Thane Stenner, founder of Stenner Wealth Partners+ at CG Wealth Management and uber high-net-worth investor peer network Tiger 21 in Canada, is one of the country’s most sought-after wealth managers. His highly distinguished career spans 25+ years and includes previous senior roles such as Managing Director at Morgan Stanley and Graystone Consulting, their elite Institutional consulting division. He also hosts BNN Bloomberg’s Smart WealthTM with Thane Stenner podcast. Thane’s team deals with 51 clients across Canada including many Single Family Offices (SFOs).
He sat down recently with Canadian Family Offices to share his firsthand insights, leading global trends and best practices for consideration of ultra-high-net-worth families: how to set up an effective single-family office (SFO).
In your prior role as managing director with Morgan Stanley in California, your team was ranked #1 by Barron’s as California’s top institutional consultant. What did you learn about the family office sector while at Morgan Stanley and Graystone Consulting group?
I spent four years with Morgan Stanley and, as part of that experience, I got to see research and trends on about 700 family offices around the world and learned a lot about the sector. The key takeaway was that in boom times, the SFO tends to overhire and overspend. When we go into down or recessionary times, they end up downsizing and outsourcing more. That’s the key thing I observed firsthand, and the research bears it out. They tend to over-staff/spend internally within their SFOs during extended bull markets and then need to retrench and look for more outsourced talent externally for more professional guidance during Bear Market downward cycles, to reduce their annual SFO spending/budgets, while still tapping into excellent sources of professional guidance.
What family office structure and model is best used in the marketplace today?
In Canada, ultra-high-net-worth (UHNW) families typically set up a single-family office with at least $200 million in family wealth, but in the US closer to $300 million. The first question the wealth creator looking to set up a family office must ask themselves is: “What am I willing to fund in an annual budget for my level of wealth for the next five to 10 years?” That’s the mindset you have to have. Answering this question is really important because it will dictate how you structure your own single family office.
“Globally, it’s a best practice to adopt a hybrid model that features in-house and external expertise, marrying core internal capabilities with external wealth expertise.”
For example, it’s common for an SFO to have a CPA/CFO, administrative roles, and an analyst or chief investment officer on staff and then outsource the actual investing/wealth management, research and due diligence.
I’ve seen many business owners tap their trusted chief financial officer (CFO) or legal counsel to lead their SFO when they sell the business because there is already a trust and comfort level built over years. That typically means, at least initially, that person will be managing the family wealth through the lens of cash flow, accounting structures and tax efficiency, in the case of CFOs, or through the lens of organizational structures (i.e., holding companies and trusts) in the case of lawyers. In some cases, the business owner or another family member may lead the SFO. This tends to happen for two reasons: they want to maintain strict control, or leading the family office will give them a sense of new purpose after selling the business.
In all cases, unless they specialize in investment/wealth management, they will need to bring in investment professionals or consultants, either by hiring in-house talent or outsourcing. Again, the annual SFO budget will/should come into play. Top professionals in the investment field typically earn in the millions of dollars a year serving numerous clients versus just one. What can you afford to pay? One option to make attracting higher-end talent more affordable is to pay a salary plus performance bonuses based on how capital performs, subject to well articulated/defined risk and return parameters of course.
The strong trend globally, and particularly in the U.S., is to outsource investment and wealth management versus someone who is on staff. Additionally, increased global deal flow, co-investment opportunities, more significant due diligence, third party manager screening, etc can rarely be done as well as independent third-party platforms with significantly more resources than what a SFO can do on its own. It’s simply a fact of budgeting and time constraints and talent sourcing in most situations.
How many single-family offices have you professionally worked with in your career?
I am fortunate to have worked with more than 50 family offices. The largest has about 40 staff, for a multi-billionaire family, who are also still operating businesses.
What are the top tips or advice you would give to someone thinking about setting up an SFO or who already has an SFO today?
Narrow in on your annual budget. I think this often gets overlooked and wealth creators are not as intentional about it as they should be. All the research points to this on a global basis. As a result, family offices tend to expand, and contract based on what the markets are doing. For the last 10 to 15 years, the markets have been exceptionally good. My prediction is that a recession is coming in the next year and the markets are going to be a lot rockier. My advice is to start to look now at simplifying your structure into a more efficient/optimized “hybrid” MFO/SFO structure. What activities/duties do you wish to own and pay for internally/in-house at your SFO going forward, and then outsourcing the rest with external professional parties to drive/stickhandle, while still always reporting back to your SFO? What do you want to own internally and what do you want to outsource?
Outsourcing is generally cheaper, because you’re not having to build the infrastructure to support in-house staff, and is way more scaleable as you move up the Wealth CurveTM. A hybrid SFO model with investing/wealth management outsourced also provides wealth creators with access to a tremendous amount of research and investing opportunities globally. For example, our group subscribes to more than 50 different sources of global research. All those subscriptions cost money. From a deal flow perspective, we see more than 100 different opportunities a month. It’s difficult for an SFO that’s not in the industry to access and filter all those opportunities. That’s a major advantage of a hybrid model that the most successful global SFOs utilize as a best practice in structuring and efficiency.
Don’t be afraid to adjust your in-house/outsourcing mix of services, to ensure access to the very best available talent, expertise, resources and wealth strategies in the most practically efficient manner possible.
*Responses have been lightly edited for clarity and length.
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About Stenner Wealth Partners+
Stenner Wealth Partners+ is an in person/virtual Multi-Family Office team of financial/wealth specialists with a boutique approach and global perspective servicing Canadian and US investors/households with generally a minimum of 10M+ in investable assets or 25M+ net worth. As a CG Wealth Management team, SWP+ is a highly exclusive practice team with one of Canada’s largest independent wealth management firms. Client Range of Net Worths: Between $25M To $2.5B+. New Client Engagements: Strategically on-boards only 6 new key relationships annually.
About CG Wealth Management
The global wealth management business is entrusted with C$110.4 billion in client assets.1 The wealth management operations of the Canaccord Genuity Group (CG Wealth Management) provide comprehensive wealth management solutions and brokerage services to individual investors, private clients, charities, and intermediaries through a full suite of services tailored to the needs of clients in each of its markets.
1Canaccord Genuity Annual Report , September 30, 2024
Disclaimer:
This story was created by Canadian Family Offices’ commercial content division on behalf of Stenner Wealth Partners+ at CG Wealth Management, which is a member and content provider of this publication. CG Wealth Management is a division of Canaccord Genuity Corp., member Canadian Investor Protection Fund and The Canadian Investment Regulatory Organization. Thane Stenner’s views, including any recommendations, expressed in this article are his own only, and are not necessarily those of Canaccord Genuity Corp.