Family offices often begin with one focus or goal, then gradually broaden their scope as the family grows and its needs change. Sometimes these changes happen without the family planning them, but TFF Traditions Company — an Ohio family trust company — is making this transition intentionally, in the second year of its existence.
TFF serves as trustee of trusts holding ownership of The Fedeli Group, a risk management and insurance firm owned by the Fedeli family. TFF also makes investment decisions in the trusts.“Day-to-day, we talk about investments,” says Michael Fedeli, managing director of investments and strategic relations for TFF. “In the short term, it’s really an investment-focused office. But eventually, day to day, we’ll talk about and focus on other typical family office endeavors.”
Those longer-term goals include philanthropy, as well as engagement and education for the 25 family members. The family office serves Fedeli’s parents, as well as Fedeli, his four siblings and their children. Fedeli’s father built the operating business and started investing family assets. “The fact that he’s getting us involved means a lot – he’s giving us the opportunity to participate in decisions about the future,” Fedeli says.
The family trust company was established in 2023, though some of the investment functions of a family office were started earlier than that. “We are very much in our early innings,” Fedeli says. “My father comes from very humble beginnings, and he’s become a self-taught investor. The family office world is very new to us. We’ve been fortunate enough to learn from others and are willing to share ideas, experiences and best practices with others. Right now, we’re developing goals and strategies so we’re in the right place in 10 to 15 years, as the family gets bigger and we grow older.”
Fedeli is working on ways to focus on transparency for the family, as well as increasing the structure around the family office and governance. “Something that I’m exploring right now is clearly defining our investment philosophy: writing down an investment policy statement, or what our investment mandate is, across the board, but also across asset classes,” Fedeli says. “We know what our philosophy is. Let’s formalize this process. Once we commit to a process, it creates discipline that will more than likely lead to better results.”
Focus on investments
TFF is active in selecting public stocks, which Fedeli acknowledges is somewhat unconventional. “I know there are a lot of reasons why most people shouldn’t do it, but that’s not how we view it,” Fedeli says. “One reason is it’s what we’re passionate about. We actually enjoy doing it.
And we believe that with our process, our team, and our ability to focus on long-term results, we have an advantage over, say, an active mutual fund. We don’t have to pay a fee, so it’s very cost-effective and we don’t have to worry about short-term performance.”
Although most of this work is done internally, they pay for some research and have analysts working with them part-time. “We enjoy doing the research ourselves, and we think that by doing it, we have a competitive advantage,” Fedeli says. “Now, it’s not always easy, and we haven’t always beaten the passive indexes. If you look at our track record over 20 or 25 years, we’re probably about even with the S&P 500.”
They are operating on a long timeline, looking for investments that will perform over decades, now in just one year or three. They also like investing in income-producing stocks. “We like the idea that the capital that you invest appreciates over time in addition to providing income,” he says. In areas such as real estate and private equity, they work with trusted managers. “My father coined the term ‘who diligence’: if the manager is a quality person, has a quality team, if you can trust them,” Fedeli says. “That’s most of the battle right there.”
Fedeli is working to build out the manager selection process as well. “We’ve evolved in the public markets over the past 20 years. We’re at that stage where we’re really starting to evolve in the private markets, with a little bit less cowboy investing and much more of a thorough, disciplined process,” Fedeli says. “I don’t want to say that we’re perfect — it’s always evolving, and we’re always learning, which I think is really cool. I get to learn from decades of mistakes that I didn’t make. My job is just to not make those mistakes again in the future.”
Building family engagement
Before joining TFF, Fedeli worked for a multifamily office and a wealth manager. “They have institutional experience that is not traditionally found in family offices, at least within families,” Fedeli says.
He is working to bring the structure and discipline from that environment to TFF. “A lot of that has been evolving even without me, but I want to make sure that we’re running a professionalized investment process — avoiding the fun, play money investment type ideas,” Fedeli says. “We’re looking to make very disciplined, well-thought-out investments, both in public and private markets.”
Ultimately, Fedeli also hopes TFF can be a vehicle for family engagement. To that end, TFF is forming committees to oversee areas such as education, engagement and philanthropy, as well as more investment-oriented committees. “We have a committee structure so everybody has a place where they’re involved,” Fedeli says. “Investments happen to be a lot of what we do right now, but over the long term, there will be many things that we do as a family that are separate from that. In addition to defining investment policies, goals and strategies, we also are working to define our family mission and family purpose and strive that any investment, educational, or philanthropic activities directly intersect with our mission and purpose.”
They still own their operating company, for example, and Fedeli’s older brother is its president. They are also involved philanthropically. “Over time, we’re going to expand our capabilities — it just has to be at the right moments,” Fedeli says. “Our family trust company was formed in the just the past few years, so we’re very early on. As it grows and time goes on, the expectation is that every family member is going to have some role to play and be able to achieve something that’s important to them, be it in education, philanthropy or investment endeavors.”