The WealthTech Podcast Episode Transcript

Host: Mark Wickersham

Guest: Kent Lawson, Family Office Exchange (FOX)

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Mark Wickersham: Alright, Kent, welcome to the WealthTech Podcast. I'm happy to have you on this show looks like you're.

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Kent Lawson: Thanks.

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Mark Wickersham: On some tropical island today.

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Kent Lawson: I should change my official background to, you know. Be official there. There's the.

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Mark Wickersham: Not. This is.

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Kent Lawson: It was great.

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Mark Wickersham: Content when we talk about the background screens. But would you mind giving your beef

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Mark Wickersham: action? And please give me an overview of fox and the technology program that you run.

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Kent Lawson: So my name is Kent Lawson. I'm the chief Operations officer at Fox, but my primary job is really working in the family office industry and community working with the the offices themselves to help them understand their operations and technology needs

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Kent Lawson: and working with the vendors to help them. Better understand the family office requirements. So I work in both sides of the table if you will.

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Kent Lawson: My history is a bit odd start of life as a saxophone player, being a musician.

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Kent Lawson: married another musician, which then required me to go to get a different job, and I ended up in this wealth management space. So RIA compliance side worked at advent software on the technology side, but then spent

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Kent Lawson: a dozen years as COO and CAO for a very large family office Enterprise family, and I was a member of Fox all those years, and

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Kent Lawson: Fox Family Office exchange has been around since the beginning. Sarah Hamilton, the owner, actually pegged the phrase

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Kent Lawson: Family office when she was working at a bank 37 years ago. And so we are near 36 here at Fox, and we are primarily we're an association.

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Kent Lawson: Our members are family offices or advisor firms, 2 family offices, multifamily offices, etc.

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Kent Lawson: And

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Kent Lawson: we primarily focus on education. If you're a member of Fox, you are here to learn. You're here to learn from us the subject matter, experts or people that we bring in or from each other similar

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Kent Lawson: challenges that families might have you put them together so they can talk to each other.

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Kent Lawson: We have partnerships that we work with on the technology side and risk management side and a few other areas

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Kent Lawson: where they're still part of the community. It's an ongoing basis. It's we? It's not the one and done event. That's not our focus. It's really. How do we bring in these vendors who are specialists at what they do? And that's been the idea.

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Kent Lawson: You're the professors, the vendors that come in. That's your job you're here to teach.

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Kent Lawson: And so, inadvertently, what's happened is that community gets strengthened, the families find the professors to be their number one resource, and when they're ready to make a spend, it tends to be from those people who are teaching. So it's been a great community project. And we've been at this for about 5 years, and it's continually growing so pretty excited about that.

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Mark Wickersham: Okay, I've said this before. And I'm happy to say it publicly. I do think the technology program that you run from, you know, from a technology vendor point of view, I think it's 1 of the better ones in the industry. I think there's a real value. Add, do you? You provide both to technology vendors into family offices.

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Mark Wickersham: Obviously, Fox is a an absolute institution within the family office space. You know, you've been around for a while when you have the familyoffice.com URL, and

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Mark Wickersham: just an absolute Stallworth of the industry. Can you tell me about some of the common problems that family offices are seeking help with with technology, that that you're seeing and see shed some light on. You know. How has that evolved over time, those type of situations that they're coming to you with.

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Kent Lawson: Sure, I think a common problem is

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Kent Lawson: just the lack of understanding of what they truly need and what they require. I think a lot of mistakes that happen, and I see regularly it's

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Kent Lawson: can you give me the list of portfolio counting systems I should look for at, you know, and it's like, Well, who are you?

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Kent Lawson: What kind of office are you? What's your background? What's your future gonna look like? And a lot of that gets missed. So you see a lot of the offices looking backwards at their problems.

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Kent Lawson: or they're trying to solve for a very specific issue. Here's what I want to have resolved today

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Kent Lawson: and then tomorrow, they have a new problem. And it's this constant circle, and they're never getting what they really need.

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Kent Lawson: Not never. But often that's the case. They're always looking for the silver bullet, which, of course, does not exist.

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Kent Lawson: You also have this common argument which has been going on since I think I was a youngster

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Kent Lawson: best breed all in one, you know, and those arguments continue to happen. But I think the biggest mistake I see over and over again

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Kent Lawson: the failures in technology, selection and implementation rarely have to do with the technology itself.

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Kent Lawson: It's almost always in change management. And so if they're not prepared to spend a good deal of effort and time

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Kent Lawson: focusing on the change management, it's a much harder cycle, and that's pretty common.

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Mark Wickersham: Yeah, I think those are all good points. I I definitely will talk to family offices, and they're doing a search. And they'll tell you, like the 3 vendors that they're looking at. And it's like.

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Mark Wickersham: you know, it's an orange and a bicycle, and a you know, a toy shark. And you're like, how did you come up with that list like? Because I talked to their buddies, or they get some sort of list, regardless of what their operational requirements are, what their future state needs to be, what their technology personality is.

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Mark Wickersham: You end up with this kind of really odd list. And then you know to your point. Sometimes they get what they ask for. But it's not what they need, right in terms of, you know. Can you develop more of a strategic framework, have more of a.

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Mark Wickersham: you know, on the tech side we call it a product roadmap, but have some sort of technology roadmap. How does that component fit into the larger tech stack? And to your point, you know the bigger question we'll get into that in a little bit in terms of comprehensive versus all in one but you know the big subject in terms of technology that that's a

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Mark Wickersham: waving over the family office industry, and every industry is AI right? So

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Mark Wickersham: how is AI, you know, beyond dominating the headlines? What are you seeing in terms of the vendors that you're working with, and how family offices are adopting. AI. Can you talk to it from those 2 perspectives?

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Kent Lawson: Sure. On the vendor side. I see a lot of

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Kent Lawson: let me use AI as a new workflow automation tool.

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Kent Lawson: I see a lot of that. It's almost like, well, back in sequel, you know, we did scripts great. And

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Kent Lawson: initially, a lot of the platforms are saying, let's automate some of these steps. It's not really true. AI, it's just a different way of programming. So I think there's a bit of a misnomer that's going on. People call things AI, and it's really a wrapper around some sort of programming or scripting

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Kent Lawson: the better solutions, the ones that appear to be a little further down the road and doing a better job of it. A security

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Kent Lawson: number one that's got to be in place and being

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Kent Lawson: established independently in AI, and security is important. And there's a nice long list that you can go through. Responsible. AI is part of our world today, and is that part of the picture, but with the vendors I see a lot of them trying to do smaller tasks.

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Kent Lawson: The generative AI is more certainly more popular than more complicated AI. However, in the offices themselves, what's

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Kent Lawson: being asked for is really

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Kent Lawson: a way to take a lot of the human side of things, where you've got people that have been in the office for 20 years. Let's say someone writing a trust agreement. And they've been

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Kent Lawson: the primary for all these years, and they're getting to the point of succession. And now we're saying, Well, can I take that person? How he did trust agreements.

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Kent Lawson: incorporated tool that gets me 80% of the way there.

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Kent Lawson: And now we're in a much better place as we do the succession. So that's a common thing, a reporting certainly common.

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Kent Lawson: But the requests really get into.

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Kent Lawson: Who's asking questions I want to look at if I'm the accountant in an office versus an investment person, and I'm asking for information or searching for content.

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Kent Lawson: I have a very different perspective of what I need. So building in all of those characteristics around it is critical so.

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Kent Lawson: but everybody's asking for it. It's a very popular choice right now.

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Mark Wickersham: It's certainly

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Mark Wickersham: I don't know. I mean, there's a lot of hype with it, but I think in some cases it really does live up to the hype. It is game changing the amount of

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Mark Wickersham: information that you can kind of summarize the ability to have a you know, conversation with your data to be able to hey? Can you show me the last 3 invoices for X, or can you tell me what happened to my portfolio last quarter and to be able to summarize. You know a lot of information easily.

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Kent Lawson: Well, think about it this way. Here's a good one for you. We've spent

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Kent Lawson: years and years and years trying to find the right way to store

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Kent Lawson: documents, content, file structure, SharePoint. Where do I keep this information? And oh, for that year it's in a different location. And

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Kent Lawson: as we properly unfold. AI. Now you

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Kent Lawson: theoretically could have a single data lake where you just dump everything because

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Kent Lawson: I don't need to know where it is, because it knows how to find it. So that's a game changer. When you think about how much work you can eliminate just in management of content.

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Mark Wickersham: Find the data right, and you don't have to worry about that. Oh, I didn't have the right tagging, or wasn't put in the right folder. You can just

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Mark Wickersham: ask for stuff. Let me. Let's expand beyond AI. What other major technology trends are you seeing.

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Kent Lawson: Well for the past

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Kent Lawson: 3 years. It shouldn't be a surprise, you know, if you go back 15 years ago it was custodial data, right. I how do I get all my custodial data brought to me? Well, in the past

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Kent Lawson: 10 years everybody's been doing alternatives, and in the past 5 years. It's great. Now, can I get the same sort of behavior

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Kent Lawson: from alternative data that I've gotten from custodial data and everybody's asking for it? I mean, it is the most popular, and there's plenty of tools out there. This kind of thing. I mean, there's some leaders in it, for sure, but it is probably as a peripheral system, because it's not a core system doing your accounting.

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Kent Lawson: It's probably the most popular request out there. Now.

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Mark Wickersham: Is great to see. I mean that

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Mark Wickersham: 1st mile of data aggregation for alternative investments is, you know, really low value and painful. But it took a qualified high level resource to be able to interrogate documents and really translate it properly, often at like a CFO level. I remember talking to a

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Mark Wickersham: a family office about that problem, and they said, It's it's like cleaning bathrooms at the airport, you know. Nobody wants to do it, but it's got to get done every 4 h, you know. And it's great to see so many options

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Mark Wickersham: available for family offices to be able to automate that that process I mean

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Mark Wickersham: the alternative investment industry. When you know, modernized the 1996 and created a Pdf and emailed it to you. And that's as far as it went. And now with AI and these vendor specific solutions, you're really seeing that information get unlocked. You're seeing that low value kind of thing. Go away. You're seeing more transparency in it, because they can manage that data better. It's great. Any other sorts of innovation or trends. You're seeing.

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Kent Lawson: Yeah. So what one of the things we do here at Fox among

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Kent Lawson: our education, and you know, governance, succession planning, etc. But on the technology side, we sort of keep track of all the new players. What are they doing? What's their focus?

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Kent Lawson: So the other transition that's happened is used to be.

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Kent Lawson: I've got a major player, and they keep trying to build each of the pieces within it, or they'll partner with another significant player

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Kent Lawson: over the past few years. What you're starting to see is, most of the newer players have a very specific small focus. This is what I do. This is all I do

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Kent Lawson: plug and play.

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Kent Lawson: so I can have this 50 different applications if I want. They're all talking to each other. But I'll handle estate planning over here. I'll handle alternative data over here. I'll do governance over here.

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Kent Lawson: plug them all into your environment. So there's a real transition to speciality instead of bigger systems.

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Mark Wickersham: Yeah, I would. I agree with that. I think the Apis have made that really possible to that. These systems can integrate that can talk with each other much better. I think best of breed used to be a really kind of big science experiment that the clients had to go through. And now it's a it's a little bit more manageable. These. There's a lot more optionality, as you say, that there's very specific solutions to very specific problems. And sometimes you're seeing them getting

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Mark Wickersham: born out of family office type of experiences, things like leaf planner and summit. You know, they're really even eaten. These are solutions that are born straight from family offices that are solving very family office specific problems. Well, you didn't see that, you know, 10 years ago there wasn't that many you had vendors that maybe said, Oh, and we'll sell into the family office space versus. Now you're saying, yeah, not only we're gonna sell into the family office space. But we're going to solve problem X.

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Kent Lawson: Yeah. And what is really interesting when you think about that is

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Kent Lawson: part of the criteria when you're doing due. Diligence is okay. What kind of support am I going to get? What kind of financial backing does the company have? What? And when a lot of these smaller, newer players, with a focus coming out of a family office. It's like suddenly, you don't have to worry about. Do they understand my space? And do they have the financial backing.

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Kent Lawson: It's sort of inbred right? So it eliminates a lot of the initial worries.

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Mark Wickersham: It is the Golden age. So with all these changes that are going on in terms of

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Mark Wickersham: vendor specific, you know family office solutions. AI in particular.

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Mark Wickersham: is this gonna force family offices to to modernize? What is gonna take? I mean, I think it took Covid to really get everybody to get into the cloud but then sometimes you see that that it's just kind of a you know legacy solution that got hosted in the Cloud versus, you know. On the desktop underneath the desk.

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Kent Lawson: Sure.

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Mark Wickersham: So is that is this always going to be perpetual problem just due to the nature of family offices being cost centers? Or is there really going to be a technology that is so impactful, so game changing that it's gonna force family offices to modernize. And I'm speaking, you know there are modern family offices. I'm speaking in generalities here. But you know what I'm saying.

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Kent Lawson: Sure. And I think if you look at the majority of the family offices, one of the things that's a mainstay of a family office is people kind of go and stay right. You have employees that are there for very long time.

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Kent Lawson: We are approaching the largest wealth transference in history that's coming.

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Kent Lawson: That means the next generations are going to be inheriting, taking over.

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Kent Lawson: You are going to see the largest technology stack in implementation in the next 5 years.

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Kent Lawson: ever in this space, because now you've got a whole generation of folks who

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Kent Lawson: grew up very differently, and they expect things to work technologically, quickly.

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Kent Lawson: incorrectly. And a lot of the platforms and process that has been done for a lot of family offices.

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Kent Lawson: It's gonna change. It's gonna have to. So I think we are about to approach

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Kent Lawson: that time where everybody's going to be very busy. But the better you are, the busier you're gonna be right? I mean, just it's always that way. But

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Kent Lawson: yeah, we're fast approaching a mass exodus to new platforms.

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Mark Wickersham: As I always say, you want something done, give it to somebody that's busy. But I do think that's a really interesting take. There obviously has been a lot of talk about the, you know, the ongoing historic wealth transfer. But that means that they're also gonna have the keys to the car, and the next generation is digitally native, so that the

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Mark Wickersham: the report 60 days after quarter end in the in the, you know, paper documents doesn't work for them anymore. So maybe that that's really what causes the

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Mark Wickersham: modernization of the family office. Let's go back and revisit that all in one versus comprehensive solutions. I know, you know there's really no one right answer for every family office, but there is a right answer for each family office in terms of what approach to take.

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Mark Wickersham: What are some of the considerations that family officers should have when they take a look at that? And can you kind of break down? You know those 2 camps, and how you know the family offices should be thinking about that fork in the road.

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Kent Lawson: Sure. You know, when, when

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Kent Lawson: when I work on consulting projects, and I'm probably with Fox, and how we approach it is

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Kent Lawson: little more esoteric than a lot of firms, you know. A lot of firms will look at very, you know. RFP. Data need to have. Must have. What am I looking for in technologies?

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Kent Lawson: But because of what we've learned here at FOX, and how we work directly with the offices and the wealth owners?

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Kent Lawson: When I go out.

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Kent Lawson: The 1st thing I do is meet with just the family by themselves. Nobody from the office, no, nobody in the operations and people go. Why are you talking to the family about technology for the family office? Because the questions you're asking of that family are things like

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Kent Lawson: in the next 10 years. What's your plan? Are you going to become a philanthropic organization? How many households do you think will be involved? Is there a succession plan? Who's going to be doing things.

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Kent Lawson: So you're really looking at the wealth owner and their needs going forward.

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Kent Lawson: backing then into their advisors, how they fit into that plan the office and so forth. So what happens is, let's say, an office came out of. They were in hedge fund right? That's and the hedge fund stopped. And now it's a family office.

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Kent Lawson: The family that created the wealth. Their whole view of what's important to them

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Kent Lawson: is incredibly different than Hey, I had a tire company that I sold, and I've now got this mass amount of money. So am I worried about tax first.st Am IA trust company? Am I an investment company? Who are we?

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Kent Lawson: All of those questions get down to? Okay. Now that we have an idea who you are in your complexity, your needs. How many generations are all that

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Kent Lawson: I can start looking at the technologies

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Kent Lawson: and whittling away what fits them and their needs? And this is where this comes into play. If I'm an office that is a trust company, and I do none of the accounting in house, and I don't have internal investment group in house.

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Kent Lawson: I have a very different need than Nope. I've got an investment group. I've got an accounting group.

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Kent Lawson: So those questions all tell me.

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Kent Lawson: what should I be looking at? Maybe I'm only looking at an investment system portfolio accounting system because I outsource all accounting and tax.

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Kent Lawson: I don't. I would not look at an all in one, because I wouldn't need 50% of what's in the platform.

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Mark Wickersham: Partnership accounting, and all that right.

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Kent Lawson: Exactly, and then on the flip side. Well, if I'm a true investment focused house.

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Kent Lawson: it's pretty hard to find a best in breed. Sorry, all in one that actually has a true

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Kent Lawson: upright. I'm going to do all the management of investing.

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Kent Lawson: They're not really designed that way. Most of them are designed for post investment, aggregated reporting

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Kent Lawson: performance, accounting things of that nature.

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Kent Lawson: again, all those questions come into play. So it's a constant what fits that particular family? Because, you know, you've heard the phrase. Seen one family office. You've seen one family office right? It is so true.

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Kent Lawson: Oh.

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Mark Wickersham: That makes sense. That's a really great way to think about it. You know. I think

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Mark Wickersham: there's a couple of things. What are your kind of operational requirements? Right? You get at that, are you? Are you? Gonna what functions are outsourced? What are the functions of the family office period. That's gonna drive that your technology requirements. And then that kind of whittles down the options. I think also, some of it's around.

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Mark Wickersham: you know, the firm's technology personality. What did they want to manage? Multiple vendors or not want to manage multiple vendors that can be a component of it, do they? You know, have very distinct departments, a very distinct investment department, very distinct finance department that maybe those departments want to go different ways on their vendor selection. So you know, the answer is, it depends. It tends to be always. There's not

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Mark Wickersham: well.

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Kent Lawson: And now we're faced with since the pandemic

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Kent Lawson: a lot of offices are trying to, especially as they move to new generations of leadership.

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Kent Lawson: How can I outsource or become a virtual office instead of the old brick and mortar family office?

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Kent Lawson: I we see a lot of that. And that's a whole different picture. Right?

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Kent Lawson: So.

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Mark Wickersham: Right. And that that's gonna inform your technology requirements as well. Change management. I guess you said earlier. I thought it. It rang really true is that

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Mark Wickersham: you know a lot of times. I think

00:25:45.960 --> 00:25:50.000

Mark Wickersham: firms can select. One is family offices. I

00:25:50.080 --> 00:26:16.329

Mark Wickersham: don't really get great results sometimes with technology, and they struggle with it. And they can tend to select the right vendor or appropriate vendor for their needs, but still that the implementation fails or doesn't gets halfway to what the expectation was. Talk to me a little bit about change management. How can family offices get better results from the technology investment and efforts.

00:26:17.260 --> 00:26:24.039

Kent Lawson: Well, so often. You see that again, especially if they've been around a while a bit.

00:26:24.470 --> 00:26:32.189

Kent Lawson: I want new technology to get me better results. But I want it to work the way I've always worked right.

00:26:32.350 --> 00:26:34.870

Kent Lawson: I want to do what I've been doing.

00:26:35.419 --> 00:26:42.079

Kent Lawson: My case in point. And this is a real life experience that happened in the past 6 months

00:26:42.640 --> 00:26:46.860

Kent Lawson: family office, who was a hedge fund

00:26:47.050 --> 00:26:49.969

Kent Lawson: and the mentality was, I'm going to

00:26:50.190 --> 00:26:55.070

Kent Lawson: manually validate every transaction I'm going to take the transactions I get.

00:26:55.400 --> 00:27:00.020

Kent Lawson: I'm going to validate that. They're all correct, and that's my process.

00:27:00.520 --> 00:27:09.359

Kent Lawson: And you look at that and say, well, maybe that's appropriate. Maybe it's not. But let's look at it. So in this case, we said, let's look back over one year.

00:27:10.000 --> 00:27:16.500

Kent Lawson: How many transactions did you actually have to change? And what was the total dollar effect

00:27:16.930 --> 00:27:25.060

Kent Lawson: to the family? Right? So in that case, there were 2 transactions that have been changed in a year for the total of $12,

00:27:25.680 --> 00:27:27.880

Kent Lawson: like, okay, so let me get this right.

00:27:28.200 --> 00:27:33.230

Kent Lawson: The family is spending 200 5,000 $300,000 a year

00:27:33.840 --> 00:27:37.190

Kent Lawson: to get that $12 cost corrected.

00:27:37.960 --> 00:27:41.029

Kent Lawson: even if it was wrong by $12.

00:27:41.570 --> 00:27:43.340

Kent Lawson: It's back to the.

00:27:43.340 --> 00:27:44.780

Mark Wickersham: Cereal, right.

00:27:44.780 --> 00:27:48.870

Kent Lawson: Right. And so you literally have to look at that and say

00:27:49.370 --> 00:27:54.170

Kent Lawson: how you work. You don't need to do this anymore, because

00:27:54.940 --> 00:27:57.380

Kent Lawson: you're correct in what you're thinking.

00:27:57.750 --> 00:28:04.349

Kent Lawson: From a micro viewpoint you are correct, but from a macro viewpoint for the family it's

00:28:04.580 --> 00:28:06.699

Kent Lawson: not helping, it's hurting.

00:28:06.860 --> 00:28:14.420

Kent Lawson: and that is a discussion for almost everything you're doing. Why are you doing it? What's the purpose?

00:28:15.080 --> 00:28:18.019

Kent Lawson: Before you start the implementation?

00:28:18.470 --> 00:28:28.040

Kent Lawson: You need to walk through all of the workflow and answer a lot of those questions. So when you're starting your new technology and implementation.

00:28:28.540 --> 00:28:35.969

Kent Lawson: you kind of answered, okay, to maximize the technology, this is the process.

00:28:36.620 --> 00:28:40.850

Kent Lawson: Will that now work based on all of these discoveries?

00:28:41.070 --> 00:28:47.980

Kent Lawson: But so many people don't want to take that time and do the change management question upfront.

00:28:48.170 --> 00:28:51.339

Kent Lawson: but it always saves time in the long run. It always does.

00:28:51.760 --> 00:29:01.849

Mark Wickersham: Yeah, I think anytime you hear, this is the way we've always done it. You know, it's like, okay, let's dig into this because there's something there, and there's probably was a very good reason why they were checking all those

00:29:01.990 --> 00:29:08.209

Mark Wickersham: transactions at 1 point. Maybe they really did have some sort of problem, and then the data gets better or some change happens.

00:29:08.210 --> 00:29:09.010

Kent Lawson: Right.

00:29:09.010 --> 00:29:31.576

Mark Wickersham: Do you still need to do that? And then you know the other thing, too, with the if the vendors recommending a certain best practices. I know. You see, you know, family offices are unique, and they can be highly customized. But there, there's no only so many ways to process a capital call that, like some of these tasks and functions are not necessarily unique, and there are best practices.

00:29:32.000 --> 00:29:41.449

Mark Wickersham: and that family offices should be looking to adhere to that versus trying to make their. The vendors change and support functions that are not.

00:29:41.750 --> 00:29:42.239

Kent Lawson: Well, that's.

00:29:42.240 --> 00:29:43.080

Mark Wickersham: A little bit about.

00:29:43.080 --> 00:29:50.230

Kent Lawson: Point, I'm gonna get on the capital call for a moment. Because, yeah, because if I'm if I'm an investment group and I care about performance.

00:29:50.900 --> 00:29:57.750

Kent Lawson: What I need from a capital call is very, very different than if I'm an accounting group.

00:29:58.440 --> 00:30:06.530

Kent Lawson: I'm looking. If I'm an accounting group, I want every individual piece of the activity. And what's gonna come in the k 1 from the accounting side?

00:30:06.700 --> 00:30:12.470

Kent Lawson: I don't need that on the investment side, and it's a common question. Well.

00:30:12.990 --> 00:30:15.770

Kent Lawson: how do I behave so? That's a perfect example.

00:30:16.190 --> 00:30:27.039

Mark Wickersham: Yeah, the investment team is, or the performance isn't gonna care how much is recallable or whatever. But talk to me a little bit about. But about data. I mean, I, it seems like,

00:30:27.560 --> 00:30:53.989

Mark Wickersham: there is this kind of want desire for like gobs and gobs of historical data, and that can make these implementations expensive and kind of really bogging them down. Where do you? Where do you see the balance of that? And a lot of times. That data is not as good as I think it is. I think that's, you know, from a vendor side of being on the vendor side. I seen a lot of implementations go sideways because the clients data is not great. But talk to me a little bit about data.

00:30:54.990 --> 00:31:01.799

Kent Lawson: Yeah, so clearly, what happens on an implementation of technology when you get into historical data.

00:31:01.990 --> 00:31:13.649

Kent Lawson: it's like, what are your needs? What are the real needs. What do I need to bring forward? And what I what don't I? Some platforms, for instance, on the alternative side, are built that.

00:31:13.850 --> 00:31:15.980

Kent Lawson: Yeah, you're gonna need all the.

00:31:15.980 --> 00:31:16.700

Mark Wickersham: Street.

00:31:16.700 --> 00:31:22.510

Kent Lawson: That alternative data from the beginning of time. Right? If I'm in the marketable space.

00:31:22.630 --> 00:31:37.479

Kent Lawson: Yeah, maybe I only need the performance measurement numbers that I recorded, because my new system may not calculate it the same way. So let's take what I have and what we've booked. We'll bring that forward, but forget the activity right

00:31:37.930 --> 00:31:41.330

Kent Lawson: on the accounting side. It's a little

00:31:41.580 --> 00:31:46.980

Kent Lawson: easier from my perspective, because you literally can cut over at a certain date.

00:31:46.980 --> 00:31:48.389

Mark Wickersham: Balance for it right right.

00:31:48.390 --> 00:31:50.070

Kent Lawson: You know that sort of thing.

00:31:51.850 --> 00:31:55.080

Kent Lawson: But let's say you're talking about a CRM, though.

00:31:55.380 --> 00:31:57.961

Kent Lawson: Right? And I'm facing these questions.

00:31:58.470 --> 00:32:07.990

Kent Lawson: I'm got a CRM. Where my data is bad, it needs cleaned. It needs resolved. I'm going to transfer to a new CRM system.

00:32:08.750 --> 00:32:17.250

Kent Lawson: Well, what kind of data do you bring forward, and how much of it? That's a very different animal. It's not transactional. Now, it's

00:32:17.950 --> 00:32:29.160

Kent Lawson: information about your wealth owners or your clients, or whatever. So you have to analyze the actual pieces of data

00:32:29.450 --> 00:32:30.610

Kent Lawson: and determine.

00:32:30.800 --> 00:32:35.240

Kent Lawson: Okay, maybe I only care about the last

00:32:35.420 --> 00:32:44.060

Kent Lawson: 2 generations of family information. We'll we'll leave the rest of the history alone, if that's it so.

00:32:44.430 --> 00:32:51.479

Kent Lawson: But to your point it's always more expensive than you think it's going to be.

00:32:51.960 --> 00:33:00.149

Kent Lawson: and your cost and time are often significant. The more history you try to deal with.

00:33:01.110 --> 00:33:21.120

Mark Wickersham: I think those are probably 2 good axioms there regardless. It's always going to take longer than you think it's going to, even with a conservative estimate. And then the more data you bring over, the more expensive it is, and the more time it takes, and it can vary, based on the dimension of that data. I think that's a great point like G\L data.

00:33:21.510 --> 00:33:41.079

Mark Wickersham: You see, so many firms want to bring over that historical data. It's like, do you really need it? How often do you access it? Obviously you don't want current year. But we start talking about things where charts of accounts have changed over years. And how do you normalize that? And that's where you get into that land warrant agent. And then CRM data. I heard there's stat that like

00:33:41.170 --> 00:33:59.158

Mark Wickersham: 5% of your d of your data in a CRM decays every month. So you know, maybe that's not as dramatic for a family office versus a firm that's maybe doing marketing and then prospecting. But certainly, you know, addresses change emails change. People's

00:33:59.700 --> 00:34:27.789

Mark Wickersham: are in and out of families that that you know that that can change as well. And the quality of that data, what's the point of bringing over a lot of inaccurate or poor quality data. So data, you know, it's a big, it's a big deal. It's hard. Let's talk about the future of the family office industry. Obviously, there's so much change going on. I think the one thing you can see is that the pace of change is accelerating, and that that's a given. But

00:34:27.940 --> 00:34:32.240

Mark Wickersham: you know, where do you see the industry? 2, 3 years out from now.

00:34:33.730 --> 00:34:59.870

Kent Lawson: Oh, man, it it's just exploding. It's just absolutely exploding. I think about Fox, you know, if you go back 15 years ago. It was just fox, right? And that was it. And now there are tons of competitors, and almost every university is now having a family office focused area. So just the number of organizations that are

00:35:00.020 --> 00:35:05.300

Kent Lawson: focusing on the ultra high net worth.

00:35:05.550 --> 00:35:18.659

Kent Lawson: it's just growing like crazy. The number of offices. Clearly, that's growing at exponential rates. You look at globally. Yeah. Just unbelievable numbers

00:35:19.840 --> 00:35:26.140

Kent Lawson: employing people in this space has gotten a lot more complicated because

00:35:26.510 --> 00:35:34.399

Kent Lawson: more offices exist than there's experienced employees, and a lot of those experienced employees are at the end of their career instead of the beginning.

00:35:35.240 --> 00:35:42.130

Kent Lawson: So it's a pretty much a wild West right now, with staffing, and it's

00:35:42.730 --> 00:35:50.396

Kent Lawson: getting complicated. You get a lot of folks on the wealth management side that try to step into the family office side and

00:35:51.440 --> 00:35:53.629

Kent Lawson: it takes a couple years to

00:35:54.230 --> 00:35:59.190

Kent Lawson: relearn how things work and how long things take. I mean

00:35:59.550 --> 00:36:04.669

Kent Lawson: back when I was doing project management on the tech side with a tech vendor.

00:36:04.820 --> 00:36:20.320

Kent Lawson: I'd go in and do my, here's how long it's going to take to do whatever project right. And when I finally hit the family office space, I realized, Oh, well, just do your normal project planning. But then put a 4 x after everything, and that's pretty much in line. So.

00:36:20.320 --> 00:36:38.690

Mark Wickersham: Yeah, do you have any numbers on? On how many? I I saw numbers for us and Asia in particular, that we're gonna number of family offices would increase by 50%. But do you have numbers on how many family offices there are in, say the Us. Or North America? And then any any expected growth rates on that.

00:36:39.588 --> 00:36:50.029

Kent Lawson: I'm just guessing here. So if I'm not saying real numbers. But what I what I'm seeing is we're probably gonna hit 10,000 in the Us. Within the next 5 years.

00:36:50.260 --> 00:36:51.569

Kent Lawson: We're not

00:36:51.770 --> 00:37:06.070

Kent Lawson: anywhere near that right now, but that's the exponential growth. And if you look at Europe which has been around a lot longer than us, and of course, Asia, Singapore in particular, it's just massive amounts of family offices.

00:37:06.320 --> 00:37:12.990

Kent Lawson: We do a family office design workshop. And certainly we have a lot of education areas for this.

00:37:13.550 --> 00:37:24.119

Kent Lawson: And it's like, Well, how much? What do you have to have to have a family office, and everyone wants to think of it in terms of aum assets under management. It's like, well.

00:37:24.860 --> 00:37:29.060

Kent Lawson: that doesn't necessarily dictate how the office is going to work.

00:37:29.240 --> 00:37:36.099

Kent Lawson: It's not aum. It's that complexity. Yeah, we've got a family that's well into the

00:37:36.700 --> 00:37:52.060

Kent Lawson: billions. And there's 3 people in the office because 90% of their wealth is tied up in an operating company, and the rest of what they do is just a handful of marketable securities. That's it. So a very simple

00:37:52.390 --> 00:37:58.130

Kent Lawson: family. But lots of wealth, right? Didn't turn around and see a you know, 200 million family office

00:37:58.340 --> 00:38:08.820

Kent Lawson: that's got 25 people because they're investing in real estate and alternatives and a bit of everything more complex. And of course

00:38:09.330 --> 00:38:16.130

Kent Lawson: you get into branches right then you get next generation down, and siblings don't agree.

00:38:16.500 --> 00:38:25.890

Kent Lawson: And suddenly we're splitting. We're going to do it very differently. But we're going to maintain one family office to serve 2 totally different governance structures.

00:38:26.860 --> 00:38:32.969

Kent Lawson: Very complex. So it but the numbers are, yeah, it's gonna continue to grow.

00:38:34.640 --> 00:38:43.389

Mark Wickersham: As you mentioned earlier, Kent, that you're in Advent alumni of one of the things that that's always impressed me is the amount of talent

00:38:43.510 --> 00:38:45.397

Mark Wickersham: that came out of

00:38:45.990 --> 00:39:03.849

Mark Wickersham: advent in the early 2 thousands. Can you tell me a little bit about? Why is that? Why? Why is there so much. What was it like back in the Stephanie Demarco day in Advent? Why is so much talent been kind of starburst in the industry? From that organization.

00:39:04.420 --> 00:39:16.130

Kent Lawson: Well, it's funny, because I knew Stephanie before Advent existed. Right? So she and I served on an ICAA council together back in the day, and when this all started off

00:39:17.380 --> 00:39:23.637

Kent Lawson: we're both developing something for our office. Of course, when I went to work for her she thought it was pretty funny. But

00:39:25.270 --> 00:39:39.919

Kent Lawson: what she started out with was, it's the technology I'm gonna have technology, people doing this. And it, it had its hiccups. And then she kind of shifted to. No, I need business people to do this right

00:39:40.060 --> 00:39:47.589

Kent Lawson: well, that doesn't work either. So then it became she really changed to, I'm looking for

00:39:49.180 --> 00:39:53.380

Kent Lawson: really tech savvy business people.

00:39:53.710 --> 00:40:08.189

Kent Lawson: That became the focus. So and the whole education program back in the beginning it was you went out to San Francisco, you had 3 months of training. You went through testing you did. We're going to send you out to some clients.

00:40:08.350 --> 00:40:13.719

Kent Lawson: We're going to test you at the end. You're not guaranteed a job till you graduate. Right? It's

00:40:13.880 --> 00:40:17.430

Kent Lawson: and they did that for years and years, and

00:40:17.980 --> 00:40:21.040

Kent Lawson: not many companies, especially back then

00:40:21.220 --> 00:40:25.480

Kent Lawson: had that kind of investment in their employees.

00:40:25.480 --> 00:40:26.160

Mark Wickersham: Yeah.

00:40:26.900 --> 00:40:28.732

Kent Lawson: As time went on.

00:40:29.720 --> 00:40:37.180

Kent Lawson: It continued, and those employees that were in that, especially in that, I'll call it that 15 year window.

00:40:37.500 --> 00:40:47.809

Kent Lawson: I mean, they all went on to continue on in this industry and build and do other things so, and there weren't a lot of advents back in those days, right.

00:40:47.810 --> 00:40:48.290

Mark Wickersham: Right.

00:40:48.450 --> 00:40:53.029

Kent Lawson: Not like today, where you've got 1,200 platforms in this space.

00:40:53.570 --> 00:41:03.370

Kent Lawson: Yeah, there, there were a handful that were really making a dent. So. But she really it took her a bit, but once she figured out that right recipe.

00:41:03.700 --> 00:41:05.939

Kent Lawson: It's been great.

00:41:06.690 --> 00:41:35.929

Mark Wickersham: Yeah, I've had a chance to work with a lot of folks. I manage that relationship when I was at Fidelity I've always been impressed with that organization and just the amount of talent that has come out of that organization. That and you look at like my Cfo is another one of those organizations that that end up having a lot of alumni come out of. I like to end these podcasts on a personal note with 3 questions that have nothing to do with wealth. Tech. Obviously you mentioned that you're a professional musician.

00:41:36.410 --> 00:41:40.310

Mark Wickersham: What were some of the bigger bands that you played with back in the day.

00:41:41.000 --> 00:41:55.780

Kent Lawson: Oh, you know I played with a lot of the jazz groups back in the day, you know, Meltor, May, Louis Belsa and things like that. But some of the pop groups like Bee Gees and Chicago things like that. So I had fun. Yeah, it was a blast.

00:41:55.910 --> 00:41:58.510

Mark Wickersham: You got any rock and roll horror stories for me?

00:41:59.110 --> 00:42:01.060

Kent Lawson: None that I can share in public.

00:42:02.710 --> 00:42:09.749

Kent Lawson: No, I was always the grandfather of the group, like when I was on tour. Often I'd end up driving the bus because everybody had been

00:42:09.950 --> 00:42:13.439

Kent Lawson: having too much fun. And I, even though I was the youngest guy

00:42:13.670 --> 00:42:16.914

Kent Lawson: I was sort of the oldest guy there

00:42:18.230 --> 00:42:20.802

Mark Wickersham: Alright. Well, next time I see you in person. Well.

00:42:21.560 --> 00:42:30.420

Mark Wickersham: and get a story or 2 out of here. You're in Chicago. I love Chicago, one of the great cities, not only in the Us. But on the planet.

00:42:30.600 --> 00:42:35.610

Mark Wickersham: What's your favorite thing about location, favorite location, or favorite thing about Chicago?

00:42:37.160 --> 00:42:46.790

Kent Lawson: Oh, boy, I am a huge fan of Chicago for the fact that I can. The restaurants and the theaters are all

00:42:47.410 --> 00:42:56.379

Kent Lawson: sort of a miniature version of New York except not as crazy. Right? even where I live. I live out in the suburbs, but

00:42:56.520 --> 00:43:05.309

Kent Lawson: massive amount of great restaurants, and the music scene is great. Chicago Symphony. The jazz scene here has always been great.

00:43:05.310 --> 00:43:06.940

Mark Wickersham: Flu, scene, right.

00:43:06.940 --> 00:43:11.809

Kent Lawson: Blues. Yeah. So yeah, the arts. It's been. It's just been great.

00:43:14.098 --> 00:43:20.360

Mark Wickersham: Yeah, I got a couple, I think some of the the blues, bars, blues, etc. I like to go to those.

00:43:20.360 --> 00:43:20.840

Kent Lawson: 3 years.

00:43:22.140 --> 00:43:25.819

Kent Lawson: Green Mill, if you like. Jazz, the mill is the place to go.

00:43:25.820 --> 00:43:26.660

Mark Wickersham: Okay.

00:43:26.850 --> 00:43:33.460

Mark Wickersham: love, it can't wait to get back out there. I do love Chicago. I think it's a a great city. It is kind of

00:43:34.018 --> 00:43:50.960

Mark Wickersham: you have like. It's a major metropolitan city, but it's not quite as crazy or hectic as New York, so I think it's great architecture is awesome. I also highly recommend, if you're from out of town taking the architecture tour, the.

00:43:51.330 --> 00:43:53.450

Kent Lawson: On the boat on the ferry. There, that's a great one.

00:43:53.450 --> 00:43:55.089

Mark Wickersham: Yeah, yeah, that's great.

00:43:55.960 --> 00:44:03.110

Mark Wickersham: Alright, Kent. Well, this has been a great conversation. I really appreciate your insights on this one, and thanks for sharing.

00:44:03.640 --> 00:44:05.880

Kent Lawson: Thanks for taking the time. Appreciate it, mark.