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Inside the eight-figure Canadian Virtual Family Office

Inside the eight-figure Canadian Virtual Family Office

Mr FamilyOffice
October 20, 2023

Inside the eight-figure Canadian Virtual Family Office

Time for a profile - a look inside a virtual family office

Last week it was theory, this week it’s practice

I spoke to the Principal of a Canadian VFO. They are keeping it lean and mean…

👨‍👩‍👧‍👦 The Family Office:

Location: Canada

Family office type: Virtual Faily Office (VFO)

Generations: 3

AUM: 8 figures

👔 The Principal:

“We operate in a lean fashion with me being responsible for the day-to-day management of the office including investment oversight and execution. I work closely with a few specialists and contract generalists on an as needed basis.

We primarily operate as a private fund and deploy a multi-strategy approach to managing capital in public markets.

All models are systematic and run uncorrelated to each other in duration, frequency, and asset class. Most of the models were designed by me and my partners from a separate business.

This year's focus is networking and building cash flows in preparation for allocations to alternatives outside of public markets in the next 2-3 years. Since we are an emerging VFO, we understand the value of building networks as it gives us access to deal flow and insights from other Families. Not to mention building friendships along the way.”

📜 The Origin Story:

“Deciding to consolidate our Family's interests and move forward as a VFO was quite daunting in the beginning. It took a lot of research, planning, uncomfortable conversations, and Family meetings to get the ball rolling. It's one thing to manage your own financial capital. It's another thing to manage financial capital earned over previous generations, as there is an element of irreplaceability and respect that requires proper forethought and planning.

We overcame the challenges by taking our time in the beginning. We broke down our goals in order of priority and followed through on execution one step at a time. Sacrificing return short term by exercising patience and focusing on process was how we have progressed, and it has worked to our benefit.

Conducting training every quarter on particular topics that prepare the Family for the next stage on our long term road map has been of great benefit. One of the things I have been quite deliberate about is ensuring that all involved parties have the ability to take ownership of the risk we take as a Family. Wilful ignorance is not allowed and I have found providing lesson plans and structured learning encourages members to ask questions and ensures they understand the big picture and the small steps it takes to get there.”

📈 What are you working on:

“By far, the most time consuming model my partner’s and I have built is our intraday futures portfolio. This particular model touts backtested returns of over 50% per year on average, trades a broad range of futures contracts and settles to cash at the end of day. We launched our paper pilot in Q4 of 2022 and ended the pilot on August 7th, 2023 with a 47.1% return. We have now begun trading on live capital.

At present we are beginning to raise capital for a Hedge Fund which in turn will act as an insurance policy for my Family to access IP I created with my partners should unexpected events occur.

That way they always have access to the things I helped create and have a way to allocate to them.”

🌱 Supporting the next gen:

“We actively encourage the youngest generation to be critical thinkers. We believe thinking critically is a skill and that it should be fostered as soon as possible.

Second, business conversations are rarely off the table. I know from personal experience that early conversations with my family played a big role in valuing legacy and developing the “builder” mindset.

We also help our younger generations build tiny businesses as soon as they begin to understand the value of money. Our measure is when they realize that money is used to purchase items/ experiences.

i. At that point, we find an activity they enjoy and try to turn it into a business so that they have a natural pull toward doing that activity. They are rewarded as owners in those businesses.

ii. This gives us a sandbox to help them internalize our Family principles around stewardship and philanthropy. It also helps us teach financial lessons by observation and suggestion etc.”

🎓 Lessons in generational wealth:

“I can say that I have had a front row seat to the “shirtsleeves to shirtsleeves in three generations” show and in our case, dysfunctional Family relationships were at the heart of the problem in previous generations.

As a result, we work quite hard to focus on the Human and Intellectual side of things because that's where all the value is.

There are good days and frustrating moments but I have to say I absolutely love what I do and I wouldn't have it any other way!”

💻 The Tech:

“One of the pieces of software our Family uses is Trustworthy.

Trustworthy allows us to safely store all of our documents in a centralized place while having peace of mind due to its high-end security. It can be used to store materials on:

Corporations
Estate
Insurance
Real Estate
Legal
Tax

It also allows for advisors/ family members to get access to documents and material while safeguarding accessibility on an as needed basis.

Emergency Contacts can also be assigned and managed in the event of exigent circumstances.”

—

🙏 Huge thanks to my guest contributor this week. It’s always good to hear from people on the front line

There are more family offices on Twitter than you may think. They usually don’t advertise who they are. But they are there, quietly learning, engaging and networking

If you would like to share your family office story, give me a shout [email protected]

𝕏 highlights

Heartwarming stuff

This one started a few conversations

Silence is golden…

📚 what to read

Mr China by Tim Clissold - a fascinating and entertaining account of a Wall Street banker who raised $418M to invest in China in the early 1990s. Seeing endless opportunity, he had visions of becoming the J.P. Morgan of China, but watched in horror as the Chinese system ate away at his capital day by day

📻 what to listen to

In the occasional podcast Family Office World, Ron Diamond interviews key figures from the family office sector

📺 what to watch

The White Lotus is a dark comedy-drama following wealthy guests over a week in a high-end Hawaiian holiday resort (season 2 moves to Sicily). Outstanding writing, characters, and cinematography. If you haven’t seen this, you’re in for a treat