Building the Family Office Farm
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Reflecting on the history of our family office, our investing philosophy mirrors how previous generations built their wealth through farming. They patiently waited to harvest the crops they planted; we buy securities and patiently wait for them to appreciate.
Two decades ago, my family paid the Secretary of State of Nevada the necessary fee for establishing a corporation. That was the legal beginning of our family office. The initial capitalization was large enough for the class C corporation to stand on its own as an entity, but the size of its investment portfolio was, even by the much smaller standards of those days, a relatively meager pile of cash and securities. Its immediate value was that it provided a layer of insulation to protect our minor child’s assets from the liability risks of what her parents did for a living. Then, as now, there were rules that extended lawyers’ fiduciary responsibilities and legal liabilities far beyond the scope of their law practices and into their private finances.
What began as little more than an incorporated wallet is now a family office with six members from three successive generations: two of us in our 70s, two in their mid-30s, and two young children. The largest part of recent funding has come from the middle generation. Beginning in 2014, one of its members began receiving the publicly traded shares of his employer as incentive compensation. The older co-workers in the technology company, who had been receiving incentive stock since the late 1990s, offered their younger colleague the benefit of their experience. (As Oscar Wilde remarked, “experience is what other people call our mistakes.”)