Every new hire in a family office has a story behind it: Why did the family office decide to fill this role? How did they decide whether it should go to a family member or a professional staff member? And why did the person who was hired choose to take the position?
Josh Miller recently left his role leading a single-family office to become CEO of Minot’s Light Management Inc., a single-family office located near Boston. The move was motivated by his career path and the type of work he wanted to do.
“The prior office had a wonderful family, and I was fortunate to be there for five years. But when you have such a significant number of family members, there’s not much difference between that and working for a big multifamily office running a book of business,” Miller says. “When I originally wanted to get into a family office, my mental picture was different than that. It was an office with less than 30 family members, where you truly are managing asset complexity more than human complexity. For me, asset complexity provides a lot more opportunity to continue to grow and learn.”
Miller also wanted to work for a family that was small enough that he could focus on NextGen education. “My hope is that I’ll be able to build deep, meaningful relationships with the family members and get to know them so I can offer truly proactive advice, because I know what’s going on in their lives,” Miller says.
The new role offered him the chance to build his technical skills via asset complexity while also building the deep relationships that would allow him to use those skills to help the family. “That’s what I was looking for. I’m new to this office, so still have a lot to learn. But, I think I’m making good progress,” Miller says.
A transition for the family
Hiring a new family office leader does not just mean changes for the newly hired leader — it is also a big change for the family. Miller is the first non-family member to lead Minot’s Light, which has been around for about 16 years. That makes for a big transition for both the family and the staff. The family office was started by a family member about 16 years ago after the family had a liquidity event and recognized they had an opportunity to work together and invest together and leverage their significant wealth.
“They’ve done just a stellar job. The family member who has run it, who I’m slowly taking over for, really worked hard, made some great moves early on and has put the family in what I think is a great position and has built just a phenomenal office,” Miller says. “What this transition is about is that the family has grown: It’s not just one single family anymore — it is spread across multiple families. And they are very different, even though they’re all related and very close as siblings. They’ll benefit from some professionalization and some independence at the family office level.”
How can a family tell when it’s time to move from family management to professional management? “I don’t know exactly when that inflection point is — it’s not automatically when the family gets to 14 people,” Miller says. “But I have learned that almost every family is going to hit an inflection point where it’s just better to have an independent person run it than a family member.”
One reason is family dynamics can get in the way of the office running efficiently. “When a family member works in a family office, sometimes maybe they forget that they’re an employee or maybe the relationship isn’t that of employee-employer,” Miller says. “I recognize that I’m an employee and that I work for them. I’m not a sibling or a cousin or a parent or any other family member. I’m an independent party that could be fired. I can also walk away whenever I want. This creates a slightly different relationship.”
Miller says he is also finding some of the NextGen family members are more comfortable talking to him than they would be to a relative. “Some of the conversations I’m having are a lot more meaningful because they’re more comfortable talking to me because I’m an independent,” Miller says. “This was true at the last office I worked with as well: NextGens were comfortable coming to the office because they weren’t talking to their aunt or their uncle. They can talk to me like they would talk to an advisor.”
Taking a fresh look at advisors
Leadership transitions can provide an opportunity to reconsider how the family office is structured and run. Miller reports to the family office board, and 95% of the work of the family office is outsourced, especially on the investment side. “This office is really the central figure that oversees, coordinates and facilitates everything, and it is the general partner of some of the entities. So, it serves a corporate function as well,” Miller says. “We really don’t do any concierge-type work, and I would love to keep it that way.”
Miller said they are considering thoughtfully bringing some of the planning and relationship-based work back into the office. This would mean instead of family members calling one of the investment advisors to talk about cash flow, for example, they would talk to the office first, and advisors would be brought in as needed. “Because my background is in planning, I would love to bring some of the planning back in-house — but we’re trying to be very thoughtful about not taking on too much work,” Miller says. He notes if they are already paying an advisor to do something, they don’t want to duplicate resources. “But I also think that if the goal of the family is to perpetuate the office over generations, then a lot of the more relationship-oriented work really should be done in-house. And if you’re going to be a financial administrative office, planning is some of the deepest relationship-building work.”
Building relationships with family members
Miller’s goal is for family members to look at the family office as their first call for any problem. “I don’t know everything, but I’ve worked really hard to build a good network, partly so that I can help the family in any way possible,” Miller says. “For example, somebody once asked me to help them buy a piece of land outside of Massachusetts. I’m not a broker. I have no experience with that. But I reached out to my network and found them a broker. I like that component of this job.”
The family office can also act as a facilitator between trustees and beneficiaries — an area where Miller sees opportunities: “I have had both beneficiaries and trustees come to me and ask about their roles and responsibilities in certain situations.”
Miller is also hoping to educate not just NextGen family members, but any who are interested in learning about investments. “Because this is a pretty investment-heavy office, as new investments arise, I’d like to have the opportunity to explain that to family members: to have conversations about a new investment, and why it’s appropriate or what it does,” Miller says.
Miller is also working with the board to formalize processes and procedures — for example, to answer questions like how much of the technology budget he can spend without board approval. Transitions are hard — especially when you’re trying to move from an office that was run by a family member, Miller says. “There are growing pains when you move from a family member leading the family office to a professional.”