In short
How billionaire family offices (and “fractional single family offices”) invest and manage wealth beyond portfolios—covering fiduciary vs broker-dealer conflicts, transparent fee structures, family-office services (CFO/bill pay, governance, education, credit, estate tax planning), and tax/asset-protection strategy.
Key claims
Traditional wirehouses are “one size fits all,” lack transparency on fees/conflicts, under-serve private markets, and do “family office window dressing.” Crescent is positioned as a true fiduciary RIA charging only an AUM fee for wealth management plus separate, disclosed professional-service fees for family office services; it negotiates better terms by forcing bank/manager competition and passes benefits through. They say balance-sheet advantages of banks don’t matter because they can source competitive financing and use third-party custodians (Fidelity/Schwab/Pershing).
Notable examples
mortgage conflict where advisor was compensated; “submarine compartments” for asset protection; diversified long-term mix (global equities, private equity, T-bills/munis); Biltmore/Vanderbilt stewardship and multi-generation education.
Guests
The episode features Curtis (co-founder/CEO background described) and Abby Stein (co-founder). No other named guests appear in the transcript.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOFounding Crescent: The Need for Change
0:45 to 2:06
David discusses his journey leading to the founding of Crescent.
“I sold that company a couple of years later to Blue Cross Blue Shield.”
Disappointment with Traditional Advisors
2:06 to 3:22
David shares his and Avi's experiences with traditional wire house advisors.
“I had an advisor in San Francisco, a guy I had met in my 30s.”
The Shortcomings of Wire House Services
3:22 to 4:53
An exploration of the limitations of services offered by wire houses.
“So we took our two families and two analysts.”
The Fiduciary Standard in Wealth Management
4:53 to 7:09
Discussion on fiduciary standards and the difference between RIAs and wire houses.
“So I would say a lack of transparency, a bit of vanilla, if you will.”
Understanding Family Office Services
7:09 to 9:08
David explains what family offices provide beyond investment services.
“So I think that's a big difference between the RIA world and the broker-dealer world.”
Addressing Client Needs with Family Office Services
9:08 to 12:51
The various services a family office can provide to meet client needs.
“I don't know what they make in the traditional wire house world, but it must be a lot.”
Competing with Large Banks
12:51 to 14:00
David discusses how Crescent competes with large investment banks.
“It's so interesting because lots of people say that, what you just said, but we don't find it to be an issue.”
Custody and Securities Lending
14:00 to 15:10
Understanding the role and models of custodians in asset management.
“So it was actually a conflict more than an advantage.”
Wealth Preservation Strategies
16:48 to 19:10
Exploring effective strategies for long-term wealth preservation in family offices.
“Let's say, as I'm sure you oftentimes have, you have somebody have a billion-dollar exit, a once-in-a-generation, once-in-three-generation exit.”
Tax and Structural Alpha
19:10 to 23:31
The importance of tax strategy and structuring in investment planning.
“money, and you have to match it with the right education of the next generation.”
Show all 22 chapters
Tax and Structural Alpha
23:39 to 24:57
The importance of tax strategy and structuring in investment planning.
“With Square, you get all the tools to run your business with none of the contracts or complexity.”
Tax and Structural Alpha
25:02 to 25:13
The importance of tax strategy and structuring in investment planning.
“With Square, you get all the tools to run your business with none of the contracts or complexity.”
Understanding Wealth in High-Tax States
25:13 to 26:17
Examining why billionaires thrive in high-tax environments like California.
“Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place.”
Understanding Wealth in High-Tax States
26:25 to 28:00
Examining why billionaires thrive in high-tax environments like California.
“with none of the contracts or complexity run your business smarter with Square get started today.”
Investment Insights on Real Estate and BDCs
28:00 to 29:54
Learn about underrated investment opportunities in multifamily real estate and business development companies.
“But it is challenging for small businesses especially and for high-income earners who don't have the assets that an entrepreneur would have in starting and building a successful tech company.”
Understanding Private Credit and Venture Capital
29:54 to 31:31
Discover the current state of private credit and the dynamics of venture capital investments.
“Private credit as an asset class has been given a really good drubbing right now and it's probably overdone.”
Lessons from Long-Lasting Businesses
31:31 to 34:33
Explore how certain businesses endure through generations and the lessons we can learn from them.
“The example I like to use is early stage venture capital.”
The Importance of Stewardship in Business
34:33 to 42:00
Understand the role of stewardship and long-term planning in maintaining successful businesses.
“My dad was the first one who went to college and he started a business in college to pay his way where he hired his fraternity brothers to dress up like Santa Claus.”
Stewardship and Long-Term Thinking in Business
42:00 to 44:10
Explore how principles of stewardship can strengthen both family-owned and non-family businesses.
“Do you think those lessons could be applied to a company that's not family owned?”
The Value of Long-Term Business Strategies
44:10 to 46:04
Discuss the benefits of running a business with a long-term perspective and its surprising outcomes.
“And it sounds trite or it sounds like a slogan or something, but if you truly embrace it, when you're building the business, you fundamentally build a different business.”
Paradoxes in Parenting and Business Exits
46:04 to 48:24
Investigate the paradoxes of parenting independence and the challenges of managing capital post-business sale.
“I mean, we have long periods of time sometimes where for whatever reason, capital markets, you can't sell something at what you might think is a fair price.”
Prioritizing Focus in Leadership
48:24 to 49:59
Understand the challenges leaders face in balancing focus on their main objectives with personal responsibilities.
“They had top leaders and executives in the company.”
Transcript
Automatic transcript. May contain errors.0:00Crescent, which is an RIA that you co-founded, latest number, 235 billion AUM and AUA. Why did you find the need to start another RIA? Sure. So my background, and similar with my co-founder, Avi Stein, is really the life of the entrepreneur and CEO founder. So my background isn't in traditional wealth management or the RIA world. I came upon this from a need for my own family and for Abby's family. I started off in Baltimore from humble beginnings and started my first company when I was a student at the University of Chicago. I dropped out of the university one semester before graduation to launch a healthcare technology company called the Lifecart.
0:46I sold that company a couple of years later to Blue Cross Blue Shield. It was a great experience. My younger brother, Doug, who was a high school senior, the two of us literally took our proceeds at closing in a cashier's check. We were so unsophisticated and poorly advised. And we went to the bank and deposited in our checking account. And then with all of this extensive planning we had done, we went to the Audi and Porsche dealerships and we purchased new cars. So we really didn't have access to the amazing talent that, say, a firm like Cresset has to advise and plan. And that led to a career of starting and building companies and investing in companies.
1:27But I never felt that I had the support of a firm like Crescent, a multifamily office that was really a fractional single family office where we had all of the things that, say, the Walton family or some of the largest families in North America have with these large dedicated teams and the resources that go with it. So I had retired from my business in 2014. Abby and I had become friends. And after a few years in that stage, we were talking one day about our experiences in wealth management with our own advisors. I'd been a client of a wire house for 25 years. I had an advisor in San Francisco, a guy I had met in my 30s.
2:13Avi had been with another wire house here in New York. And it just was really disappointing when we were comparing notes on a lifetime of working with a traditional wire house advisor. And then on top of that, I'd had my own family office for 15 years, spent about$3 million in overhead, six or seven employees. And looking at that, it was the burden of responsibility of managing it and having its own culture and everything that goes along with it. And so when we were talking about it, we're like, why isn't there a platform that would be for all the phases of a CEO founder's life? from their 20s and 30s when they're starting and getting traction and scaling to their 30s and 40s when they're hopefully having their first liquidity event to then as it goes on with life, family, philanthropy, all the things that go along with this.
3:04Why wasn't there a platform like that? Because it seemed that we only heard from the very large firms right around the time of a liquidity event. Most traditional advisors, they only want to call you right around the time of liquidity event because they're looking for asset gathering. So we said, you know what, let's put some analysts on it and let's spend some time and see if we can find a place that we can become a client of. So we took our two families and two analysts. We spent a year looking. We met with some really interesting firms, all names that your audience would know. And at the end of that year, we looked at each other and like, you know what?
3:40It's just not that great. So let's start our own. So we decided to launch Crescent. When you say wire houses, it's the largest investment banks in the world, these ultra high net worth private banks. And broker dealers. And broker dealers. And you and Avi, both extremely independently successful before you started CrossFit, you think that you would be able to be satisfied by these wire houses. What exactly made you so unhappy about their service? The first would be almost in a sense like one size fits all, whether it's the traditional 60-40 portfolios that typically we were seeing back then. The second would be a lack of transparency.
4:21You know, I'm sure that if you, especially now with Claude, you could probably really dig into the footnotes and the filings. But back then, it was really hard to understand how these traditional wire houses operated and to understand all the ways in which we were being charged and all the fees that are associated with the investments that you're making and understanding whether your advisor was truly a fiduciary holding your best interests always at heart or were they conflicted in some way. So I would say a lack of transparency, a bit of vanilla, if you will. Certainly back then, a lack of participation and awareness around private markets.
5:03And of course, what's so ironic about that is that Avi and I and many others created all of our wealth by investing in private companies and private assets. So how can you really work with an advisor who doesn't understand that at a very deep level as you go forward from your liquidity events? So it was just a whole variety of things. I'd say the last one is, I would call it family office window dressing. Many of the traditional wire houses will say, we have a family office embedded within our firm. Well, go find it because we were looking and we We didn't really find those resources. The firm I was with for 25 years as a client, I think I saw an estate tax attorney one time in 25 years.
5:42I wouldn't call that a family office experience. You use this word fiduciary. A lot of people don't know. And this isn't, let's not just blame the wire houses, the entire wealth management industry. The lobby of the wealth management industry, when the SEC wanted to create this fiduciary standard for their clients, they pushed back and lobbied against it. So it was supposed to be put on the SEC level. It was fought against. So it's literally encoded into the very DNA of the industry. Yes. I mean, as I understand it, in the wire house world, they use something called the suitability standard, which is, is the investment suitable for the client?
6:24even if the advisor might be getting some sort of a fee or commission or incentive or bonus by you investing in it. So that's called suitability standard. The RIA world that we're in, we view ourselves as a true fiduciary where we absolutely put the client before ourselves and do not take any of those kinds of incentives or other fees. We have a very simple model. We charge one fee for traditional wealth management, an AUM-based fee. And if you are a family office services client, using all of the things that we can talk about that are in the family office services, you pay for that in a separate fee the way you would for professional services.
7:05And that's it. And everything is completely disclosed and very transparent. So I think that's a big difference between the RIA world and the broker-dealer world. On the wire house side, there's a lot of conflicts, some explicit, some implicit. Obviously, you have hidden fees, so sometimes you're getting charged for something. Sometimes, for lack of a better word, there's commission sharing on the back end. All this is permitted. But there's also implicit issues where if you're at a large bank, and even if you're not getting a cut of the fees, you have a lot of pressure when it comes to bonus time to be pushing the bank's products.
7:44To be fair, you're also not a charity. You're a for-profit business. How is it that you're avoiding these principal agent problems? Sure. So getting back to what you were describing, I think that the challenge is all the ways in which in that model, the ways in which clients can ultimately be charged. And you described a variety of them. Our model is really simple. It's the AUM-based fee on wealth management, and it is a professional services fee for family office services or for consulting. And so I think that is just a very transparent model. The other big difference and something for people that are looking for a service provider to consider is the idea of is the firm that you're considering using their scale to benefit the client.
8:34So if we're able to negotiate better terms with a manager, whether that's a public or private manager, we pass that benefit directly through to the clients that are participating in that investment. If a client asks us to go and find a mortgage or a loan for them and we're able to get two, three banks to compete for that and provide term sheets, we help the client negotiate the best deal and they get the best deal. We don't take something from the bank. So it's a different model. But the RIA model is a profitable and sustainable business model. Firms in the RIA space can easily have margins on an EBITDA level of 25 to 30 percent.
9:13So the model works. I don't know what they make in the traditional wire house world, but it must be a lot. It must be more than 25 % to 30%. It must be a lot. You mentioned this term several times, family office services. Double click on that. What do family offices need that's outside of investing? So family office services. So if you think about wealth management, developing portfolios, setting goals around those, and then basic planning, financial planning, we'll put that in one bucket. Now let's think about all the other things that someone who's either exited their business and now is living off of the proceeds or let's say a CEO founder who's driving a company forward and they have some liquidity but they also own a business.
9:58What are all the services and things that you need so that you can stay focused on your mission and what is most important to you and give you your time back? And I think this is just a huge issue that is not talked enough about. What's so interesting about family office services is it probably starts with things like bill paying and fractional CFO services. So having a CFO who's taking care of all of your personal things outside of your core, let's say being a founder, being a CEO, who's taking care of all that for you, all that reporting, making sure that you understand your asset location, where everything is, your estate planning is correct.
10:36just all the things that are around having wealth, your tax efficiency, everything that's with that. And then you have other services like governance and education. So when your wealth is going to be managed and our time comes when we're very, very old men and now someone else is taking over, what's the governance structure that you have so that this wealth can continue for generations? And then education. How do you talk to your kids about money? How do you get them ready for the responsibility of taking over this at some point? What are your family philosophies around philanthropy? We find a lot of families are, you know, an inch deep and a mile wide.
11:15And when we get with them with our philanthropy resources and family office services, we're able to help them focus and have much greater impact and satisfaction and happiness from their philanthropy. Family office services is credit services, which we touched on a few minutes ago. That would be you need a line of credit. who's going to go out and negotiate with banks and get you the very best credit line possible for whatever that need might be. Family office services includes, we have a staff of estate tax planners who are all ex-attorneys from wonderful estate tax firms, and they're helping reviewing all of our family's estate tax planning, making sure that their wealth is going to go where they want it to go down the road.
12:00So it's a whole host of services. It's a professional services firm within a firm. Think of McKinsey, think of an accounting firm, think of a law firm, but it's all the services that you would find in a full, at-scale, enterprise-class, single family office for one of the largest families in the world. And these are cross-site full-time employees? Full-time. There are probably, I think we're up to 160 full-time team members who are just doing family office services. Just to play devil's advocate, I agree fully a lot of the conflicts that you see at the large investment banks, but they also have seemingly a huge benefit, which is their balance sheet.
12:42Jamie Dimon likes to go around and say, we have one of the world's largest balance sheet. I believe it's over$4 trillion AUM. Why does that matter for then clients as they're able to borrow money and borrow against their assets at lower rates. How does Cressa compete with that? Sure. It really does not come into play. It's so interesting because lots of people say that, what you just said, but we don't find it to be an issue. And here are the reasons why. The first is at$235 billion of AUM and AUA, we're able to bring banks to the table for our clients' needs. And we're actually able to get the banks to compete.
13:21So in my own personal circumstance. I was with a traditional wire house that also had a bank affiliate for 25 years. And at one point I needed a mortgage. My advisor arranged for a mortgage with the bank affiliate. I didn't think twice about it. Later on, I asked my advisor, were you compensated on my loan? I'm just curious. And after fumbling and bumbling for a bit, he said, yes, I was. Which at the end of the day made me think, okay, I mean, I did fine on the loan. I I don't think I was paying credit card rates. But clearly it wasn't competitive, and clearly I wasn't paying probably the lowest rate possible.
14:00So it was actually a conflict more than an advantage. I think that actually making banks compete for our clients' business is a much better model. And then let's talk about securities lending, and let's talk about custody. So with custody, we use Fidelity Family Office, Schwab Family Office, and Pershing, which is Bank of New York. So we have, we think, three of the best custodians anywhere in the world, and we'll put their balance sheets up against anyone. And their model, by the way, in these custody businesses, it's designed completely around safekeeping of these assets from technology to not using leverage and all the things that I think are actually really inherently different in the third-party custody model.
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16:51Let's say, as I'm sure you oftentimes have, you have somebody have a billion-dollar exit, a once-in-a-generation, once-in-three-generation exit. What would you advise in terms of their model portfolio? One of the things that family offices and their CIOs have stressed to me is that there's no such thing as a wealth preservation strategy in the long term. Most family offices don't make it to the third generation. Even with great tax planning, you have the death tax, the state tax that's constantly eating away. You have divorces, you have marriages, all these things. Do you think that this is a misnomer, this idea of a wealth preservation strategy?
17:31I think that you can have a wealth preservation strategy. And for me, I would start with two things, tax efficiency and asset protection. So I would start with the foundational most basic thing, and that is making sure that what we're investing in, we're investing on a tax-aware basis. And we can talk a little bit more about that. And then in terms of asset protection, I think sometimes people don't realize some of the liabilities or things. You invest in a building, and then there's litigation associated with that. Well, did you invest – did you have like a blocking company that you invested in that then made that investment?
18:10Did you do that on a tax-efficient basis? Are you protected if something bad happens at that asset? So I think thinking of your wealth like a submarine and having these different compartments that you can seal off so that if you end up with either a bad investment, that at least all you can lose is the equity that you invested in that or the capital that you put into it. So I would start with that. And then within the portfolios themselves, I do believe that a well-constructed portfolio that's highly diversified includes, say, global equities and exposure to private equity that we're just talking about and a good portfolio of income-producing things like treasury bills and municipal bonds, something that's really well-diversified and has a global aspect to it.
18:58and you're investing for the long term and you have sufficient liquidity that in a drawdown, you don't panic and do panic selling, I think that you can actually compound your wealth over generations. But you have to also match that with the right planning around the psychology of money, and you have to match it with the right education of the next generation. Because the threat to the wealth isn't bad investments or bad asset protection or inefficient taxes. The greatest threat to the wealth would be the next generation or the generation after that changing the plan and losing the money through excessive spending or bad investments or fighting over it.
19:40And there are just so many ways in which people can lose their capital and really ruin an incredible plan. So I think you have to match a well-architected plan with the right family education and governance so that future generations can actually take that responsibility and be successful I love that you went there structuring perhaps the only thing that's more boring is tax structure and tax yeah oh the two least sexy parts of asset management but that's where I would argue I would argue yes that's where you begin but also I would argue that they are really the some of the last points of alpha as an individual investor absolutely for several reasons one is so much of the capital markets is you are betting against somebody else so if you are day trading in your basement on the public markets who is your counterparty it is Bally as any it is point 72 it is Ken Griffin the smartest people in the world with the smartest people working for them in the world with the smartest technologies and oftentimes literally literal wires going into the New York stock exchange for trade execution.
20:53That's your betting accounts. When you talk about tax alpha, tax aware strategy, structuring, nobody's taking the opposite side of that bet. Nobody's saying, don't put an LLC into your structure so that you have unlimited liabilities. The IRS might not love some of these strategies, but there are some regulatory ways to look at it and legislative things that have been passed for better or for worse. So these structural alpha and this tax alpha. Also, on top of it being not sexy, it's a difficult thing to sell. When you're a large bank trying to win business, structural alpha is not really the thing that you tout.
21:27Certainly in the traditional model, my own experience is that family office services were hard to find, hard to pay for. Sometimes it was like, well, if you put more assets with us, then we'll provide this service. So it was really not transparent in the pricing. And you bring up a really good point in terms of are those services really available and will they make a difference? The whole trading explanation you gave, I think, is a great explanation. And, you know, my view, if you're a young person and you want to be a day trader, go get a job in one of the places that you were mentioning, go learn how to do it and make that your business.
22:01That never was my business. My alpha, before I even learned about great planning, was in starting and building companies. And that's how I created wealth for my family. Abby Stein, my co-founder, the same. My brother, Doug, the same. We all were cut from the same cloth. Business builders. And that is an opportunity to compound wealth over time on a tax-efficient basis because you're not trading and you're not selling your business every day. So it compounds on a tax-deferred basis over a long period of time. That support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place.
22:39Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in-store, online, on your phone, or even at pop-ups, and everything stays synced in real time.
23:14You can track sales, manage inventory, book appointments, and see reports instantly whether you're in the shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing to your best customers keep coming back. And right now, you can get up to$200 off Square hardware when you sign up at square.com slash go slash how I invest. That's S-Q-U-A-R-E dot com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity.
23:50Run your business smarter with Square. Get started today. Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically.
24:20There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are, in-store, online, on your phone, or even at pop-ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly, whether you're in the shop or on the go. And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing to your best customers keep coming back.
24:53And right now you can get up to$200 off Square hardware when you sign up at square.com slash go slash how I invest. That's S-Q-U-A-R-E.com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Support for today's episode comes from Square, the all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground.
25:33I was actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Checkout is fast, receipts are instant, sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop-ups and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in the shop or on the go.
26:06And when you make a sale, you don't have to wait days to get paid. Square gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing to your best customers keep coming back. And right now you can get up to$200 off Square hardware when you sign up at square.com slash go slash how I invest that's sqare.com slash go slash how I invest with Square you get all the tools to run your business with none of the contracts or complexity run your business smarter with Square get started today. That's the riddle I used to ask people. If the taxes are so bad in California, why are there so many billionaires?
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26:44And the answer is, if you pay one-time tax, even if it's 38 % versus 25 % in another jurisdiction, you have compounded that oftentimes for decades and decades. Yes. Until now, they're contemplating the wealth tax, of course. Could be different. But absent of the wealth tax, you're compounding over and over again. You have these network effects. We were talking about if you want to be in venture capital, the value of being around San Francisco. And you keep on compounding. And then once it's worth billions and billions and billions of dollars, you pay that one-time tax. It's obviously painful. And there's obviously structuring around that you could do if it's a public company and things like that.
27:22But that's the answer to the riddle, which is if the tax schema is so bad, why are there so many billionaires? And actually, the opposite of that is also true. It's a very difficult state. Some of these high-tax jurisdictions, very difficult states to build traditional businesses where you're paying taxes on a yearly basis and that don't have this kind of losses until they're$10,$100 billion. California is a beautiful place to visit. I mentioned to you earlier, I lived there for a few months over the summer to visit our kids. And it's a beautiful place to visit. It's most challenging for high income earners and for small business people, exactly what you said.
27:58But if you have a very large tech company, it's a whole different thing. And that's why that riddle exists. But it is challenging for small businesses especially and for high-income earners who don't have the assets that an entrepreneur would have in starting and building a successful tech company. I'm going to put you to a specific asset class or sub-asset class. What do you think is underrated today as an investment? There are a few things that I think are interesting and underrated. And by the way, it is a fantastic question because so many things are so elevated in their valuation constructs that I think it's like not easy to find things that are truly out of favor.
28:41But I would say, first, I've been an investor for years now in multifamily real estate. The last few years in real estate were really challenging. But as a result of that, new construction slowed. There is a housing challenge in the U.S., an affordability challenge. And so I do think that we're actually at the beginning of an upward period for real estate, which would include multifamily for sure, where we'll see more upward pressure on rents, which will be good for real estate investors. So I think that's an interesting asset class to look at and to understand better. the BDCs that we spoke about earlier, the opportunity to buy portfolios of loans where if you go and look at where loans are traded on tradable loans, and you can actually see that a loan might be trading at a 5 % discount, but then the portfolio in a BDC that that loan is in is trading at a 17 % discount, and it's diversified.
29:38If you can get a hold of the loan portfolio, You can go to Edgar at the SEC and you can download these reports and you can really dig into it. And if you do your homework, a well-constructed BDC that's trading at a 17 % discount is super interesting, especially if you can put together a portfolio of four or five of them. Private credit as an asset class has been given a really good drubbing right now and it's probably overdone. And within private credit, I think tax-aware, like equipment leasing, because of the big, beautiful bill, you can turn around and get nice tax deductions by investing in equipment leasing.
30:17And so it's not a permanent tax benefit, but you are deferring taxes and compounding your benefit on a tax-advantaged basis. So I would say those would be the areas right now that I see opportunity. The asset classes that regularly come up with single family office, one, as you mentioned earlier, lower middle market PE. Previously, Professor Steve Kaplan, I think a friend of yours, he showed that private equity has roughly a one beta. So you're not getting more risk than being S &P 500, but there's still that alpha, and that alpha is mostly in the lower middle market. Large buyout is just getting so big that it's becoming more and more difficult to generate alpha.
30:57But in the lower middle market, if you know what you're doing, you have a team and you have a smart way to access that. Second, perhaps extremely obvious, top quartile venture or top decile. Yes. Another Steve Kaplan research, 52 % persistence for many decades, top quartile staying top quartile. Venture would be an access class, not an asset class. You have to get into those best funds. Absolutely. Absolutely. Also as just a general principle of how to invest, one of the things I think is very misunderstood about asset classes is the supply and demand dynamics in the asset classes. If an asset class, no matter how overpriced it was, if it becomes unfavorable for a long enough time, the capital and the demand goes away from that asset class and it reaches an equilibrium point where it now becomes favorable.
31:49The example I like to use is early stage venture capital. Let's say people think that's overpriced at$50 million. If the capital keeps on leaving that asset class and it keeps on going$40,$30,$20, at some valuation, maybe it's$5 million, it now becomes one of the best asset classes. That's right. But yet people like to pretend like these asset classes are fixed pricing. Early stage venture must be at$50 million. Oftentimes, some of the best asset classes are below the headline. I had the CIO of Texas Tech, Tim Barrett, and he was going after probably one of the most hated asset classes, Office Space, because the headline was so bad, nobody was investing.
32:31And he went one layer below that, and he looked at specific geographies, specific structures where the baby went out with the bathwater, and he saw these great returns because, not in spite of it being unfavored, but because of the very fact that it was unfavored, there was the equivalent of free money on the floor where nobody was there to pick it up. Yeah, I agree with you. When I was in the ninth grade, I had a teacher, Mr. Reese, and he talked about the cycles of life and the cycles of business and boom and bust. And it's absolutely the same thing within asset classes. Asset classes cycle into favor.
33:06Investors get excited. There's a lot of press that supports that, especially now with social media. There's so many outlets that can get behind something. and we get in particular areas just get overheated, valuations soar, and then eventually it changes. Having an understanding of the fundamentals of investing and having the ability to pick and choose certain asset classes that you want to become an expert in, and if it's two or three, great, and then your ability to watch those and to have a sense as to when to get in and when to get out. I mean, let's take multifamily real estate as an example.
33:41You're talking about family offices. There are many single family offices where the source of the family's wealth came from real estate. We're sitting in New York, New York City, some great families that made tremendous wealth over generations here in New York real estate. They know about what properties you want to hold forever, what properties you might want to sell under certain circumstances, when to finance, when to refinance, when to recap and pull money out. They have such a great understanding of their asset class and their experts in it and that makes it hard for new people to come into it but if you can do that in two or three things where you really understand them at a granular level then you have a good sense as to when to double down and when to perhaps pull back and maintain more liquidity in your portfolio and on that vein you wrote the book the long game why did you decide to write a book so 30 years ago I mentioned I'm from Baltimore more from humble beginnings.
34:39My dad was the first one who went to college and he started a business in college to pay his way where he hired his fraternity brothers to dress up like Santa Claus. He rented them to department stores like a temporary service agency. And as only could happen in America, department stores became shopping centers, became malls. My dad did 400 malls in the U.S. That meant that for 53 years, if you took a child to have their photo taken with Santa that everything around it the set the chair the whole mall that was our business and it was a great family business and my dad had that company for 53 years but my brother Doug and I did not want to go into the business we loved dad and we loved the business it was fun to grow up in it we didn't want that to be our careers so my dad unfortunately didn't have a great succession plan and eventually he was forced to sell the business into kind of an ESOP, not a super successful employee ownership model.
35:35And then eventually that was sold to a large kind of convention company that basically handles the really big conventions. And after working there for a year for the buyer, my dad called my brother and me and said, this company that he sold it to, he goes, they're bad at Christmas. They're bad Santas. And I don't want to work here anymore. And he quit. And it became such a sad chapter in his life. So the book, My very first inspiration for the book was my father. And how could I come up with some kind of a construct where his company could have continued beyond the 53 years that it stayed in our family and so that it could have thrived for a longer time?
36:16And one day I was walking in downtown Baltimore. I picked up the Baltimore Business Journal, and there was the book of lists, and it was the oldest companies in the state of Maryland. And it was companies back then like Alex Brown, which was a great, great investment bank. They had lasted for 195 years. Johns Hopkins, a name everybody knows. And some defense companies, I think Lockheed Martin was maybe on it back then. And then I see this name, the Lone Brothers Tent Rental Company. And I look at Lone Brothers, and they were like 200 years old. And this is years ago. I'm like, oh, my gosh, how does a small business, kind of like my dad's business, how do they last for like 200 years?
36:55That means that they lived through pandemics and like the Civil War. And I mean, I'm just making a list of all the things in my mind. So I went and I go look the company up and I find out that Joseph Lone left England in like 1815. There had been a volcanic eruption and there was darkness kind of around the earth. So it was cold everywhere. So it was dark and cold in England. And he's like, I'm going to leave. And he picks Baltimore because it's a great port back then. And he makes his way to Baltimore and he opens up the Joseph Lone sale company, making sales for the clipper ships that are going back and forth doing trade with probably Alexander Brown becomes the Alex Brown company.
37:34And I'm like, wow, what an incredible origin of that company. How did they last for 200 years? So I end up calling Brian Lone and interviewing him, learning his lessons. And that became a hobby of mine where we would travel as a family. I'd bring my kids and my wife, Jill. If we were in Italy, we're meeting with, you know, the Frescobaldi family, 33rd generation. Think about that. That means that they bought land in the center of Florence in the year 1500. So this is a family that's lasted for 33 generations. And so we sat with Lamberto Frescobaldi, his two sons and our two sons, and we had a great conversation about life, about succession, about family education and family values.
38:17and I just did that over and over again. And then finally, about two years ago, I was talking to my co-founder, Abby Stein, about our hopes and dreams for Crescent. We want Crescent to be a 100-year business. And Abby said, you know what? Take those interviews, put them together in a book. Let's put that out to our team. So originally, the book was going to be written for the team at Crescent. And then my daughter-in-law was talking to me about it and some other friends, and they were like, this could really be a book. Like, you should put this out here. And the reason you should put it out there is because there's this amazing fascination that we have as a society around technology, innovation, disruption.
38:55You know, what's new? How fast can we get to the exit? All that's great, super cool, and we should celebrate it. But we've put almost nothing into what are the lessons we can learn from companies and organizations that have stood the test of time. And it could be Hasbro or Whirlpool or it could be Ferragamo and Frescobaldi in Italy. These are companies that have stood the test of time, that have survived moments of truth where if they had taken the wrong turn, we wouldn't even know their names anymore. But they were able to make the right decisions over the scale of 100 years. And that's probably 15 or 20 moments of truth where they were able to get through the pandemics and the wars and the recessions and depressions, having a bad generation.
39:38I mean, 33 generations for the Frescobaldi family. You know, they said to us, not every one of us was so great over 33 generations. You know, there were a couple of not so good ones in there, but the business was resilient enough that it could even survive a bad generation. That's pretty cool. What was the most surprising lesson you learned from interviewing these organizations that have been around for hundreds of years? So one that I absolutely love, especially spending time visiting Asheville, North Carolina, is the Biltmore, which is the Vanderbilt family. So the Cecil Pickering family, they're a sixth generation family now in Asheville managing this American treasure, the Biltmore house, 8 ,000 acres, spectacular beauty.
40:22And they have been able to survive from George Vanderbilt, who built this all the way now for six generations through great family planning, through a family culture of conservation and preservation, and of stewardship, where they view this amazing, again, American treasure of this home that we have here in America that was George Vanderbilt's home. They treat this as something that's not even theirs for their generation, but something that they are taking care of future generations. And it's powerful. It's really powerful. And they've proven that they can do it. And they've been very successful.
40:59It's a great place to visit. I highly recommend it. Said another way, they bought into the vision. Multiple generations have bought into long-term vision. And each generation has taken the responsibility of helping the next generation to come up to speed on what all of that means. So like G5, they spent a lot of their youth on the property working the farm, working the house, working the hospitality. One, you know, one gentleman, his background, he worked at Disney and learned hospitality at Disney. He also was in Africa with Jane Goodall and learned about conservation. And so he's running part of the business.
41:41And then another gentleman spent his time in investment banking and learned about capital markets and investing. And so he's helping and working that part of the family. So you've got operators and investors. You've got entrepreneurs. There's a family member who started a jewelry business, which is fantastic, taking some of these inspiring pieces that previous generations had and then bringing her design ideas to make them contemporary and cool and has really created a wonderful jewelry business. So there's innovation, entrepreneurship, operators, investors, but they all share this passion for the property and this tremendous responsibility of stewardship and making sure that it's great for future generations of Cecil's and Pickering's, but it's also great for those of us that want to come and visit this property and experience it.
42:32Do you think those lessons could be applied to a company that's not family owned? Yes, I do think that these ideas around stewardship, around thinking over the long term, you know, how you spoke about balance sheets earlier, how you manage your balance sheet, how much leverage you're going to put onto a business, how much you're going to invest in the future. All of these decisions, I think that whether it's a family-owned business or whether it's a business that you are running for somebody else, that you can use these same principles to allow a business to be a whole lot stronger and very successful over a longer period of time.
43:09And what I find with a lot of short-term thinking is if you're a buyer of a business that's been built for the short term, you better do your diligence because you'll find in many cases corners that have been cut. And so if we use a real estate analogy, you're walking around a property and it needs paint and it needs work and you can just tell that someone hasn't really been taking care of it. If it's an operating company, you can see that there's short staff. On the capital equipment side, things are falling apart. You can just tell when something has been well taken care of and someone has created a very powerful cash flow machine that is built to last.
43:51Before me and my business partner who's sitting here, Curtis, before we started Weisberg Capital, we sat down and we used this framework that I learned from my mentor, Eric Anderson, who's now on his fourth unicorn. and he's learned through his experiences that he's only interested in building the business he wants to work in for the rest of his life. And it sounds trite or it sounds like a slogan or something, but if you truly embrace it, when you're building the business, you fundamentally build a different business. And it's in the DNA, it's in the values, it's in how you hire, it's in how you incentivize.
44:30And I think there's something to this whole aspect. And maybe it's the asset management business in itself that's turned everything to these three, four-year cycles. In fact, we're so short-term focused as a society that the public markets are day-to-day. So when you have a private equity fund holding for three to five years, you're like, holy crap, they're so long-term thinking. But if you take a step back and look at the original businesses, these family-owned businesses, there is something to holding these assets for 10, 20, 30 years. I had a guest on the show, Brent Bishore, who's in the Midwest, and he has this 30-year fund.
45:06And you mentioned this concept of leverage. He oftentimes buys companies and waits for this once-in-a-decade opportunity where shit hits the fan and there's a buying opportunity. And by not having leverage, he's the only one that's not like a chicken running around with its head cut off. I think there's something to this compounding. And the thought experiment is if tomorrow you sell your company, what are you going to buy? If you're just going to put it into a 60-40 portfolio, if you're going to buy the S &P 500, why? Why not compound what you know, your asymmetric information, something that you control in order to compound your wealth that way?
45:43People are just so incentivized to just get that mark, get that pat on the back that they over-index on that and under-index on what are they going to do the next day. Yeah. I think that's a great concept. I totally agree. I have a saying, which is you should run your business like you're going to own it forever because you just might. I mean, we have long periods of time sometimes where for whatever reason, capital markets, you can't sell something at what you might think is a fair price. And I actually think that what is counterintuitive of, say, the long game, a 100-year business, or in your example of owning a business for decades, is that a lot of times people think that that means, like, never selling.
46:25And certainly that is a possibility. I mean, looking at this fantastic Biltmore property, never been sold and probably never will be. But what it means is you're building a more valuable business, a more durable business, and that makes it more desirable. And so when you were talking about your friend's concept, I think that what's so interesting about I'm going to run the business like I'm going to own it forever or in his example, I guess it was run it for decades. This idea that you're thinking more over the long term and you are building a better business, a more durable business, a more valuable business.
46:58And that is something then that ironically and interestingly acquirers will desire even more. And at some point they're knocking on your door. The paradox. I've also found the paradox, the more long-term you think, the faster your growth. The more short-term results you will have from the long-term thinking. We should collect these paradoxes. So I think of like having been a parent and now becoming a grandparent, one of the great ironies is how independent are your children? And this is so ironic because the more you love your children, the more you would want to hold them so close and protect them from every little bump and bruise.
47:32But that's so ironic because if you want independent children, you have to allow them to fail. You have to allow them to do their own thing. But that's kind of a paradox. You'd think that actually the people that love their children the most would actually be holding them so close. But that's exactly the opposite of the outcome you're looking for. You want independent children that are capable and can carry on their own lives without us. That's the highest thing that a parent can do. Another great paradox and irony is the sale of a business, the exit of a business. to be celebrated. Now you have a pile of capital.
48:05But the funny thing about it is that capital will not manage itself. And so someone thinks that, hey, I worked so hard to build this business and take these risks, and now I'm going to diversify. But the pile of capital is sitting there, and they're not putting the same level of expertise and effort into managing that that they did in their business. They had a board of directors. They had top leaders and executives in the company. They had talent and culture and all the things it takes to build an organization. Now suddenly you get a pile of capital and it's like one guy and a dog. And that's just an unbelievable and kind of funny paradox that people don't always put the same level of rigor into how they're going to manage the capital after they have that exit.
48:45And the last one that I think is a funny paradox is around great leaders, CEO founders, or really leaders in any particular field. It could be a great professional athlete or entertainer. anyone who's great at something, they're able to focus on it with a level of intensity. And as a result of that, everything else is excluded through the focus. And then if they're a family person and they want to stay married, they're going to have to be investing and putting time into their family. And if they're a good citizen, hopefully they're doing some good works in their community. Is there any time after that for deep planning around estate tax and some of these other things that we talked about.
49:23And what I found, which I thought was just my secret, that I didn't put time into those things until eventually we created something like Crescent and I could become a client of it. It turns out that every high performing CEO founder that I've met, they all have the same thing. And that is that they were focused on their main thing and their family and then hopefully the community. And they all actually had this drawer where they put everything in it, statements, plans, all this other stuff. And they've just closed the drawer. and once a year they'd send it all to their accountant. And so that has been a very funny paradox.
49:55On that note, Eric, this has been an absolute masterclass. Thanks so much for stopping by. Thanks for having me.
From the publisher
What if the greatest threat to generational wealth isn’t bad investing—but the inability to think beyond the next liquidity event?
In this episode, I sit down with Eric Becker, Founder and Chairman of Cresset, to discuss why he built a modern multi-family office after decades as an entrepreneur and investor. Eric explains the structural conflicts inside traditional wealth management, why most ultra-high-net-worth families lack true family office infrastructure, and how long-term thinking changes the way businesses, portfolios, and families compound over generations. We also explore governance, tax-aware investing, succession planning, and lessons from companies that have endured for centuries.
