Family Business Audiocast | Episode 10 | Angelo Robles | Angelo Robles Enterprises
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About Our Guest:
Angelo Robles is the Founder and Chairman of Angelo Robles Enterprises, which encompasses various family office initiatives like SFO Continuity and Family Office Masterclass, focusing on excellence, best practices, and continuity within family offices. He has transformed numerous family offices, advising prominent families on crafting generationally resilient and adaptive frameworks that leverage modern technology and insights. As the Founder of the Family Office Association (FOA), he developed it into a leading educational and consultative organization before selling his interests in 2023. An accomplished author, Angelo has written the book Effective Family Office and co-authored Maximizing Your Single Family Office. Through his “Family Office Masterclass” series, he provides valuable education on critical topics, including risk management and the integration of AI in family office operations.
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[Transcript]
R. Adam Smith
Welcome to the family business audio cast on LinkedIn. I'm R. Adam Smith, creator of this audio cast series. I've been an entrepreneur, investment banker, and board leader for over 25 years. I want to thank the registrants for joining live today on LinkedIn. It's great to see many familiar faces and many new ones.
A bit about this audio cast series. Family business is a passion of mine, have grown up in a family of entrepreneurs, and have engaged for two decades in a vast range of dialogues, deals, investments, and boards with fascinating family enterprises around the globe. I founded the family business audiocast to offer a useful platform for listeners to hear from industry veterans, academics, and leaders. Whether you’re a family office or ultra-high net worth individual owning companies, building a multifamily office or focused on governance, culture, or corporate change, I hope these conversations will be enlightening.
R. Adam Smith
Today, we welcome Angelo Robles… my friend Angelo, welcome to our audio cast series. It's great to have you today.
Angelo Robles
Adam, thank you so much. It's a pleasure to be on.
R. Adam Smith
Angelo Robles is the founder and chairman of Angelo Robles Enterprises, which includes its family office holdings, Family Office TV, SFO continuity and Family Office Masterclass. Angelo has advised, created and reimagined over 20 family offices for the world's most successful families for two decades.
Angelo guides his clients in creating and sustaining generational dynamics and engaging family offices that are humanly wise, cognitively flexible, forward-looking and organizationally robust. Angelo was also earlier, the founder of the long-standing, Family Office Association - FOA has grown to become one of the most successful membership organizations dedicated to family offices. Recently in 2023, He sold his final interest in the firm; and now we're here today. And, he also is the author of many books (and masterclass papers), including The Effective Family Office available on Amazon.
All right, so we'll get going today…our focus is on the family office, which is also a family business. Angelo, tell us a bit about you. We'll dig into the questions.
Angelo Robles
Yeah, that's great. So, you are correct. And your comment, Adam, that a lot of people maybe don't quite understand.
Often, wealth is created from a substantial family business that has a liquidity event. And now, the family office effectively becomes the binding glue, the legacy of that family. And to me, that relates to the family office, and equates to family continuity. So yes, this comes back in terms of being a family business. My challenge is how come there's not the level of rigour and institutional focus…. commonly, in most family offices, most family offices will fail. Now. It's a bit of a stark comment, because given a long enough timeline, effectively, everything, quote, unquote, fails. But I think you know, generally what I mean, they're not held to the same rigor and standard. They're not necessarily great. And they rarely will go by the time that the wealth creator is interested in continuing or discontinuing the family office.
Maybe one more comment, Adam, because I think there may be some people that are very fluid in the family business, but maybe not quite as much in the family office. So, to me, a single-family office, aka SFO is an entity. And usually for profit, we may get to that created by one family of great wealth, with, let's call it people and resources dedicated internally and exclusively to that family. The family business really now is continuity in terms of inside the family. Why do most family offices fail? Is it because of a bad decision on Money and Taxes well, over time, that is important, and could play into it.
But usually, it relates to a lack of synchronization, a lack of governance, which is basically how joint decisions are made in the family, and a lack of capacity and capability, which equates to competency in the rising generation. By far, the number one determinant both within the family and the family office is the quality of the people. People are the number one determinant of the success of a family office. Henceforth, you do have to look at it as being potentially a people problem.
R. Adam Smith
So, we've talked about legacy a lot, you and me, and we talked about the specialness of family firms. You use the word uniqueness when you're thinking about the enterprise, and you've had a lot of experience in not only creating family offices but also helping them sustain and grow. You recently had Dr. Dennis Jaffe, talking about sustainability legacy, as well…. talk about the principles around sustainability that you share when you're advising families.
Angelo Robles
Yeah, that's a great question. I do see someone that I know sent me a text who happens to be listening in ….Angelo, could you give some clarity because you kind of left it on a hook? What do you mean for-profit, single-family offices aren't quote, unquote, for-profit…..at least here in the US the way to properly structure a family office going by the lender versus IRS case from late 2017. That came to a head where one of the rare circumstances where the family won, if you look, to get certain deductions as simply a private investor, you're going to be limited to a certain point. But if you structure your single-family office, technically, as a for-profit entity, meaning it's a structural management company, LLC, or corporation, structured in a domicile that has an intertwined relationship with the assets, where it's getting compensated, quote, unquote, that allows a level of tax deductibility that could be very substantial.
The business of the family becomes the family’s greatest threat to the family. Well, I think that's pretty obvious to the large majority of your audience with how I'm building it up. Effectively, it is the family. So, how do you advise families? And how do you implement strategies to have them have success in the family and the family office?
If I had a top three, and the first is always people, but how come there's so little focus on what I would call a chief people officer, not some PC, HR junk, but really someone obsessed with building greatness of the SFO, its people, technology, and systems, I can waver back and forth on two or three input systems to So here's something that I would like to have everyone think of, it's not a hard benchmark, and I'm using that in parentheses to radically improve in a family office going from mediocrity to great. Some in the audience have heard me state, that you could take the last man on the bench of an NBA team, and there is nothing they could do to be Michael Jordan to be LeBron James, the good news for you is those interested in the family office space, It's not that level of inherent talent or capability to rise from mediocrity to good and Good to Great, and then possibly truly exceptional, top 1%.
I believe it is a formula. It is a process. And I think in relatively short order.
Now, part of that is going to depend on competency and discipline, and the focus of the family and their willingness to, again, bring on the right people. But I think it's very, very possible to effectively and rather bluntly, go from mediocrity too good to great. So, this goes back to a question that I probably didn't fully answer before. Why family offices fail. Primarily, it's going to come down to governance. Now, governance is a people issue. So, it goes back to what I said before. So rather bluntly, the family and the family office have a level of competency. And part of that relates to not identifying blind spots and ego, which happens to all of us who have had some success getting in the way. I think the family, Adam, has to answer what is the purpose behind the wealth.
Now I'm going to quote someone who's a married and family member and also runs the family office, and it's a multibillion-dollar family. His name is Scott, and he wrote something for the family firm Institute. That was called 60 30 10, meaning 60% of the time of the family office is focused on money, 30%, Let's broadly call it legal, and 10% on a family. But if the biggest threat to the family is the family, then who in the family office is focused 100% of their time, why is it only 10% And I think Scott's 10% is actually being a little generous. To me, This relates to the other important area of, if you want to call it a hire or a focus of the family office is what I would call a chief learning officer. That is an opportunity to help teach capacity and capability that leads to competency. These are all things that are integral in terms of having the family business now the family office and family continuity, as it should be is commonly the number one goal, you have to ask the question, Why are most family offices mired in mediocrity? And I think some of the again little soundbites over the last three or four minutes are reasons that could be worked on, and how any family and family office I think could greatly improve. And rather quickly.
R. Adam Smith
Let's come back to the purpose. Because when a family firm has significant wealth then they create a family office, which can then become a more effective organization for profit, but also add nonprofit elements around the for-profit, right… as a platform.
So, let's come back to purpose, initially, because purpose for family firms relates to how they view the future, right? How long are they going to continue to build that business instead of selling it and getting into the issue of legacy? Before even you talk about people. So, you've had wonderful people you've interviewed across private equity corporates, public companies, I noticed you had Jamie McLaughlin, who's an expert, as well as Jay Hughes, another expert on generational transfer. So, thinking about these interesting, important people over the years, maybe share some comments on how you see the purpose and passion, drive the organization's future and also back to governance, like, how does that focus on purpose, and passion and legacy result in the structure of governance?
Angelo Robles
Well, I think that's very important to me. I go by some of the work that even someone like<< Nick Vaughniron >>has spoken about, and he was a guest on my program recently, his realm in terms of being in synchronicity, I guess, is a word for it. But I go back to that I have more of a hardcore financial background. So, I do get that those that can be a little bit more linear. And believe that “well, the family's rich, they, of course, want to get richer”. That misses the boat, as to why most family’s shirtsleeves to shirtsleeves in three generations….that's not to say that money and legal issues are not important. They absolutely are. But when you look at governance, which is what is the purpose of your wealth, and is the issue of generational legacy, aka through family continuity important, by far at the point of liquidity and creating a family office, it's really going to come down to governance, now getting some standards of governance. So, off the shelf, oh, I realize a family constitution and mission...
R. Adam Smith
There's no right or wrong governance structure there, right, you can have just bigger or better, but is there a right or wrong in terms of governance structure?
Angelo Robles
Usually, it tends to be top-down. And that's a big problem. Now I do understand, especially in a newly created family office, meaning a liquidity event, where the family maybe not be great in volume and numbers. And maybe the children are very young, it's very tempting to basically say that I'm the final decision maker that keeps governance very simple. And most people are going to take the approach a little bit of letting their blind spots and ego get in the way. And the simplicity of saying that when they're old enough, I'll begin to incorporate them, but they don't have the life experiences yet. Therefore, I'm going to do top-down. I can tell you, having known 1000s of family offices and hundreds and hundreds of families and studying the great research of Dennis Jaffe, who you mentioned in his 100 years, you know, plan, and what he's seen over the course, generationally around the world and Jay Hughes and many others. So, Jim Grubman in Von Aner, and others who I mentioned before, Christian Stewart and other ones, you know, really talented people.
And the fact that a lot of you in finance, legal and accounting really missed and you're totally missing the boat, and it would be a huge advantage you would have effectively within that community and within your industry is to completely understand the value of governance, the importance of how joint decisions are made, and how that really is going to define the purpose and success of that family moving forward. It should be from the bottom up; it should be more inclusive. I can't tell you whether that number is an odd number like three, although that is a number that boards and committees would usually recommend, that is going to be subjective to various branches within the family the size of the family.
And again, this is going to go beyond the scope of perhaps certain shorter discussions today. But the family and family office will not succeed together as a family without governance that is done right. However, that is the find, and how it has the capacity to adapt. That's going to be critical. You mentioned my interviews and my family office TV. And yes, Jay Hughes was on the summer; you mentioned Dennis Jaffe, and Vaughn Amon, and even I'm thinking of a guest I had on earlier this week, Rebecca Patterson. It's not all governance. So, governance is important. But she's the former chief of strategy for Bridgewater. So geopolitical thinkers… and people like David Hunter, who's a very well-known economist, people like <<Greenbrae>>, and former investment banker, <<Ian Burlingame>> on geopolitical issues, and perhaps among my most common, well-known guests, or frequent guests of Tim Ferriss, and that would be Adam Robinson….who's a brilliant thinker, legendary chess icon and trained under Bobby Fischer, and a problem solver.
So, for me, I like that I like people who may not be directly in the family office community, but they're intellectual. They're creative thinkers. They know how to think critically, and they know how to solve problems. Sometimes, in the family office community, our nose is too close to the action. We become a historian, which is valuable, but we're not revolutionary. It's too vanilla. It's too down the middle. There are not new nuances being forged in the family office world. And to me, I find that intriguing.
R. Adam Smith
Let's come back to legacy. However, there are five to ten thousand family offices in the world now that are known, and most of those family offices are formed from the liquidity of a single company, right? And then the family grows, and they continue to build the people and the scale and the board, as you say, or even create a multifamily office or have other clients or even other companies that they purchase the direction and scale the family businesses all over the map. Isn't it quite varied in terms of the focus on legacy and purpose? Because if the family is really just G one, and just the owners, right, and they're not involving their children, or they don't want to, then it's more of a financial animal. It's not really a broader corporate ecosystem for the broader family if they're not involving the family, or they don't have children.
So, you've talked to wealthy, successful businesspeople like Peter Thiel and Stephen Cohen. These gentlemen have family offices, or sometimes they look to build them into bigger organizations, or sometimes they just use them as a financial vehicle. Right? Talk about the range of purpose.
Angelo Robles
Yeah, like, I think basically, what you're getting to be the majority of what we would call a single-family office, are they really more private investment vehicles or entities for the family? And the answer to that is yes. And that's not necessarily a bad thing. In its silo, the fact that you have wealth, and money is going to be important in terms of capital preservation and growth, and that you have an entity totally dedicated to you 24/7. And this still is going to need governance. And still, people are going to be the number one factor and its success or not, but you have to go back and look at what is the end goal, what is the purpose of the wealth, and if the purpose of the wealth is only the wealth, then that's not going to be sustainable. So, this goes back to what I said earlier. And that and you're correct, there are really not what I would consider a pure single-family office with a definition of family continuity, and much deeper than investing. And those family investment vehicles, for the most part, will not last past the generation of the person who created them. There will be some that may morph into being more of a true family office, and there will be some that may morph into becoming more of a commercial enterprise as an investment vehicle or an MFO.
And there's nothing wrong with that if that's the direction the family wants to take. But broadly speaking, you are correct. A lot of people in the world of finance, both in greater Greenwich in New York and the hedge fund community and more of the VC and Angel community in Silicon Valley and around the world. They often don't quite get it; they're a little bit linear. They're focused on money, and I understand it, but they're not necessarily building true bottom-up governance. They're not engaging for the value of family continuity. And they're not engaged in even if they're a younger rising generation in the family. There's going to be a disconnect. And again, I've seen that happen. And all the figureheads that we mentioned before, it's inevitable that wealth, for a variety of reasons, will collapse. Now again, everything collapses with a long enough timeframe. I get it, but it's not going to provide the legacy to the family and society that that wealth creator might have originally wanted.
R. Adam Smith
Right. Well, family, businesses and enterprises are quite large. I mean, globally, they're probably 70~80% of the entire GDP of the world. A lot of people don't understand the scale of family-held, family-closely-held businesses that are held by a family or broader family ecosystem. Just back to the MFO. Talk a bit about what you're seeing at the larger MFO levels that have more proactively managed MOFs that aren't just wealth management. So, if you take out their wealth management firms, just share a bit of your views on the significant expansion of the MFO organization, let's say over 20 billion. And where do you see that going? And perhaps you see some of these larger scale organizations growing into bigger corporate holding companies, let's say more like a Berkshire Hathaway's.
Angelo Robles
Adam, as I'm going to a caveat before I try to answer, I am effectively, let's go with the word 100%, focused on single-family offices. I've been doing it for decades; I'm extremely narrow. Now, of course, there's going to be some crossover into the MFO community. But I would look at that before I mentioned Jamie McLaughlin, who I've known for many years, kind of the way that I am to single-family offices. I would say that he is with his focus on the multifamily office; I do agree with him; there are only about 50 to 60 in the US real, fitting the definition of more than just an investment vehicle for the family being an MFO. But for those that may be thinking Angelo, it's just a family office. What's the difference? Like you're kidding me, a single-family office I defined before is an entity with the right people and resources totally dedicated just to that one family. MFO is a marketing term that generally is an enterprise that is looking to take in more AUM, and the level of services they provide is going to be dispersed among a variety of families. That does not mean that there are not some that are very, very good. That does not mean that most single-family offices are good. I already defined it well. By a mathematical nature, most are average. And to me, that's unacceptable. So, if you don't care about greatness in your single-family office, like why have a single-family office? but unfortunately and given greater depth to your question, I don't think I'm going to be the right person for that, since my focus is effectively on billionaires to super rich and their single-family offices.
R. Adam Smith
Now, back to the scale that just briefly for the listeners to understand the scale of family enterprises, which is a very tricky space to get data on. Because there's no official measurement of family firms and family enterprises over time, but E&Y and St. Gallen did research that I just wrote about recently on family business.org, finding some really good data in 2023. They measured the top 50 global family enterprises and found that they generate a trillion dollars of revenue, and they're actually generally quite healthy.
And just in the US alone, for example, there are 37 million family businesses in the US. So, we'll come back to finish up today. Certainly, we can't get into tax because we'll have a longer discussion and half of the audience will drop. So maybe we'll do taxes as a way of doing that. Adam, of course. Yeah, exactly. But on the call today, we will repurpose this for the future. But we see some friends in consulting and tax. We have some former guests. I see Ruby, who worked with LVMH. Drew's working with the family investments in his sports space. And Alex, it's wonderful to see some of your old friends here. And Martin and Jamie over in St. Louis. So, thank you for joining. Share with us some of your special stories from your in-depth conversations and mentoring with clients. Like just share a couple of horror stories, a couple of accolades.
And I think that's probably what's going to be best for the audience, given that I know. And I've been very fortunate in my career with a number of people that are incredibly successful in their family offices. And given that I love to research for me, travel to meet with them, develop friendships, and smoke cigars, which the audience knows that I do love to do enjoying a good dinner or scotch and getting to know them more personally. Having a family and having a child myself allows for me the capability of understanding the importance of legacy and of governance. But if I had to share some things from some incredible people, the most contrarian thing is not the opposite of the crowd. But it's the thing for yourself. So, among the most common things I hear from billionaires, including my interview with Michael Saylor, who went to MIT and is very smart.
Angelo Robles
Think for yourself. Again, think for yourself. Understand this, what gives you the opportunity is other people doing dumb things. I remember a very wickedly smart investor who came from nothing and is worth hundreds of millions of dollars. He told me investing is about four things - discipline, controlling your emotions, which many of us have a hard time doing, having an edge, which I think that's a very important one, and managing a bank role.
Angelo Robles
Now, I also in an interview that was more private, for my members of SFO continuity, did an interview with a 30-year veteran working in a family office. Although I may want to mix up his three in terms of what I would consider, I asked him, What are the three main functions what your experience having worked for, I think it's three different single-family offices. He said, managing the stability and performance of the family's financial assets was number one, and proactively protecting the family brand was number two. And I did like the third, ensuring care character within the family. Now, I know some may say...
R. Adam Smith
We finally got to character. That's great.
Angelo Robles
The number one thing that a parent or grandparent has wealth in their lineage with their family could teach. In my opinion, I'm glad he stated it, and it popped into my head in character. And yes, I do believe as a single-family office, not only should you, as an executive, quote, unquote, have character, but I think there is an impact and your capacity and capability with the rising generation. To help with that, if I had to leave you with maybe two final kinds of comments from things I'm hearing from these amazing people, or at least amazing financially, and hopefully they're doing something beneficial in society, avoiding stupid mistakes, is more important than being smart.
Angelo Robles
So, I think that families, and this is having to look at, again, the family is already rich, you have to think of risk identification, risk analysis, and then optimal risk responses to mitigate the risk across domains. It's others, not just me, that I've spoken about financial risk, including liquidity, operational risk, and then the hardest one that we touched on, of course, a bit with synchronization and governance. And that is going to be a behavioral risk. There is a project that I'm working on, Adam; it basically is my research and insights effectively with literally the world's most successful families. About seven billionaires so far have allowed me to do a 200-question questionnaire. I mean, I must drive them crazy. For me, it gives me the insight in terms of what drives them. And what are some mindsets and traits that made them successful? And I don't know if we're going to have the time to get into those. But certainly, maybe the next time we hold the conversation, and I can up that number to maybe 15 or 20, I've done 200 questions, both in person and some of it written in email. That would be exciting. I'd love to do that.
R. Adam Smith
Really sharing some free Cuban cigars and letting them see that your beard is real in person.
Angelo Robles
It is real or in person, of course.
R. Adam Smith
But it's formidable. Thank you for bringing up character and mistakes. We'll wrap up soon, but I think there's a quote I remember Oscar Wilde said: experiences are simply the name we give our mistakes. All right, well, we'll wrap up any further comments as we finish our chat today.
Angelo Robles
Well, again, I want to be respectful of the time. The audience knows that on my family office TV and my interviews, I'm kind of known for my hour-and-a-half to two-and-a-half-hour interviews. I guess at that stage, I tried to be a little bit of Joe Rogan in terms of creativity and debt and mainly length relative in my interviews. I would say a subject that I know that I have pushed, but I think is gravely important for those listening to understand that maybe there's not enough focus on besides things like character and governance, and people are the number one factor in terms of driving the success, I'm assuming and a bit of family business, but definitely within the family office, I would look at what's going on with what I call the velocity of destruction.
The massive challenges we have going on around the world, the massive deficit in this country, the threat to dollar hegemony, the uncertain economy, one day, one day how there may be taxation on unrealised capital gains, and I think this comes down again to continuity within the family in the event of crisis which really only comes from going from fragile to resilient to being anti-fragile, I think the work of Nassim Nicholas Taleb and marks its. I think it's just groundbreaking and wonderful. And that does relate to what I said earlier, not just character, but also capacity and capability in terms of becoming competent. And that comes down to adaptability.
So there are a lot of problems out there; you could put your head in the sand, or you could understand what those problems are and develop the capacity to adapt to address them. You may not always thrive financially, and there may be setbacks financially, but you grow stronger from the crisis; you're not destroyed by it, you continue and grow. Now, again, you know, we're not going to have the time to do a deeper dive into that. But I do appreciate your wonderful questions and the great work that you're doing in the community. As a leader in family businesses, I enjoy your content. And I learned so much. And I've seen that you've had Martin and so many others and, and, you know, Christina, you know, waiting and others that are just wonderful, deep thinkers and leaders. So, continue the great work that you're doing. I learned so much from it. And I look forward to, hopefully, imparting value to the audience on my platforms and social media and the programs that I do with Angelo Robles.com.
R. Adam Smith
Thank you. Yes, you can find Angelo on LinkedIn. Of course, thank you for the platform and for supporting this. And also on his website and Twitter, or you can email him directly as well. I appreciate the support and the commentary of anti-fragile, and we all could use some determination. I would say that, you see, his book on the black swan is fantastic.
Angelo Robles
It is the work of the universe of the founder, his friend, Mark Spitz Nagel. That guy is brilliant, he might be a little crazy, but he is crazy in a good way. But again, it's up to you to be competent. Don't rest on your laurels on how the world worked a year ago or five years ago. It's different now. This is identifying your blind spots and moving your ego aside. And you may have to put in two or three hours a day to keep up and to be competent. And develop your Rolodex to be a real force in the community and to be someone who provides value. If you're working in a family office, work to be great, be incredible. Why don't you want to be top 1%? If everyone were striving to, that'd be very, very, very hard. There's only one in 100 that is going to be 1%. But unfortunately, the benchmark or fortunately for some, the benchmark is so low many of you can do it.
R. Adam Smith
Yes, that's inspiring. Thank you. Well, I'd like to thank all the attendees today for the family business audio cast and our guests, Angelo Robles, founder and chairman of his company, which is growing Angelo Robles Enterprises. Thank you, Angelo, for today.
Angelo Robles
Thank you. The pleasure is all mine.
R. Adam Smith
This is R. Adam Smith signing off. Stay tuned for the next episode of the Family Business Audiocast on LinkedIn.
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