Grayhawk’s co-CEO Peter Mann: wealth, investing and family challenges

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Multi-family offices – wealth management firms that offer integrated services to a limited number of wealthy clients – have a tough mandate.

The needs are unique to each family, but one commonality is that clients want a firm they see as delivering consistent financial results, no matter the market conditions.

As Grayhawk Wealth co-chief executive officer Peter Mann has come to learn, it’s not just about delivering consistency and building trust in all aspects of the business, but handling the added layer of complication that wealth and intergenerational issues can add.

Based in Toronto, Mann has been with Calgary-headquartered Grayhawk since 2020, leaving his seven-year position as co-chief investment officer at Gluskin Sheff and Associates Inc., to move into the multi-family office space.

Here, he delves into the firm’s investing and industry outlook and thoughts about what are their clients’ top concerns.

What was the path that led you to being co-CEO at Grayhawk Wealth?

“I think, like most things in life, you don’t really have a specific plan.

I was introduced to the founder of Grayhawk, Michael Kaumeyer, about 12 years ago. We became very good friends and we would chat about the business and what was going on, and how the world was changing.

My last four and a half years at Gluskin Sheff, I was the co-chief investment officer, so through some capital partnerships and some involvement within Sagard, which is the alternative asset group that lives within Power Corporation, we all came together in March of 2020 with the idea that I would lead elements of the investment and oversight of the firm-related aspects.

Michael would continue in his great capacity as a business developer and relationship strengthener within our client base.”

Why was Grayhawk founded and how has it evolved?

“It started really with one successful family in Alberta. There are now over 80 families. The firm is probably tenfold the size in terms of assets that it was in 2015.

You build out the necessary pieces. Like everyone, we’ve made our mistakes and we’ve bumped into some roadblocks along the way but there’s definitely a very strong core group of people here.

I think we’ve been fortunate to have great partners and we see our partners in multiple lenses. The capital partners that helped us build this business. The client partners that have supported us through the period of the build-out of everything, and then the employee partners, as well as all the people who have lived alongside the group of people that have so passionately built it, and that happened well before I got here.”

What is the biggest challenge you see for family offices in the next few years?

“It’s capacity and scale. By that I mean, a family of extreme wealth has so many underlying complexities that are not monetary. While monetary can be the disruption in the middle of it all, the challenges are really about happiness, and loyalties, and trusting, and friendships, and all of the things that go in all families but get amplified when there is a large sum of money that sits in the middle of it all.

I think it’s about: how do you resource? You can’t be everything to everyone or you’re nothing to anyone. How do you best devise a plan that includes the skills that you or your organization can bring to a family, but married with the skills that you know either you cannot afford or are done better elsewhere, so that you can align for a holistic oversight alongside a family?”

What are the top concerns Grayhawk’s clients express?

“They want high trust. They want deep confidence, and we both know that comes largely from consistency, and consistency, again, isn’t really a return mechanism because so much of the return is variable and out of the control of everyone else.

Let’s be honest, the beta or the movement in markets determines a lot of the outcome for people. Fortunately, over long cycles, it goes higher and not lower, and so typically people enjoy the benefit of that.

You can mitigate some of that volatility but you can’t remove it, so how do you create consistency? You try and do it in reporting. You try to do it by delivering integrity and honesty, ensuring a sense of trust around the information that’s being provided.

I would say that the concerns that exist within our families are, as I said earlier, no different than ours but amplified. Are my children going to be happy? Where will this money go? How would be best served? Can I do this tax efficiently? Are there ways that I can protect my children from the vagaries of future wealth or the potential for others to be able to come in and take advantage?

Oftentimes there sits a family business in the middle of all of this, which creates another complexity. Who’s going to run it? How do you operate it? Is it an independent person? Is it one of the children?”

What role do you see wealth playing in families’ lives?

“I read this great quote recently from a very successful American entrepreneur, who was a multibillionaire. They asked him how he defines success. He said, ‘The key to success for me is that my kids want to spend time with me now that they’re adults.’

Time spent is really the greatest output on all of those things. When I look at it through the lens of my family or the families that we work with, it’s about ensuring that knowledge isn’t sourced elsewhere but shared openly and honestly internally.

There’s also the philanthropic side. We have families that bring their children into the decision-making process for philanthropy from a very young age. We have other families that are very adamant that until you have made your own money, you will not be giving away ours. We will make those decisions, not you, because you only appreciate what you’re giving when it is actually yours that you’re giving.”

How do your clients view Canada as a place to live, conduct business and manage wealth, both now and looking into the future?

I think wealthy Canadians feel as though there’s a very, very high degree of debt in our country, and it needs to be sourced from somewhere. I think there’s great concern that it comes from them. Not that people aren’t willing to pay their fair share.

I think, again, though, for many families that achieve generational wealth, their primary objective, once achieved, is protecting it.

I recently spoke with a tax lawyer who does border-related movement. He shared with me that approximately $8 billion of Canadian wealth had already moved offshore in the last 24 months. You’re starting to see it really clip the wings of generational wealth in this country.

What kinds of intergenerational issues do you see crop up in family enterprise?

You’ve heard the expression shirtsleeves to shirtsleeves in three generations, where the first generation finds it, second generation builds it, third generation blows it. That is obviously not true in its most simplistic form, but there is no question that there is a very high correlation between the lack of interest or grit associated with the maintenance of a long-term family business the further away you get from the founder.

A fifth generation who was not even alive 50 years before the business was founded often does not have the same sense of duty and responsibility, or personal accountability. The minute that they become franchises that generations are looking to live off of and not build is when things really change.

I would say another thing is that invariably all your kids are different. If it’s going to be generational, and you expect one of those family members to play a certain role or to take over, you are choosing one versus another, and there’s a lot of emotion.

That’s also the dynamic that you often get in family businesses where they know they’re going to be okay, but I don’t want them to rest on the fact that they know they’re going to be okay. Because our life is about struggle. If you remove struggle from kids, you remove the ultimate sense of accomplishment, which is truly what happiness is found in.

What are some key factors that will affect investors?

“I think probably the single most important question that will be asked now and for the next seven to 10 years will be: Can most people generate a level of return in what we would call contractual returns, like fixed income, relative to having to assume the volatility of the stock market in order to generate the return they want?

I think a portfolio over the next decade will do as well or better structured with much more fixed income in all forms.

The real key driver that no one talks enough about is that the saver, who has essentially been exploited for the last 20 years, to protect the lender because there’s been so much debt in the world that’s been generated, now it’s actually earning sufficient return on its cash or on its short-term investments. They live a much better life than they did two or three or four years ago. If somebody lived on 2per cent of fixed-income returns, they now live on 5, and that looks meaningfully better and much stronger. I think all of those dynamics allow for someone to construct a portfolio that’s much different than what it’s looked like in the last 10 to 15 years.”

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