one or two industries they focus on in addition to commercial real
estate, and those with $500M–$1B+ may have two to four areas they
primarily invest in. One exception to this is if you have a specific approach or
strategy that can be applied to companies in numerous industries specific to
distribution, manufacturing, marketing, capital structure, or some other
value-add approach that does not limit you to a single industry. The only
other consistent exceptions I have seen would be those families very early on
in managing their liquidity or third or fourth
generations attempting to diversify to the extreme
their direct investment assets in very large cash-
flowing blue chip companies that are still private.
Direct Investment Worksheet: We have PDF

and Word document versions of our direct
investment worksheet available within the
Centimillionaire Data Room. This worksheet
helps you think through various components of
your strike zone and is a process I have found to
be useful with the families we work with now.
To access the Data Room, please send an email to

Advisory@Centimillionaires.com or visit http://Centimillionaires.com.

Centimillionaire Case Study: I am under contract with a $60M net

worth family that made their wealth in real estate development and
is now interested in investing in consumer products. We identified a fast-
growing segment within the consumer products industry that we could
limit our scope to and decided to only consider investing in those types
of companies. We then further limited our consideration to companies
that had over $1M a year in revenue that also had good reviews on a
third-party website that was consistently used in the space. We then built
a spreadsheet of 375 of those leads, and I had my five-member full-time
data research and deal origination team create a spreadsheet of the
contact details for the CEOs of the almost 400 companies. I then wrote a
carefully crafted one to two sentence email to those CEOs from an email
address that used the premium domain name for that branded family
office. For example, my emails came from Richard@XZYHoldings.com,
and if they went to XYZHoldings.com, they would see that our strike
zone of investments fit their company type. I included a one-page
attachment of our investment focus, which also was in line with the type
of company CEO we were targeting and emailing. That would get us
many responses, and I had phone calls with 70 of the 375 leads over a
period of three months. We then narrowed down that list based on size,
profitability, personality, openness to selling, openness to selling
controlling stakes, geographical location, growth momentum, etc., to just
eight investible companies from those 70 leads. Since then, we have
closed one acquisition, and we have three more still pending from that
work completed 18 months ago. When you use a data-run process like
this in a niche area, people remember you and come back to you years
later with offers to sell you their business now that it is larger or after
they go through a life event that forces them to consider the option of
selling. Also, I cannot count the number of times someone in the family
office world complains that valuations are high and that deals are always
shopped, yet I also have heard CEOs targeted in a data run say, “I have
never thought of selling or have been approached by an investor before.”
That is a beautiful thing as you can mold the situation to align your
success with that of the CEOs and the companies without the mess of an
unrealistically high valuation and without the many limitations someone
may put on you when they have three to five other bidders or more at the

table. This case study is one I hope you will put into place within your
niche business area of focus over time as it is used by fewer than 1% of
single family offices and ultra-wealthy families that I speak with yet has
many benefits to completing.
Free Video: Here is a short video I

recorded in India recently while there to
speak at an event on some strategies for
valuing some high growth companies:
http://Centimillionaires.com/Valuation
Summary: Some suggested strategies to address deal flow deficiency from

this chapter included:
1. Develop your laser focus based on your values, mission,

objectives, and family history.
2. Identify your high-level strike zone for quickly filtering out
investment opportunities.
3. Complete a more thorough checklist for first pass due
diligence to help screen out investments further that would
otherwise create conflict or potential losses.
4. Complete your first data run for originating investments or
work with someone to complete one for you to find qualified
and focused investment opportunities you would never
otherwise get to see.
5. Complete the Direct Investment Worksheet from the Data
Room.

Chapter 5: Time Constriction

As your wealth exponentially grows, your screens, filters,
and ability to say no may not develop at the same speed.
When you first start a business, there is a lot

to take care of to prove your idea. As you
grow it, there are more support systems
around you, and you are able to work more on
the business.
When you reach a certain level of liquidity,

however, the scope and breadth of
opportunities becomes greater than your
systems and team can manage. If you are
similar to many families I have worked with,
there is a level of demands on you that most
people cannot relate to. Between your
operating businesses, your real estate assets, overseeing various existing
holdings, regulatory and tax filings, meetings with advisors, family demands,
etc., time goes by faster than ever before. One centimillionaire called me last
week and said, “I don’t understand. I am far busier than ever before, yet I
have more resources than ever at my disposal.” One reason why is that there
is a larger game being played now at the ultra-wealthy level; another reason
is that there are dozens of new learning curves to move up as part of that
game. Another client of mine, worth over $100M, won’t slow down to train
an executive assistant who could give him leverage, so he is constantly
missing phone calls scheduled, meetings, and follow-ups expected by
counter-parties.
Free Video Resource: I recently recorded a

video in the Mayfair area of London while
hosting one of our investor summits there on a
common mistake that can cost you millions if
you are newly ultra-wealthy, and is simple to

avoid. Here is where you can stream that now:

https://Centimillionaires.com/Mistakes
No longer can an investment just be good or a counterparty be trusted or well

respected and that be the criteria to determine whether you should take a
meeting. In my experience, many at the ultra-wealthy level have to be careful
about what they spend time on and realize a new set of systems and tools are
needed to reduce chaos, organize opportunities, or sort through a series of
confidential yet important processes that require support.
It is important to decide early on what you do not want to do, what you are
not good at, what you do not enjoy, and what you will for sure not be
investing in or needing so you can ignore or politely say no to 95% of those
that are asking you for your time.
A wealthy family’s activities can be as complex as that of a private equity

fund managing $300M or more but without the highly polished team—and
with the added complexity of family members that have their own passions,
along with relatives and that old friend that is seeking to raise capital for their
next great idea.
Time Value: A core issue that is critical to be reminded of is your value on

time. It is worth so much now that you need to have support systems in place,
so as much of your brain as possible is focused on what you are naturally
great at, what you enjoy, what you are passionate about, and things that give
you energy and do not take away from your focus and balance. All of the
smart strategies in the world will not help you manage your wealth
effectively if you are constantly in a state of frustration and stretched to tend
to what needs attention.
Every single person I have mentioned this to has said, “Yes, of course,
Richard, that is true with me as well.” Yet many of these same $100M+ net
worth individuals do not have a high-power executive assistant, they still
drive themselves everywhere, they take meetings out of feelings of
obligation, and not a single one of the hundreds of centimillionaires I have
met with had their goals, mission, objectives, values, and explicit direct
investment strike zone clearly mapped out on paper. Applying the advice to

your daily activities and being explicit about what is allowed to take up your
time is what is not easy to do, but it is absolutely critical.
Additionally, families often do not think enough about what new reality they
want to create. I went to the home of a $700M family for four hours a couple
weeks ago, and this was something they had not really explicitly thought
about at all. They had no idea what type of family office they wanted in place
so that their daily activities would match up with what they think they should
be doing, what they are passionate about, and what they are really good at
doing. Making sure that they are creating that new reality on purpose through
the design of their family office, and not just through what advisors are
recommending to them, is important.
It seems unrealistic, but I have met $800M net worth families with just one
person managing the wealth and overseeing the private banks and fund
managers. I recently met for a half day with a $500M family with no team,
no office, and no secretary even helping them to look at what they should be
putting together. Just the other day we got a call from someone who inherited
a large sum of money and was starting from scratch. I think it can be helpful
to know that if you have a very informal way of approaching managing your
wealth, you are not alone. We conducted a benchmark study of 179 ultra-
wealthy families and found that only 56% of them have dedicated office
space, 32% had a formal family dashboard with a mission and
goals/objectives stated, and just 38% of them had an advisory board in place.
As the best practices on managing wealth spread and the number of ultra-
wealthy families grows, these numbers will continue to move up, but we are
in the very early days of that being the case. At this point, the industry is very
inefficient and I am often told the experience is confusing and unclear. This
leads to lack of action and lack of conviction on which direction to head next,
and many times families can take a lot of time—sometimes years—to figure
out which structure and approach is best for them.

Leaning on Advisors: You should see your advisors as a significant source

of investment that is getting you a consistent return on that capital
contributed. For example, your tax advisor should typically be more than
paying for themselves through additional savings. Your Head of Direct
Investments should be helping you refine your strategy, think more high
level, originate unique deals, and negotiate better terms. Your CFO or
accountant should be allowing you to make smarter decisions, act with
conviction, and drill down to find smart numbers as quickly as needed. If you
have the right solution providers in place, they are bringing you fresh
perspectives and strategies, supplementing your team, supporting you, and
making your life easier, not harder. If they do not have a service mentality
and do not know how to serve you well enough to be of great value, then you
need to change who you are paying each year for those solutions.

You do not want to be your service provider’s learning curve. If you are a
whale to your provider, that is bad. If you are a top 10%–20% client, they are
learning through mistakes made on your account. I personally would never
recommend a solution provider that does not have an exclusive focus on
family offices or a division at least laser-focused on ultra-wealthy clients; it
just does not work. Otherwise, if you are not careful, the lawyer may want to
simplify your legal structure just so he himself understands it and not because
it is in your best interest. The value of a provider being able to cross-pollinate
ideas across clients, to help you emulate every changing best practice, and to
make introductions or source opportunities across clientele can be a big
percentage of the total value they bring in addition to the core reason why
you hired them in the first place.
In the worst-case scenario, your solution providers do not really understand

what a family office is, have not heard of the term, and do not have many
examples of other family offices they serve (if any). The best-case scenario is
that the providers you work with respect your time, bring consistent strategic
value to the table, and understand how your needs are unique from mass
affluent and $5M–$20M-type clients. If you are asking yourself whether your
current solution providers are making you both more efficient and effective,
then you may have already answered the question.
Free Video: I recorded a short 3

minute video in NYC lately on
advisory board strategies and tips for
single family offices and ultra-wealthy
investors that may help you if you are
thinking through next steps for yourself
in this area:
http://Centimillionaires.com/Board
Transparency: The biggest waste of time can be high turnover of team

members or solution providers. To avoid this, it is best to have a mindset of
transparency and accountability from the start and to require that openly with
everyone you interact with. If that rubs anyone the wrong way, then perhaps
you do not need to be working with them; you only need one or two solution
providers in each area typically. It is important to put into place absolute
transparency and accountability within your own team and family office
wealth solution as well, or you will quickly find that someone who is running
your family office might keep you blind from certain things, making you feel
like you are reliant upon them. Another example of this time cost if you are
not careful is that your back-office support or bookkeeper might have your
data or might have access to your historical information, and that might make
it feel like it is very painful to unplug or you are not even sure how that
works. Ask up front about all of that, and make sure expectations are set from
the start that you want it to be easy to unplug if that is what you feel is best
for the family, even if you have no intent to do so at this point. You have to
set up your culture, advisors, and team from the beginning to avoid worse
case scenarios and have ways to address issues that come up in a productive
manner — and these issues will surely arise at some point will if you do not
guard against this.
Consistent Injection of Insights: It is important to focus on being effective

and not just efficient when thinking about how to address the challenge of not
always feeling short of time. We all want to make more progress per hour or
day spent on an activity, so setting up your life and business operations so
that you can have high-quality interactions with other centimillionaires and
ultra-wealthy investors can help you save time. These connections can open
your mind to new processes, solution providers, deals to consider, due
diligence strategies to employ, or concepts for managing your portfolio. If
you are in constant touch with high-quality peers, there will be more of a
chance for an ever-improving effectiveness to your ability to competently
manage your wealth that will compound over time due to the combination of
those many perspectives and approaches. While we do paid work to
implement discreet full balance sheet solutions, it is free if you would like to
attend our events as a registered investor or member of our Centimillionaire
Co-Op. There are no member dues or costs to you—just your time to be
involved and participate in a few of our 10 investor summits a year in cities
such as New York, London, San Francisco, Toronto, Miami, Dallas, Chicago,
and Singapore.

If you are reading this book, there is absolutely no excuse not to have a
virtual assistant, full-time executive assistant, and/or virtual family office
solution in place for yourself. Like I mentioned earlier in this book, if you are
a centimillionaire and you do not have a family office, you are already
paying for that. You are burning money and opportunities and are costing
yourself more through missed tax deadlines, late fees, missed meetings,
unopened emails, or just through moving 30% or 50% slower than you could
with proper support.
I have consistently found that the biggest problems with the approach of
centimillionaires are fundamental items such as the lack of Key Performance
Indicators (KPIs), no clear focus, no dashboard, no value-add solution
providers, no formal team, no systems or checklists, no tracking of smart
numbers, or no posting publicly of how the team or organization is
performing. Each of these and many other tools we discuss in the book are
what reduce chaos and provide the family with leverage of time and
resources to accomplish their goals.
Centimillionaire Case Study: I have been on retainer and under

contract with a $175M net worth family for over three years now, and
they have been time broke the entire time we have worked together. We ran a

search process to find him the best executive assistant possible and ended up
finding someone who has been the personal assistant to a high-power partner
at a law firm for a decade, but they were not offered the position essentially
due to timing of the team’s travel schedule. They have since put off this
decision, and we struggle to communicate each quarter because they listen to
their own voicemails, respond to their own emails, and do not have anyone
dedicated to picking up the pieces left behind after meetings and planning
sessions. This client is successful and will likely become a billionaire over
the next decade, but they also have much more chaos and friction than is
necessary due to not prioritizing putting into place simple and appropriate
support systems. To their credit, this client has put into place some powerful
service providers, and they now have great support outside of their team for
moving faster with more accurate reporting and protected structures in place.
Free Video: I recorded a short video in Berlin

on virtual family offices while there to meet
with a few families, if you are familiar with this
concept it may be helpful to stream this short
recording: http://FamilyOffices.com/Virtual
Summary: Some suggested actions to take to address time constriction

issues from this chapter included:
1. Position yourself to consistently connect with peers who are

at your level, and find ways to access their strategies.
2. Create your family office dashboard, and formalize your
single family office or holding company further.
3. Employ an expensive, high-power executive assistant to get
yourself leverage on your time.
4. Ask your advisors how else you could be leaning on them to
be smarter, faster, and more focused.

Chapter 6: Family Feuds

The wealth is truly passed on through the family stories and
values; it is the only way the family and wealth will be preserved.
The most painful challenge that comes with wealth can be the destruction of
the family. It is a type of problem that wealth can create more easily than it
can help fix, and it seems to naturally put barriers and conflicts in place if it
is not proactively managed in a way to prevent and resolve such issues.
Free Video: Here is a short video

on the hidden dangers of being
ultra-wealthy whether you have a
formalized family office or not you
can probably relate to some of
these issues which nobody likes to
discuss:
http://Centimillionaires.com/Dangers
Your Family Story: Communicating your family’s story in a way that shines
a light on hard and painful lessons learned, values created and solidified, and
how the wealth has been managed can help establish respect for what has
been built to date. Having these stories that are central to the family’s culture
repeated often and shared among generations is important. For some families,
these stories are just kept in verbal format, while others find it helpful to
create a family legacy video documentary or coffee table book with the most
important stories, pictures, and events captured for passing on the family
values in a consistent fashion. This can prevent fighting within the family
because it sets the norms, expectations, rules, and boundaries around the
morals and goals of the family.
As an example of this, my grandfather researched our family history back a

few hundred years within a long 80-page document, and we have traced the
Wilson name back to the 1700s as well. I bring my children into our office
and share with them stories of what is happening in the business and how the

organization got to where it is today. Below are some pictures taken from a
family history book for our family:
I have only met a handful of ultra-wealthy families out of over 1,000+ that
have documented their family’s mission, values, objectives, wealth creation
story, and values stories and had formal family meetings where they
consistently discussed such things.
One approach that was

highlighted by Mitzi
Purdue of the well-
known Purdue Chicken
family when she spoke
at our Single Family
Office Summit recently
(HD recording of her
talk available in the
Centimilllionaires.com

Data Room) was the idea of the family covenant mindset—that no matter
how bitterly the family may disagree and no matter how critical one may be
of another family member’s actions, the family’s interests are held above all
else. It means that regardless of what happens, issues are solved within the
family, by coaches/private arbitration/consultants as needed but never for any
reason with teams of fighting lawyers or public court appearances. The
family covenant approach means the family is more important than any
conflict that can arise within it. Mitzi is also an advocate of endowed
vacations, family newsletters, and children’s activities that instill the family
values and stories into their lives with actions and experiences instead of just
words and pictures.
Impact Investing & Charitable Giving Warning: There is a lot of talk

about sustainable investing, impact investing, philanthropy, and how to
combine doing well with doing good these days—so much so that some have
become resistant to it simply because of how much of a marketing game it
can appear to be for some and how some others are forced into playing the
game. For example, some companies that have been investing in apartment
buildings for 15 years may now call it impact investing because they are
improving the living conditions of those in the area, while others may
complain that they raise rents. Meanwhile, companies that historically have
caused some of the greatest natural disasters may now meet certain
benchmarks for diversity or renewable impact and may reinvest a lot into
meeting certain benchmarks so they can be included in public market
sustainable investing ETFs or index funds that track such benchmarked
companies.
When you combine these trends with a family’s desire to create a legacy,
things get complicated quickly when people say they want to make a
difference. Most self-made, ultra-wealthy individuals feel that they have
already made a positive impact through the creation of their wealth by how
they treat others, add value to customers, treat their team, and create wealth
for their investors. The one area I would like to provide some guidance on is
getting the next generation involved with the family. If it is done through
philanthropy, it should be carefully managed and be thoughtfully used with
younger members of the family. If members of the family are only exposed
to the family’s wealth through helping give it away, it may be socially
beneficial but a detriment to their own ability to then turn around and be a
resourceful, thrifty, hard-working, and enterprising entrepreneur themselves.
For example, if you created your wealth through the real need and desire to
make something happen and to create a new reality for yourself, and success
was critical to your wellbeing, that is in stark contrast to attending a $40,000-
a-year grade school, having four homes, and helping the family by giving
away their money. In fact, some would say it is the exact opposite, so the
same results cannot be expected. This is just an important discussion to have
within the family if the goal is to propel for a culture of being industrious and
entrepreneurial, if those are in fact some of your family values that you
would like carried
on.
For those that are

having this
conversation within
your family now, I
would point you
toward the “17
Sustainable
Development
Goals” released by
the United Nations
on all of the various ways that companies and families can positively impact
the world. I believe this approach leaves room for practical application and
impacts to be expected and measured so the desire to have an impact can be
focused on one or two areas of highest concern and desired effect.
Personally, I like most impact investment ideas that do social good but also,
due to their structure, are self-replicating, reduce the costs of the operating
business, or have some tax advantage so that the impact is genuine and not
just a good story. I have found this to be important so that family members
across generations can get behind the idea as needed instead of just the part
of the family or one family member that is excited about impact investing,
which sometimes carries the baggage of expected lower returns.

Foundations: Due to my father working with the ultra-

wealthy for over 30 years now and over $1B worth of
gifts and donations being made through his work, I
have had a lot exposure to philanthropy. Growing up, I
used to go to donor meetings and hear case studies of
non-profits. I would see how wealthy families
could help expand a cancer hospital for children or
endow a position at a university critical to their
expansion. There is a lot of overlap between
families with impact investing and philanthropic
giving. To help organize efforts on setting up
private foundations, aligning cause-related
foundations, and hopefully reducing some operational overhead that comes
with running a full-fledged foundation, we have been doing some work with
Sheila Driscoll of the Driscoll family, which is well known for their fresh
berries in supermarkets around the United States. Our hope is that by
identifying some of the best-run foundations and their causes, we can help
other families that want to contribute to the same cause do so with their gifts
tagged for “100% to the cause” use so that none of the money they want to
put to use gets wasted on infrastructure and all of it goes to making a
difference. This area of centimillionaire and billionaire giving is inefficient.
A little bit of planning in how you will measure the impact of your giving
and how what you give will integrate into your family’s vision and story is
worth thinking over in detail. We are going to be creating more content on
this—setting up a family foundation and philanthropy in general—in the near
future. If you want to be notified of new resources being released, please let
us know.
Governance Controls: Another

component of having the right level of
control within your organization is
having governance rules in place so
that as you grow, you will have the
rules of the game and protections in
place for your own good as well as the
good of those on the team and in the

family. Many families today are broken apart, do not speak with the eldest
son, or have broken into two or three sects within the family that stay apart
during holidays and refuse to work together because of mismanaged
expectations and unsaid promises seemingly not kept. Many times a family
member hiring an old friend, investing in their friend’s company, or using the
family’s name in public ways that are perhaps not appreciated by all family
members involved leads to resentment and misunderstandings on the true
motivation in play.
Many families also do not want to disclose how much wealth they have
without being able to explain the full story as the number by itself may lead
to certain expectations. By telling the family story, values that got the family
there, family goals, and governance rules around all of that in the same
conversation, you can manage much of those expectations and reactions.
When the context of the wealth is made visual, planned out well, and
communicated thoughtfully, it mitigates the risk of certain reactions or
assumptions about what the money is for or who is getting it and when.
An organizing document or dashboard for your family and governance

policies can help prevent some of the common causes of such scenarios by
putting in place expectations and establishing guard rails regarding what any
one family member is allowed to do
or able to authorize without
approval by the proper individuals
in the family.
Family Office Governance PDF:

We have written up what could be
the start of your governance rules
for your family office so that you
can see some example components
and potential ethical policies you
may want to have in place. This
resource can help start the
conversation within your team on
how to put these policies in place at
your next family meeting.

To download these, please access the Centimillionaires.com Data Room and

free PDF version of this book by registering here:
http://Centimillionaires.com/Book.
Family Bank (Inheritance Controls): Many times families find that they
created enormous value in their community and for their clients while their
wealth was created and that much fulfillment was derived by growing a
business. The struggle to earn a living is something that is often valued, yet
many families bring their children up helping to run a foundation, giving
away money to charities, and getting a new Mercedes for their 16th birthday.
Remember, this is typically not how first-generation wealth creators were
brought up, so it is important to remind ourselves that if you are not careful,
you may, by accident, raise a Ferrari-driving, non-productive, lazy offspring.
While you cannot control the personalities and life decisions of each family
member, I have never met a family that wanted their child to end up being
thought of in such a way.
One solution to this issue that many families follow is to limit inheritance to
simply undergraduate education or a master’s or Ph.D. degree (and living
expenses during those times), a down payment on a house at age 27, and
perhaps a final inheritance of $1M or $3M at age 55 or 65; otherwise, even if
the family is worth $100M+, they may receive nothing unless they apply to
the family bank for business funding. Under this model, the family would
either loan or invest in a business that a family member wants to start or
acquire. The elders of the family must approve this investment, and it is
structured as a 0% interest loan that must be paid back or structured as a JV
between the family member and
family bank with an equity split
between both groups. In this way,
the only real way for the next
generation to access the wealth is
by applying for responsible use of
those funds, whether it is a $5M or
$20M investment. This is seen as a
more entrepreneurial way of
passing on wealth and encouraging
further creation of it versus simply giving your child $20M to do whatever

they would like with whether they are hardworking and industrious or
wasteful, etc.
“I want to provide enough money for my children so they can do whatever

they want, without having so much money that they can do nothing.”
– Warren Buffett
In addition to having a family bank, you should have an experienced trust

and estate advisor that can help with having flexible trusts set up. Combined
with proper governance policies, there can be rules—and everyone knows the
rules and expectations within the family—within the family office team.
Having quarterly family office meetings that are moderated and led in a
systematic way can help keep people on the same team. And hopefully, at
least twice a year, if not quarterly, the family is meeting in person. Having
your systems in place enables you to know what daily, weekly, monthly, and
quarterly kind of key performance indicators your family office is held to and
what your team members are doing each day. Having the governance rules in
place lessens the risk of money destroying your family instead of supporting
it.
Our suggestion is to move from where many families are with no family
history of values documented and no governance rules or ethical policies in
place to a well-thought-out power and wealth transfer plan that considers
multiple generations.
Centimillionaire Case Study: One family I know in the UK put

the son in charge of running the family money. He had full
discretion and was not paid for this full-time job but was handed money
without question. The entire family’s financial future relied upon this
individual’s role of managing the family money, and he had never
managed money before in his career professionally. The son decided he
would invest in a futuristic technology that would propel his family to
new heights yet was not in the industry where the wealth was created.
The project took considerable technical expertise to oversee, which the
son did not have, and money was wasted; the product never came to
market. In the end, the family wealth was destroyed by this major, one-
shot-in-the-dark investment outside of their field of expertise. This
family that was worth $110M after the family business was sold 40
years ago, yet they are now, as a family, worth less than $60M, and the
family size has grown considerably. The worst part of the story is that
the family no longer speaks with each other. The wealth was damaged,
but the family was obliterated. This was not the intent or plan by
anyone, but everyone now is bitter at the son for doing something in
hindsight that seemed so poorly thought out. He had good intentions,
and maybe another family member would have lost the wealth at the
same level or worse, but much of that is unsaid. To this day, the son still
runs the money, he still is not paid for his full-time effort, and none of
the family members get together or speaks with each other. The wealth
is a sort of curse instead of a resource that could have propelled forward
the positive values that the father had held while creating the family’s
fortune. Proper focus of energy, respect for moving up a new investment
learning curve, diversification of assets into proper segments, a
documented family history, regular family meetings, governance rules,
ethical policies, an investment policy statement, a dashboard, and many
other processes and tools could have helped prevent or reduce the
damage done here.
Summary: Some suggested strategies for preventing chronic family feuds

from this chapter included:
1. Develop strong ethical policies and governance rules;

complete the Governance Worksheet from the Data Room.
2. Hold regular family meetings, and manage expectations
within the team and family to reinforce values.
3. Create a family history book or family documentary video to
bring to life the family’s values and story of value creation.
4. Communicate often and openly within and outside of family
meetings regarding governance rules and ethical policies
within the family to prevent hard feelings and broken
relationships.
5. Consider creating a family bank to pass on wealth to those
that want to use it to propel the family fortune and values
forward at the same time through a new business venture.


Next Steps
The work of helping serve the most

successful families in the game of
capitalism is what keeps my role in
the space dynamic and enjoyable. I
am fortunate to work with so many
great people and families, and it is the
trading of strategies, structures,
filters, and models to follow from
businesses often developed over
decades that drives centimillionaires
to want to connect with each other.
A lot of families are just

overwhelmed by all the conflicting
advice they are getting. The options
can feel conflicting, and sometimes
the right move is counterintuitive. Since many families are used to having
full control of almost all of their net worth tied up in their assets, handing it
over now to someone else is not an enjoyable process. Many are frozen, not
wanting to make a mistake, in part because of the self-serving that goes on in
the advisory business.
Nobody, including you, knows what you really need or why, however, unless
you go through a series of fundamental questions on where you are going. To
help you move forward, we have decided to openly share our 50 Kick-Off
Questions that we use for clients when they onboard with us. These are not
the only questions we ask, but we start here, and it can be good to answer
these for yourself, if not for other advisors you may look to work with, from
an accountant to an attorney or wealth advisor.
Many times over private dinners or first-time meetings, families will ask for
advice on an investment they just got pitched, or they ask me what they

should outsource or what fund managers I would recommend. Without

knowing them very well, nothing I say could be of any value. While I
appreciate that they simply want some feedback, it scares me a bit that they
would even be asking others that do not know them such detailed investment
questions as my answers would only be based on the last four minutes of
conversation.
One trend that is growing right now is that of creating a virtual family office.
This is essentially a very leanly operated single-family office where the
family typically would employ a multi-family office for their diversified
investment portion of their portfolio and keep just one to two parts of the
commercial real estate portion, with the direct investment into operating
business portfolio sections in house being managed by their own team. This
keeps expenses relatively low typically and allows families with $30M–
$50M on the low end to those with over $100M+ in assets to invest more
effectively perhaps than just using a wealth management firm or private bank
of a traditional type.
One example is that a family made their money in aerospace manufacturing.

They might be on the board of the company, and they got bought out by a
private equity firm. They might only look at investments in aerospace or
maybe only in aerospace manufacturing, keep that in house, and then
outsource everything else so they only need to worry about the space they
already know very well, their circle of competence, as Charles Munger would
call it.
Free Video: Here is a 3 minute video on the

importance and benefits of formalizing your
family office, and why it provides you with
such a high ROI:
http://Centimillionaires.com/Holding
10-Minute Assessment: We have created a 10-minute quiz that is easy to

complete and helps you gauge how well developed and formalized your
wealth solution is today. It helps you review eight areas of your organization
or current situation and allows you to grade each area on a 1 through 12 scale
with four main categories of progress that you can move through.

This helps you look at how you can evolve your family office structure and
your approach to managing your wealth. I think starting with this can give
you a little bit of a roadmap on where you need to start, whether your family
office has been around for a few years, it is just starting, or it has been around
for a generation or two.
50 Kick-Off Questions + Assessment Tool: If you have not used any of the
resources in the book, please at least leverage these two. The assessment only
takes 10 minutes to complete and can be useful for years to come while
growing your team and family’s capabilities and holdings.
To download the 50 kick-off questions and complete the assessment now,

please register for the Centimillionaire Data Room of resources at
http://Centimillionaires.com/Book
Centimillionaire Case Study: We have had three families at

$300M, $60M, and $250M approach us in the last few weeks
regarding where to get started. The conversation is strikingly similar
between most families that just had a liquidity event. The top concerns
are whom to trust, where to spend time, what to do first, and how to

know what is right for them. The common thread that I keep seeing is
that families should outsource functions and areas of investment where
they did not create their wealth, focus their energy and brain trust on
where they have a distinct advantage and high conviction, and consider a
mix of direct and third parties while allocating to cash-flowing
commercial real estate assets. The quickest way to lose your wealth is at
the two extremes of trying to do everything yourself or outsourcing
100% of everything. The common thread between these three families
and most we work with is that all of them have core expertise in one to
two areas that they could allocate to while also diversifying assets
broadly via a third party and leveraging the tax and appreciation benefits
that cash-flowing commercial real estate assets can give you.
Summary: Some suggested actions from this chapter included:
1. Download and complete the 50 Kick-Off Questions

document to see what types of questions you should be
considering while moving forward.
2. Complete the Family Office Management Scorecard
assessment tool.
3. Define what one or two areas of focus you want to maintain
the most control over within your portfolio, and find
appropriate levels of outsourcing for the rest.
4. Review the previous chapters to decide what to reread, tear
out, or share with others in your family or on your team.
None of the suggested strategies in this book will work
without taking action, so hopefully there are three to five
ideas in this publication that you can put into action right
now and start discussing or acting on today.

Centimillionaire Resources Data Room

We have gathered all of the media resources, tools,
assessments, and videos from this book, including the PDF
version of this publication, and placed them within our
Centimillionaire Data Room, which you can register to access here:
Our hope is that you can refer back to these checklists, tools, and media
resources for the next few years as needed and will have an easy way to
share them with advisors or family members that you want to get on the
same page as you.
Access Resources at http://Centimillionaires.com/Book


Author Profile
Richard C. Wilson is the CEO of Centimillionaire

Advisors, LLC providing performance-based family
office solutions for $100M+ net worth families.
With 24 team members he is also the founder and

head of the Family Office Club, the largest
community of registered family offices globally with
over 1,750 private investor members. In addition to
having 6,500 participants attend 25
live conferences hosted per year, various divisions of the Family Office Club
include PitchDecks.com, investment certification programs, &
Centimillionaire Advisors, LLC
Richard has spoken over 250 times in 14 different countries at industry

conferences. He also has the #1 bestselling book, most listened to podcast,
and most visited website in the family office industry. Richard shares insights
from his work with clients through his publications, he has written the first
book on single-family offices, and the only books written on both how to
start a family office, and on centimillionaire investments. Richard has an
undergraduate degree in business,
an M.B.A., and has studied post
masters psychology through
Harvard University’s ALM
Division. Richard resides on the
island of Key Biscayne, Florida
with his wife and three daughters.
If you would like to talk to Richard directly to get help in creating your
family office solution or exploring what options may make the most sense for
you and your family please text (305) 333-1155 or email
Richard@Centimillionaires.com.


Centimillionaires 3 Minute Video

We offer family office
creation, formalization,
and management
solutions geared towards
ultra-wealthy families.
We have helped dozens of families start their family offices over the last 12
years, and having met with over 2,500 family offices in person, we bring to
the table a perspective and depth of relationships that equip us to add
particular value to ultra-wealthy families.
If you would like to learn more about how we believe the current wealth
management and multi-family office space is not directly address the needs
of 1st generation and entrepreneurial 2nd gen families please see our 3 minute
whiteboard explainer video here where we have drawn out a new way to look
at your investments and process to help focus your energy and capital.
The video is on the homepage of our website: http://Centimillionaires.com
The other resources references in the book can be found for free at

Centimillionaire Strategies by Richard C Wilson - Final

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Centimillionaire Strategies by Richard C Wilson - Final

Diunggah oleh

Hak Cipta:

Format Tersedia

Richard@Centimillionaires.

com Text for Help: (305) 333-1155

CHAPTER 1: BLURRED VISION 13

CHAPTER 2: CONTROL CONFLICTS 25

CHAPTER 3: FEEING FRENZY 37

CHAPTER 4: DEAL FLOW DEFICIENCY 43

CHAPTER 5: TIME CONSTRICTION 57

CHAPTER 6: FAMILY FEUDS 65

CONCLUSION: NEXT STEPS 75

CENTIMILLIONAIRE DATA ROOM RESOURCES 79

Special Note for the

iii Download Free Resources: http://Centimillionaires.com

iv Download Resources: http://Centimillionaires.com

Nothing contained in this book is an investment recommendation, or even

Each investor must rely on his or her own examination of an investment

v Download Free Resources: http://Centimillionaires.com

6 Download Free Resources: http://Centimillionaires.com

7 Download Free Resources: http://Centimillionaires.com

Figure 1: Chart Source: The Visual Capitalist

8 Download Resources: http://Centimillionaires.com

“centimillionaire” in the title, most likely because it is thought of as too niche

Free Video: Throughout this book you will see a

We have advised dozens of families varying in net worth from $30M–$5B+

This book on centimillionaire strategies is being written

This book is short by design. I want you to be able to digest it during a

11 Download Free Resources: http://Centimillionaires.com

12 Download Resources: http://Centimillionaires.com

Chapter 1: Blurred Vision

13 Download Free Resources: http://Centimillionaires.com

One client we have onboarded recently through Centimillionaire Advisors,

14 Download Resources: http://Centimillionaires.com

and earn a fair return. Centimillionaires have no “job” typically; their

Over time, many $100M+ families develop a three-prong approach to their

Know Yourself: No book, advice from a high-paid consultant, or solution

15 Download Free Resources: http://Centimillionaires.com

What are your top five core values?

What is your mission?

16 Download Resources: http://Centimillionaires.com

I always start working with ultra-wealthy families

Proprietary Strategies: Recently I had dinner with the head of a family

It is the combination of your family’s past in business, natural strengths,

Multiple Mental Models: Charles Munger discusses the idea of using

Free Video: I recently was asked

18 Download Resources: http://Centimillionaires.com

Strategic Assets: In every industry, there are bottlenecks, a limiting

Whitemail: This strategy is one that is friendly and the opposite of

Royalties: One example of a structure I have evolved over time is that of

fast-growing organic skincare company. The CEO of the company and I

Free Video: Here is a short

Real Estate Debt + Collateral: I recently had a private family office

over a three-year term and put their apartment complex up as collateral.

Operating Business Debt Investments: The same is true with operating

Negative Controls: Many times it is challenging to have a CEO be

Niche Domination Strategy: Many families want to get ahead of the

Chess Board Mindset: The final strategy I want to bring up here is

22 Download Resources: http://Centimillionaires.com

portfolio. These strategies can be combined, layered on top of each

Centimillionaire Case Study: We are under contract with a

23 Download Free Resources: http://Centimillionaires.com

this chapter included:

Free Webinar: If you are enjoy video

24 Download Resources: http://Centimillionaires.com

Chapter 2: Control Conflicts