To Financial Management and Beyond: The Role of the Family Advisor
Thank you to Karen Azlen for interviewing Mindy Mayman as part of Introduction Capital’s podcast, “IntroCap Interviews”.
Managing finances might invoke an overwhelming sense of confusion, frustration and too many piles of papers and files to even bother starting… but truthfully, there’s something artistic about financial management. What? Managing money… a form of art? …Why not?
Hear us out: Art is an expression of human activity; it takes skills, creativity, concepts and ideas to prepare a true masterpiece. It takes an understanding of how to combine different aspects in just the right way… mastering the finer details while always having the big picture in mind… and, above all, a desire to create something great. And there it is, a fitting description of what it takes to be a reputable financial professional. It takes someone with a vision, a comprehension comprehender of the complex, a forward thinking and knowledgeable artist to paint the most accurate financial picture and ensure it suits its surroundings and can withstand the test of time.
We may have painted a very flowery picture here, but it’s one we believe accurately depicts the role of a family advisor.
To help clients reach their financial goals, family advisors are often tasked with seeking out new and unique ways to think about financial management – because each family is inimitable and so are their goals. This requires creativity, a comprehensive and holistic understanding of the market and its challenges, and ultimately a deep, genuine desire to help and understand others.
Analogy aside, in this day and age, what makes a great family advisor?
For Mindy Mayman, partner at Richter Family Office (RFO) it starts with being a good listener: “As humans, we all have our own biases, our own self-talk, but it’s important when advising clients to try and understand what the family is going through and wants to accomplish.” And how can that be achieved? For Mayman, it comes down to curiosity: “I think being genuinely curious and caring about the people you are working with is essential. People are perceptive, they will know if you come from a place of integrity and if you are being authentic when speaking to them. That is important so you can get to know more about them, their family, their story, their aspirations and their financial goals.” This allows family advisors to understand the intricacies of the family they work with – which in turn allows for a more customized and holistic approach to managing various aspects of their finances: portfolio construction, investment reporting, financial advisory services, etc.
To be able to make a connection and build a working relationship with the families, the family advisors must at their core express humanity. For Mayman that means showing vulnerability and empathy in her approach and in her interaction with family members: “I think that it was Brené Brown that said: vulnerability can be defined as uncertainty, risk and emotional exposure. When talking with families about very sensitive issues whether they are financial in nature, health-related, talking about their children – the next generation – we have to be vulnerable in order to first understand and then enter this emotional space with them. And that’s where empathy comes in. That one seems easy in theory: it’s putting yourself in the other person’s shoes. But it takes a practised hand to be able to take on that role of the family advisor and see all the sides that come together to create a family’s unique dynamic. Sometimes that means showing empathy to more than one family member to help one person see the other’s point of view all the while remaining objective to offer the best possible advice.”
Another key aspect that defines family advisors – and possibly the most integral of all – is honesty. It takes courage to tell the clients what they need to hear and not necessarily what they want to hear – but it’s essential to ensuring that the family’s goals are met by creating an open dialogue based on mutual respect between all parties.
These qualities are an important part of what makes a great family advisor, and they are applicable in a number of circumstances from managing wealth, to acting as a family’s quarterback for complex technical issues or their personal CFO, to advising in the areas of philanthropy, and educating the next generation. Now what differentiates the role of a family advisor and a trusted family advisor? It’s how they utilize their skills, forward thinking and holistic knowledge to assist families each step of the way; keeping an eye on their financial goals and the roadmap to attaining said goals.
For Mayman, that means being there through difficult times, as well. Speaking about the current pandemic and the role of RFO’s family advisors, she says: “Early on we reached out to clients to give them a sense of what was going on with their portfolio. We normally review their portfolio on a quarterly basis, however even though the quarter wasn’t yet finished, we felt the need to reach out to them and share our expertise as well as help them get a sense of how they were doing in such an uncertain time. In many cases, clients were comforted by those calls, not just for the simple fact that we reached out but, generally speaking, of how their portfolios were constructed to begin with. When constructing a portfolio, we use many asset classes and we have a significant investment in the alternative space. In that sense, our families were comforted by the fact that their portfolio had not fallen near as far as the stock market, because they didn’t have all their money in the stock market. It was also a great time to make some changes for some clients willing to take some additional risk; the circumstances presented an opportunity for investment. The families we work with have a clear plan and a defined strategy. And while we didn’t know that we would be hit by a global pandemic specifically, in putting together portfolios, we always make sure to take into consideration that potentially we could be hit by a crises – we focus on risk and asset allocation so that should anything happen, portfolios will experience less of a shock.”
For the families RFO works with, one of the most important steps in the initial phase of any economic uncertainty is to take an almost back-to-basics approach, reminding the family that their portfolio was constructed with periods like this in mind. “We worked with families to make sure they had enough liquidity on hand for 6 to 12 months. We shared knowledge with our families so they understood which part of their portfolio would be impacted by the pandemic and which part was far less likely to be impacted. We were with them every step of the way to ensure they understood and were confident in their strategy,” says Mayman.
To make sure that a family’s investment framework provides them with the greatest odds of long-term success, family advisors also rely on manager due diligence.
Mayman shares that it’s one of the benefits of employing an open and independent advisor model: “Working at RFO, being an independent advisory firm, it really means that we have no limit to the strategies that we can explore. We’re always open to looking at new opportunities that come our way – because we pride ourselves on doing a full due diligence and vetting of the managers. We ensure that they pass our due diligence both from an investment perspective and from a tax perspective – in that they work for taxable Canadian families. This allows us to take advantage of alternative forms of investment: private equity, real estate, venture capital, private debt, and more. It also means that we’re not restricted to the Canadian market. In fact, many of our alternative managers are located outside of Canada, simply by virtue of market size. And if they make sense for taxable Canadian families, we’re happy to present these strategies to our clients, and explore these avenues further.”
Humanity, presence of mind, skills and a comprehensive knowledge of the market all come together to create the picture of what a trusted financial family advisor should be. At RFO, this is where the bar is set. Families don’t experience life in silos – the same is true for the RFO approach. As Mayman shares, “We rely on talented professionals with backgrounds in finance and tax, and knowledge in varied spheres such as estates, philanthropy, cybersecurity, etc. We trust in people who can connect with expert entrepreneurs as well as new entrepreneurs. People who understand the wisdom and respect the knowledge and the values of older family members but can also connect and work along side the family to inspire the next generation.” To be a financial family advisor is to go beyond financial management, it is a mission to be with families on every step of their journey – and be the artist creating a masterpiece that is reflective of their lives, goals and ambitions.
To learn more about Mindy Mayman’s thoughts on the role of financial family advisors, take a listen to her interview with Karen Azlen on Introduction Capital’s podcast, “IntroCap Interviews”.