by Marc J. Sharpe & Seth Morton
From the outside looking in, The Family Office Association (“TFOA”) is a close-knit network of single family offices, whose combined net-worth rivals that of a sizeable nation-state. the truth, however, is more nuanced and much more interesting. TFOA was not born of a grand vision, but instead emerged as an unintended consequence of a chance meeting between a small group of single family office executives, who met at the offices of a storied Texas law firm in 2007 to interview a series of eager fund managers and service providers.
While a mind-boggling number of groups have emerged in recent years to capitalize on the craze of family office wealth management, TFOA has put stakeholder experience and relationships above short term monetization and has chosen to focus on creating a pure peer network of like-minded family office executives, essentially for free. This is in part due to TFOA’s founding principles of privacy and non-solicitation, but also due to an inherit understanding that when one tries to monetize a network like this, what makes the network valuable, trusted, and special, can quickly disappear.
Viewed in this light, the story of TFOA provides as case study into the challenges of conscious capitalism, a movement led by entrepreneurs and business leaders who seek to elevate the human condition through business by orienting business around all attendant stakeholders.
How it all Started
In early 2007, a small group of single family office executives met in the law offices of Vinson & Elkins, a storied law firm founded in 1917 in Houston, TX. The purpose of the meeting was to meet a selection of fund managers and services providers who were targeting the needs of their family office clients. However, the most lasting impact of this meeting was not found in the services being offered, but rather the executives themselves realizing they had much to learn from one another – and that they would rather meet and discuss these issues in private, out of earshot of the third-party service providers, in a safe and confidential environment.
This meeting highlighted a common problem family offices face. The amount of wealth the family has makes them a target for every service provider, wealth advisor, fund manager, and salesman looking to pitch their wares or sell their services. As the profile of a family office grows, it becomes more and more difficult to find unbiased opinions and independent analysis. Instead, every interaction feels compromised by the bias of a motivated sales representative.
For this inaugural group of TFOA founding members, the promise of a community of like-minded peers, who were willing to engage thoughtfully on problems, share best practices and deal flow, and collaborate on matters of diligence, was an idea whose time had come and was too good an opportunity to pass up.
In the early days, TFOA members would meet each month to share interesting opportunities from fund managers, conduct due diligence together (to capture the wisdom of the crowd), and act as a safe space to discuss challenging problems in a private and confidential setting. These early meetings carried the group through the Global Financial Crisis, when throughout the fall of 2008, the major financial markets lost more than 30% of their value and the entire financial system was on the brink of collapse. During this time, TFOA members helped each other and provided much needed, impartial counsel as they used their collective expertise and personal networks to monitor the situation and help each other weather the storm.
While surviving the financial crisis showed the inherit value of these relationships, it was the untimely passing of one of the original members of the founding group that strengthened emotional ties and brought members even closer together. This moment of reflection underscored the community’s true priorities: genuine care for all members and the value of human relationships. From these early meetings and experiences through hardships – both economic and personal – TFOA developed its own unique personality, culture, and set of core values. These values guide TFOA to this day and include confidentiality, professionalism, cooperation, trust, non-solicitation, and diversity of thought.
Technology and Expansion
TFOA achieved its next major milestone in 2015, when the group introduced a private, member only, online portal to facilitate networking and the exchange of ideas outside of physical meetings. While regular, informal gatherings provided tremendous value to family offices looking to build relationships, the locality of the network, and the nature of in-person meetings, placed a ceiling on the potential growth and scale of those relationships. The private, member’s only portal enabled more frequent and instant interactions between meetings, allowing for greater engagement and shared diligence, while also allowing members to connect with other family offices outside of Texas.
Expanding the network also meant redefining the TFOA value proposition with members. The desire to grow creates an inherent tension and, to be successful, must be done in a way that allows the network to maintain its core values of trust and community while still delivering high quality resources, relationships, and experiences to members. Family offices are extremely sensitive when it comes to being monetized by others and they are intimately aware of the many self-proclaimed family office network groups that are out there trying to monetize their family office relationships for profit. The last thing a family office needs is another channel for over-shopped deals or more unwanted solicitation. By being mindful of these issues and pivoting carefully, TFOA was able to continue growing without sacrificing its values or the trusted relationships that exist among and between members.
The core advantage of having an efficient virtual platform to share ideas, discuss opportunities, and find ways to partner with other members sits within an overall framework that encourages engagement and engenders trust. By keeping members’ needs at the forefront, TFOA has been able to leverage the efficiency of a virtual technology platform without alienating or isolating member. And by not opening the group to third party service providers and sponsors, TFOA has found a path forward that encompasses a space for members to learn and grow together, while also maintaining the ability to accommodate the needs of the network as they evolve.
A Different Kind of Symposium
The challenges around maintaining member privacy and trust and creating an outstanding stakeholder experience was further tested in 2017 with TFOA’s first Annual Single Family Office Symposium. Rather than create an event modeled after a trade conference or marketing event, TFOA’s Symposium was modeled after the Symposia of ancient Greece and their more modern iterations found in institutions of higher learning.
The first ever symposium, as documented in Plato’s dialogue The Symposium, brought together a broad range of Athenian personalities including poets, playwrights, philosophers, politicians, war veterans, businessmen, and landowners. Though disparate in background and perspective, they came together to learn from each other and to share ideas. The objective was not to conform each participant into a single dogma, but rather to facilitate growth and learning for everyone in accordance with their own needs and interests.
TFOA’s Symposium was similarly designed, pairing the candor of the original symposium with the discretion of Chatham House Rules. By partnering with The Baker Institute, the first TFOA symposium was able to bring together speakers with a combination of public policy as well as practical investing experience. This also helped keep the focus of the gathering on mutual learning, rather than on marketing or business development. This first symposium included no sponsors, no service providers, nor any non-single family office attendees. Over 100 principals and “c-level’ single family office participants attended, as well as a high powered roster of speakers. The first symposium set a high bar for future events and served as a practical manifestation of TFOA’s values in action.
Since 2015, TFOA has successfully brought members together for an annual gathering in Houston, Dallas, Austin, and virtually (during the coronavirus pandemic). While each symposium has retained its closed door nature and strict guest list policy, over time the format has involved to include a select group of sponsors who are willing to underwrite some of the hard costs of hosting such an event. The participation of non-family office attendees presents unique challenges. On the one hand, family offices prefer not to participate in an event that is merely a promotional grab bag where they will be inundated by service providers and fund managers. On the other hand, sponsors need a meaningful return on investment for their participation. Managing this inherent tension takes careful curation and management. By finding firms that understand the long-term value proposition that a community like TFOA represents and keeping the overall ratio of sponsors low in order to provide real opportunity for relationships to emerge, TFOA has been able to provide an outstanding experience for all stakeholders, while keeping the symposium firmly rooted within its core values. Today, TFOA’s annual symposium continues to be unlike any other business conference or networking event. Instead, it remains an intimate gathering of family offices for relationship building and learning, supported by a select group of aligned stakeholders focused on long-term relationships.
Looking to the Future
Despite the many challenges of the coronavirus pandemic since March 2020, TFOA has continued to grow and adapt. Virtual meetings further extended the reach of the network and events now include both a virtual and in-person component for members, wherever they may be based. As TFOA’s membership continues to grow and diversify, today almost half of all members reside outside Texas. It is a long way from the halcyon days where eight to ten members would gather and share deal flow and ideas with each other around a coffee table at Kenny & Ziggy’s in the Houston Galleria area. However, the same core issues remain the same.
Tomorrow’s TFOA will retain many of the things that have made TFOA successful to date but will continue to grow and add high quality family office relationships around the world. Through a distributed network model, family offices will be able to build their own local family office communities in line with TFOA’s core values and servant-leader mindset. And with new growth means new opportunities to serve the network. It remains to be seen what this means for each of the stakeholders who make up the complex family office eco-system that is TFOA, but one thing is certain, TFOA’s leadership has learned that if your core values are at the center of everything you do, every day, then there is no challenge that cannot be met and overcome.
Thank you for your support and involvement with TFOA over the years. We appreciate your friendship and look forward to continuing this journey together…
TFOA is a peer network of Single Family Offices. Our community is intended to provide members with educational information and a forum in which to exchange information of mutual interest. TFOA does not participate in the offer, sale or distribution of any securities nor does it provide investment advice. Further, TFOA does not provide tax, legal or financial advice. Materials distributed by TFOA are provided for informational purposes only and shall not be construed to be a recommendation to buy or sell securities or a recommendation to retain the services of any investment adviser or other professional adviser. The identification or listing of products, services, links, or other information does not constitute or imply any warranty, endorsement, guaranty, sponsorship, affiliation, or recommendation by TFOA. Any investment decisions you may make based on any information provided by TFOA is your sole responsibility. The TFOA logo and all related product and service names, designs, and slogans are the trademarks or service marks of The Family Office Association. All other product and service marks on materials provided by TFOA are the trademarks of their respective owners. All of the intellectual property rights of TFOA or its contributors remain the property of TFOA or such contributor, as the case may be, such rights may be protected by United States and international laws and none of such rights are transferred to you as a result of such material appearing on the TFOA web site. The information presented by TFOA has been obtained by TFOA from sources it believes are reliable. However, TFOA does not guarantee the accuracy or completeness of any such information. All such information has been prepared and provided solely for general informational purposes and is not intended as user specific advice.