In this insightful dialogue, Mindy of Richter Family Office illuminates Richter's evolution into a trusted business family office, offering a blend of personalized financial strategies for affluent families in the alternative investment sector. Through captivating anecdotes, she underscores Richter's enduring, trust-centric relationships and client-focused, team-based approach, showcasing their commitment to enhancing clients' investment acumen across generations.
In this insightful dialogue, Mindy of Richter Family Office illuminates Richter's evolution into a trusted business family office, offering a blend of personalized financial strategies for affluent families in the alternative investment sector. Through captivating anecdotes, she underscores Richter's enduring, trust-centric relationships and client-focused, team-based approach, showcasing their commitment to enhancing clients' investment acumen across generations.
Karen: Good morning, Mindy. How are you?
Mindy: I'm very well. Good morning, Karen. So excited to be here with you. Yeah,
Karen: it's great to have you back. You did the first podcast with me when I think COVID had just started and I just started the podcast series and you gave everyone that listens a really good overview of Richter and, and, and Richter Family Office and what you do.
Karen: And I thought the first question would be about Richter as a business family office. When we spoke recently, you did talk about Richter sort of going into that more business family office category. And I wanted you to start by just giving people that maybe didn't listen to the first podcast some information and background about Richter and then how Richter has transitioned into what a business family office is.
Mindy: Sure, it would be my pleasure. Richter is a firm that was founded in Montreal nearly a hundred years ago. And at the time it was founded, it was really an accounting firm. It specialized predominantly in doing audits for private entrepreneurial businesses. It later developed a significant expertise in the area of tax.
Mindy: And over many years, we really expanded the types of services that we offered our clients. So we grew into areas like business valuation, corporate strategy, restructuring, consulting. And today we think of Richter as a business family office. Because we service these families who are owner managers of private businesses, and we do it through two platforms.
Mindy: One is our business advisory platform, which offers a plethora of services to the business itself. So in the areas of audit, taxation, Business strategy, human capital, valuation, restructuring, consulting, as an example. And the other platform is our family office platform, where we really help families to achieve their goals from a personal financial perspective.
Mindy: Those services include things like portfolio management, estate planning, insurance consultation. We also serve as a back office for families who want to outsource their family office to us by offering them personalized CFO and COO services, including handling all of the books and records and compliance associated with their investment portfolios.
Mindy: One other service that I think is really important to highlight is we've put together a very formalized education program for the next generation. So our goal is really to help these families transition wealth successfully from generation to generation. And we hope to be able to help them do that by servicing the business itself.
Mindy: And the family, we have some families that are serviced across these 2 platforms and others that rest for the time being on 1 or the other. Right? Okay.
Karen: So that's a lot. I mean, that's a really wonderful holistic. Approach to helping these ultra high net worth families. And if you were to share an actual experience or an example of working with the family on the on the personal side and the business side, what would you know, what could you share there?
Mindy: Sure. So I thought of 1 of the families that I interact with. And what's interesting about this particular family is Richter started working with their family business. Almost at the time we opened our doors. So their business is very close in age to our business. We are working on the business side now with the fourth generation in that family.
Mindy: So we have helped that business transition through three generations already. We do the audit and tax work for that business. We have helped them over the years with business strategy. It happens to be a business that is in the textile sector. And so you can imagine that it's had tremendous evolution and challenges over the last almost 100 years.
Mindy: And this is also a family that works with us on our family office platform. I have today, this is a cousins consortium that manages the business. So there are 3 partners in the business, 2 of whom are brothers and 1 of whom is a 1st cousin and I work with each of them. on their own portfolio management.
Mindy: I have the good fortune of working with all of their children as well from a portfolio management perspective. We have helped them with their estate planning. We've helped them assess their insurance needs. We have at Richter also helped them handle their shareholder agreement, strategies on financing new equipment purchases for the business.
Mindy: So across our platform, I think it's a really good example of how we can help these owner manager private entrepreneurial companies to achieve their objectives, both for the operating company itself, but also for their families and subsequent generations. Right. Okay.
Karen: And what would that family say about you?
Karen: If you were to think about...
Mindy: I hope that, I hope what that family would say about the firm, certainly, is that we are their go to. For anything that comes up either in the business or in the family's financial life, and I think that is one of the very unique and distinguishing factors about Richter as a business family office is it is very unique and special that we have all of these different expertise under one roof.
Mindy: It does happen that these clients will reach out to me and ask me a question. And if it's not really a question that should be directed to me, then I simply coordinate with the rest of their service team internally to make sure we get them the right answer. This is also a philanthropic family. So sometimes they ask us the best and most tax effective way of giving in which case I would bring in the tax professional.
Mindy: And I would look at the portfolio. So we really have many opportunities to collaborate throughout the firm and leverage the very different and specialized expertise that we have internally
Karen: and outside of all of that. Incredible expertise. I can't I can only. Think about that family having built a foundation of such incredible trust with you and your team, with Richter and the team.
Karen: Like trust seems to be the, that sort of foundation that is the nucleus of everything that's going on around it.
Mindy: I think it very much is. I think having worked with families like this over 100 years definitely helps in building trust. I often say that even though we work with tremendously successful families and entrepreneurs, while their financial situation may be relatively easy in that there is sufficient will be strenuous.
Mindy: Money to accomplish their goals. It is often a lonely place for people to be because they do face certain challenges around how much is enough. What should I transfer to the next generation? How do I educate that generation to be responsible with wealth? How do I handle my estate? And these entrepreneurs have very few people in their entourage with whom they're comfortable having these conversations.
Mindy: So I think that that is one of the benefits we have is we see many families. Struggle with these very same concepts. And what we can bring to our families is experience of how other families have chosen to handle these challenges. We can also share what we have seen that works particularly well. We've seen some pitfalls that we can help them avoid and I think that really contributes to the trust building and therefore we become very intimate with them and their family and we earn the permission to have these very delicate and intimate conversations and I think they appreciate that and it really helps them in some of the things that are the hardest, which are rarely seen.
Mindy: You know, business related decisions. They tend to be the decisions around their family. Right? Right.
Karen: Okay. Great. Mindy when we talked recently, you had mentioned that you took one of your clients to New York to meet with several investment managers so that they could experience that first layer of due diligence.
Karen: And I thought that was so cool. So I thought maybe you could talk a little bit about how that trip transpired with your client. Thank you.
Mindy: Sure, with pleasure. So we actually took two successful entrepreneurs, one who had recently completely exited his business through a liquidity event and one who has exited part of the business, but is still very active in the day to day management of the business and retains an important part of the business.
Mindy: But each of these individuals has a sizable portfolio to invest, and they are learning about the investment process, and they're also trying to determine what part of their portfolio should be managed by external managers, and where do they want to do some direct investing and direct deals. The interesting thing is having run a business doesn't automatically give you the skill set To assess making an investment in another business.
Mindy: So one of the goals around this due diligence trip was to hear from managers who make investment decisions all day, every day, how they think through allocating capital to individual companies. And as an example, these entrepreneurs have started to do some private deals and when we went to see a private equity manager, one of the comments the manager made was they have learned over many years of investing that their preference is to initially invest a small amount in a company.
Mindy: Watch and observe management over several months to make sure that they deliver on their objectives as they were stated. And to the extent that they gain more and more comfort with this company, then they are prepared to make a bigger investment. And so I thought that was very instructive to clients who are looking at making private deals, especially in companies that in all likelihood will need to raise additional capital.
Mindy: One of the other things that the clients got out of this trip was we wanted to introduce them also to different asset classes. So we wanted them to be aware that, you know, investing in private companies or having equity investments certainly is one way to allocate capital, lender.
Mindy: Or looking at a private credit option. We also brought them to a manager. That is basically a multi strategy hedge fund to suggest that maybe there's value in considering a pool of capital that isn't going to return. In the same way as their equity or fixed income portfolio, so we really took them around to see different asset classes and then to learn more specifically how managers think through that investment decision and how,
Karen: how was their feedback?
Karen: Like, what did they say to you after the trip about what they took away from that experience?
Mindy: Their feedback was 1st and foremost that they certainly were impressed by some of the managers that I don't think they initially would have allocated capital to if not having been in contact with the manager and hearing directly from the manager and they were also able to compare strategies and see in certain cases where.
Mindy: One manager who was much more mature and had many more vintages of funds compared to another manager that we saw that was much younger, they really noticed the difference in the depth of the team and the thoughtfulness of the approach. And so even there, they were able to see how we, as a firm pick and choose managers and the type of opportunities that we can bring to their attention.
Karen: Right. And I'm just curious about some of your clients that self direct and will make decisions to invest in a direct deal themselves. And will they, you know, run that deal by you and you might not recommend it, but they'll still go forward? With the decision or they'll take your advice or others that would never do a direct deal without your stamp of approval.
Karen: How would that work?
Mindy: More and more clients are bringing private deals to our attention and we are building our capabilities to be able to respond. So we're going to that client need. We do today lean on some of our internal experts who work in the area of valuations and transaction support. So they put together private deals and we can certainly help clients determine if the valuation of the company makes sense.
Mindy: To help them think through the terms of the deal. We'll then bring in also our tax people to understand what the right structure is for the deal. And we will look from a pure investment perspective and be able to give them some indication of what we would think. As you could imagine, Karen, clients of this level of wealth will ultimately make their own decisions.
Mindy: Our goal isn't to tell them Yes, or no, it is to make sure that if they are going to go ahead, they've thought of all the risks. We have looked from a tax perspective to make it as efficient as possible. If we have the ability to negotiate terms, we've helped the client negotiate the best terms possible and to encourage the client to size that opportunity appropriately and to understand how it fits within their broader investment strategy.
Karen: Yeah, yeah. So, you know, you're like a risk manager, help them with any blind spots with all of the professional expertise that you can bring to the table. That's great. And keeping on the investment theme, I wanted you to share your views on alternatives to fixed income that we're seeing as a persistent investment theme right now.
Karen: There's so many different ways to, to get yield. I just thought maybe you could share a little bit of experience that you're having with clients. Around
Mindy: that. Sure. With pleasure. There's definitely been a theme around alternatives for the last number of years. We at Richter family office have done a fair amount of alternatives for clients typically somewhere in the neighborhood of 30 to 40 percent of their portfolio for the better part of five to 10 years now.
Mindy: And I think why they're becoming even more important today, Is it's a little bit of what got us here won't get us there and I think we need to remember that we're coming off a period when public equity markets were very strong interest rates were very low supporting high asset prices and we may have moved on from that.
Mindy: Portrait yeah, we now need to consider how are we supporting clients so that they have strategies in their portfolio that are performing and delivering return even if public equity and fixed income markets don't deliver the types of returns we've seen in the past so that drives us to thinking of. Certainly in the area of fixed income, what I like to talk to clients about is pipelines of income.
Mindy: We have many clients who do need income from the portfolio or rely on it entirely for their income. And we like to suggest that they should be seeking many different risk return streams in order to generate that income. So certainly private credit, which comes in many formats. sponsored, unsponsored, you could be obviously lending money to mid market companies as you could be lending money to startups.
Mindy: So there's a very large spectrum of opportunities there. The benefit being, of course, that they typically pay cashflow of meaningful amounts. So we could be talking about 8 to 12 percent on an annual basis. We've also looked for clients at rental real estate, because there again, we can generate cash flow in the form of rental income.
Mindy: Certainly when they initially receive that income, often there's not Very much taxation applied to those distributions that may catch up to them when they eventually sell the fund. But while I'm generating current income for lifestyle, there's often some tax advantages there as well. And for the most part, those have been reasonably stable strategies because the cash flow has been quite reliable.
Mindy: We've also looked at mortgage financing. Over time, which again is a different risk return profile again, cash flowing, but I don't have the underlying real estate as my risk. I simply have to ensure that my borrower can repay. So we often speak to clients about taking capital and putting it into many of these different buckets so that as much as possible, their lifestyle needs are met from income.
Mindy: And the idea behind that, of course, is that most of our clients have multi generational money, so we could look at them and say that they can afford a very high proportion of their portfolio to be allocated to growth investments. The reality is they still need to generate income for the most part. And so if we can do that and give them comfort that their income needs are met through some of these investments, then they can be a little bit more patient with the volatility around their growth investments.
Mindy: Right. Okay.
Karen: And what are some of the fears that your clients are sharing with you? And how do you work with them to mitigate
Mindy: fear? So interestingly, the fears clients share with us are rarely return focused and they are rarely around specific investment strategies. Clients really are worried about things like making sure that they protect the next generation financially.
Mindy: And that they have enough money for their lifestyle today and to secure the next generation. I'm sure you've heard people speaking about how hard it is for the rising generation to afford a home today as an example. Yeah. So these are things that parents worry about for their children. And you might be surprised to learn that even individuals who have very sizable portfolios worry about these things.
Mindy: They worry about how and when to tell the next generation about the family's wealth and how that generation will handle that wealth. We typically are working with the wealth creators, and so those individuals, for the most part, did not grow up with wealth. They created wealth over time, but their value set comes from a time where they didn't have a lot of money.
Mindy: Their children may or may not have grown up in significant wealth. And certainly their views about money are different than that wealth creation generation. So there's a lot of concern and anxiety around what is the right thing to do? How do I impart my values to this generation while at the same time wanting to transfer the wealth to them, but knowing that they will steward that wealth for subsequent generations and not simply Spend it because it's available to them for any individuals
Karen: or families that are listening to this podcast and who are considering working with a multifamily office.
Karen: What advice would you give them in terms of what they should be thinking about and looking
Mindy: for? So I think the 1st and most important element is a connection. To the advisor. And as you mentioned earlier, Karen, most of this is a trust relationship. That is the basis for everything that we do for the advice that we give and for the family's willingness to receive it.
Mindy: So I think that it's crucial that the family feel that they are dealing with a party who hears and understands their individual and unique family needs. I think that the next step is to really look under the hood. And see what services that family office provides. The reason is, like everything else in our financial services industry, many people can hold out a shingle, but they don't all look the same.
Mindy: And that doesn't mean that one firm is good and one firm is bad, but I think the family really needs to understand clearly What services that multifamily office provides, what elements does it provide in house, what elements does it coordinate with external parties, and the family needs to feel comfortable that that will really service their needs for now and into the future.
Mindy: I know that one of the things families appreciate about dealing with our firm is the fact that there is built in continuity. And what I mean by that is we are a firm in totality of near 100 individuals. And as we transition to the next generation of that family, they trust that we will have professionals who That can be transitioned over time.
Mindy: So I think that's also a really important element because typically when you're working with a family office, this is intended to be a very long relationship and typically an intergenerational relationship.
Karen: Yeah, when I think about everything that you offer to clients and I listen to you and if I'm in a, in a family's shoes, I would say, I want to work with Mindy Maimon.
Karen: I want her. And I think about your capacity to be that intimate, to be that trusted advisor. It takes time to have these in depth, intimate conversations with your clients. So I guess my question is around capacity. Business growth. How do you grow your own business? If you know, and how do you train your staff?
Karen: What's your leadership look like? An overview of your team and how they can manage everything that you've been sharing
Mindy: today. Sure. So first of all, we want to be able to service these families. With the highest touch service possible because they deserve that. Yeah. And what we've done, and this was a decision we made many years ago, is we know that we can't service all pockets of the market.
Mindy: And so Richter as a firm focuses on the ultra high net worth family or the upper end of the middle market in terms of privately owned businesses. Okay. And so it's not to suggest that other families don't deserve the right type of advice and service, but we understood that as a still relatively small firm we're not one of the banks or, you know, we don't have the.
Mindy: Depth of breath that they do. We really decided that we wanted to be very focused on the kind of client that we worked with. The other approach we've taken is a team approach. So, depending on which services the family uses, there's typically more than 1 individual with whom they work. So I will focus for a moment on the portfolio management side.
Mindy: I work with a portfolio manager, a client relationship manager together on every client file. And the idea behind that was to always have at least two people who had that family's context, and where the family would have touch points and access points within the firm. That also responds to how we train that rising generation.
Mindy: So we actually want to involve them in all of these elements. We want them to be there when we're talking about tax and structure and insurance and estate planning and not only when we're talking about choosing the next investment strategy. So, we're very deliberate about exposing our people to those conversations, training them in those areas, and working alongside them to both transfer knowledge and for the family to have these people involved in their circumstance on a regular basis.
Mindy: Mindy,
Karen: honestly, what a great articulate overview of everything that you do at Richter. That was just perfect, I think, for any listener that wants to understand what you do. That was such a wonderful, holistic commentary, and I just think it's great to be able to share what you do with, with our community.
Karen: Thank you, Mindy. And And thanks, thanks for being here again. And hopefully we'll, we'll do this again in another, in another year.
Mindy: Thank you so much, Karen. I'm always happy to join you.
Karen: Okay, good. Well, we'll talk soon. Take care. Mindy. You too. Bye. Bye.