How HNW Family Offices’ are Investing in Alts with Kendall Laughlin

In my world, I have clients that have as low as 1% in public markets, and I have clients with a very high percentage, maybe as high as 15, 20% in public markets. So it just depends on what stage they're at.

Really excited to do something a bit different with this week's interview. We're joined by Kendall Loughlin, who, while an investor in his own right, is not just sharing his own investing journey. He's going to talk about his clients. That's because Kendall is a family office director. And you might think family offices are for people with over $100 million in net worth, but that's really not the case anymore. And support like this is becoming a lot easier to access. Kendall currently serves 10 families that are in the $20 to $50 million net worth range, helping them set goals, make decisions to achieve them, And so for the future billionaires out there, this is essential listening to hear what these ultra-wealthy investors are doing. Check it out. All right. Very excited to jump in today. We've got an exciting interview with Kendall Loughlin. So very excited to talk with Kendall and have a little bit of a different angle. So it's going to be kind of fun to pivot how we do these questions. But for those that aren't familiar with you, Kendall, can you give a little bit of your background?

Yeah, absolutely, Ben, and so appreciate your work. And I've really enjoyed looking through the episodes recently. And also I'm aware of the great work that Aspen Funds is bringing as well. In terms of my own personal background, I'm a little bit of a— maybe unicorn is too strong a word— somewhere between a unicorn and an odd duck, maybe I'll say. I did business right out of college and really had a wonderful mentor in business that really demonstrated to me how you can be a successful entrepreneur, live your values, For me, like, I'm a faith-based person, so that was important as well. I caught that bug, and then all of a sudden I transitioned, and I spent about 15 years in pastoral ministry. So it was a quick shift. And through that journey, I found myself really drawn to a particular type of person in the ministry, and it was the people in our world, in our sphere, that were entrepreneurs building businesses and the kind of problems that they were facing. And, you know, my mindset started to change through the years, and I wondered, what would it be like to serve these kind of people full-time? And led me into executive coaching and then into the wonderful family office world that I'm serving in now. So that's a little bit of the professional background. And I'm with a financial services firm called ARK Financial that provides family office services to investors and one of the family office directors.

Very cool. Well, I love that. You know, a lot of times the story isn't as linear as a lot of people think it is. And, you know, my story is probably similar in a lot of ways of, kind of weaving through the passions and the things right in front of you and the open doors. So that's really cool. You ended up where you are. Talk a little bit about what a family office is, right? And I think a lot of people have heard that term. I think historically it's kind of this elusive thing that's out of reach for, you know, 99.9999% of the population. But the ideas around it are becoming more popularized at a smaller net worth level, as I've been seeing. I'd love to hear your perspective on how you view a family office for the clientele that serving?

Well, I think the family office, there's a structure to it and there's a spirit to it. To have a family office, there needs to be some kind of company, some entity, some legal structure for a family to organize their finance, their businesses, and to pass that down generationally. The spirit of a family office, the way I see it, is an organized plan for a family to pass down its different types of wealth. And that wealth could be financial, it could be values. It could be relationships. It could be spiritual. It could be all kinds of different finance and real estate and operating businesses. And I, as a family office director, most of my clients are people that are wealth creators. So they're first-generation people, you know, that are out there investing and building businesses in the world, like a lot of your listeners. And so what those people face is they face at some point in their journey, a organizational and administrative decision because they've got their business over here, which is scaling and growing and really exciting. And then they've got their family office, their financial world over here, which consists of that wheel of insurance, life insurance, risk management, cybersecurity, wealth management, real estate, cash management, all the different aspects of that. And they're feeling that stretch, and they're feeling, okay, I'm either gonna have to spend a lot more time on this, and that's going to actually take away from my core competency, kind of my zone of genius, which is building this business, whether it be auto shops or dentist offices or home healthcare or whatever the business is that they happen to have an affinity for. Or they can hire someone like me to say, hey, will you step in as the COO of this world and lead this? Will you provide leadership to this? Report into me, we'll connect, we'll set goals so that I can I can continue to do what I'm good at. And I know that this is being stewarded well. So that's kind of how I step in as a family office director in my world. There's a couple clients I have who, you know, have inherited wealth, but in terms of the people that I typically serve, they're still out there building a business. They're about to exit. They've just exited. And they're kind of now facing that tension of how do I manage all this and who can help me?

Right. Yeah, that makes a lot of sense. And, you know, historically the family office was reserved for a family that had at least $100 million. If you didn't have $100 million in net worth, you weren't really having those conversations because the idea was to get access into the investments, into the resources, into the overhead structure to create this business within a business to manage the wealth. The overhead was just too great that it didn't make sense. But, you know, a lot of the advances, a lot of the accessibility of these investments, a lot of— it's almost like a hybrid role too, where I've seen where it's a little more do-it-yourself. You can kind of shift some of the responsibility and you probably have a variety of clients there. It's allowed these resources to be available to a whole new subset of kind of wealth creators than maybe historically was available. Would you agree with that or you have a different perspective?

Well, you know, it all comes down to definitions, right? So if you're defining things as a true single family office where you've got someone like me and maybe a CIO and a lawyer that's basically working for you full time, yeah, like you're going to need $300 million, $200 million, $500 million to operate in that space. But what's happened in terms of the democratization of investing is now a lot more private investments are available to people in different categories of the financial markets. And so that's been an evolution. Another evolution has been the world of family office has been a little demystified with great services like ARK Financial, like the one that I'm partnered with and work for, or a tech stack tools as well. Where someone can come in and say, I can give you family office-like services. I can be the chief of staff of your family office and run this like a big shop, but maybe do this fractionally for you.

Yeah, there you go.

Or maybe we have a scaled-down version because you don't really need help over here, but you need help over here. And so that's where someone like me steps in, you know, maybe with a client that's 80% of their net worth is still in their business. They're not at that place where they're just sitting around thinking about necessarily all their money being in the market or just meeting with a wealth manager occasionally and getting their distributions. They're actively out there thinking about how is this business changing lives in the world and is it impacting my family's world financially? And so they're still in that $25 to potentially $50, maybe more million range net worth. And I'm coming in and saying, okay, this is where you're at. You're gonna be here probably one day. You're probably gonna be at that single-family office or true multifamily office level with wealth management, everything integrated, I'm gonna be the first step. I'm gonna integrate everything for you and we're gonna set the foundation so that as generations pass and as your business grows, you can further this prosperity with simplicity.

So you're referencing kind of building the business alongside building the family office. Are you meeting most of your clients while they're building their business or still operating the business, or is it mostly post-exit when they've sold the business? And maybe talk through a little bit of that life cycle of pre versus post and some of the things that happen along the way.

Well, there's a financial aspect to it, and then there's a mental aspect, and I'm excited about the mental aspect. If you're about to have an exit, there might be some fear. There might be fear of what's my tax bill going to be? How is this going to happen? I don't have a guide to walk me through this process. If you are post-exit, you may have gotten that tax bill or you may have gotten that return, and now you're wondering how to allocate it and you're asking what's next for me. And in both of those scenarios, you know, there's a lot of financial and administrative and organizational support that we can supply to have the best outcome for the family. But in my view, Ben, a family office without goals is like a body without a soul. We can set up all of these great structures. We can do tax planning. We can help a family administratively and financially. But what I get excited about as a family office director is the real conversation beyond just simply a business, which is what are your goals? What's the impact you want to make in life? How does this wealth or this income that you're generating regularly play into that? And how can we move that forward? Your goals are my goals now. We're looking for mutual success. And so I want to walk with you on that journey. To see you accomplish your goals. There's a kind of a coaching aspect to that as well.

Yeah, that's awesome. So a lot of times if this entrepreneur, they're wealth creators, you call it, they're building the business and pre-exit, you know, most of the net worth is tied up in this business and the going concern value of this business, and it can make up extreme concentrations of wealth, right? But then you sell the business, and all of a sudden you have a big liquidity event or a series of liquidity events, and that totally shifts, right? What are some of the things that you see in that shift and what are maybe some pitfalls that you see with different families that go through this? Because as I think about it, so many people that are building and entrepreneurs, they get excited about the big vision. They get excited about the big goal. They achieve it. And it's kind of like, well, what's, what's the next thing from here, right?

Yeah, I think of this little thing that helps me memorize that: endpoints, waypoints, and pain points. People typically come to someone like me because there's a pain point, right? There's disorganization, there's a tax issue, there's fraud. I have several clients that have come to me because they experienced fraud. And hey, we need someone to bring protection to this world. So pain points are typically why someone reaches out to an advisor. Right? They're looking for support in an area of pain in their business or personal world. And then what happens as they start to get things organized and they start to kind of get back on track and have some success in whatever area they feel led, they reach what they think is a goal. And what I have seen is there's some very similar goals that all people have. Everyone wants to take the family to Europe. Everyone wants to somehow fund something for college or home for their kids. And a lot of people want to retire their parents, right? So they kind of have these goals. And then you start asking why. Like years ago in, um, business management, there was a trend on the 5 whys. I think it came from Toyota originally, is keep asking why. And sometimes I'll just ask why 5 times in a row because that goal's just a waypoint. So you went to Europe, so what, what does that mean to you? Well, it means that we are able to spend time together as a family. Well, why is that? Well, because I want my children to be cultured. Why is that? Oh, because I love history. And you start to get into the real values and goals that this particular family has. So setting goals is so essential. And when I think of a goal, I think of even why do you want to sell this business versus operating it? Is it just because, you know, some private equity company called you and all of a sudden your HVAC business is worth $20 million and you never thought it would be? Or what does that mean to you? What does it signify? And then we're getting into real meaning and outcomes and ways that the family might be shaped long term. So that's a big conversation. Another area of impact that I'm passionate about is the area of identity. I've always known this to be true, but I saw a stat recently that really verified it. It was actually a UBS stat. 62% of first-gen wealth creators report identity confusion or disorientation after a liquidity event. And it makes sense, right? Because, you know, you're out there at cocktail parties shaking people's hand. What do you do? Well, I'm an entrepreneur. I own this business. And then all of a sudden you're like, What do I do? You know, who am I? And that piece of identity is people have to shift from, okay, I'm an entrepreneur, I'm a builder, to now I'm an allocator. And, you know, there's a parable about a guy that had the potential to be an allocator and he buried everything in the ground. And then there's another guy that took what he could and he multiplied it and he was rewarded with even more. And there's a moment of emotion there where people touch some of the words that we hear in economic history. Depression, you know, there's a Great Depression. Panic, there is a panic. And there's emotions that get touched that people have to work through in order to kind of multiply what they've built again. So there's an identity piece, there's a goals piece, and then there's some common pitfalls that people who are exiting something take the first time. I'm starting to see this now that I've served 10, 11 clients and I'm starting to see some different trends. One pitfall might be buying real estate you can't manage. Another pitfall might be unstructured or poorly structured private loans to friends and family. Another pitfall might be investing in a business that you know nothing about, and there's not an expert that you can reach out to to guide you through the process like you. So I see those common pitfalls happen as well as people are exiting businesses.

Yeah, that makes a lot of sense. We see the same thing, kind of a haphazard allocation strategy where there is no sense of goals. There is no sense of allocation and diversification. It's just, I see this deal, I like it. I see this deal, I like it. My friend sent me this one. My uncle sent me this one. And it's just reacting, right, to whatever's being thrown in front of you. And that usually does not end very well.

Right on.

But I like to talk about this allocator mindset. And so this is an entrepreneur. They've built this wealth, they've sold the business. They now have a big pile of money or sequential piles of money, and they've got to shift what they've been doing and how they approach it. And I've heard it said before, I love this idiom, and that wealth is created through concentration but is preserved through diversification, right? And a lot of the skills that it takes to be a great entrepreneur actually can hamper you from being a good allocator, right? It can actually hamper you from being good at diversifying because you're, you're willing to take outsized risks as an entrepreneur that when you're betting on yourself, maybe it makes sense doing, but if you're actually investing passively and investing in other projects, you shouldn't be taking those same risks. Right. And so what do you kind of see with this transition of business owner to allocation mindset? What are some of the ways that you coach and help these clients learn to make that shift?

That's a great question, and it is a common tension, but it's not one that's commonly defined or explored. And there's a couple tools, there's a couple conversations I have found to be really important. One is regarding network. If you're not necessarily in an environment of investors, but you've sold a business, What do you do now? Because investors learn from other investors, and that's how you get a couple laps ahead in the journey as an allocator.

Yeah.

And so there's some good podcasts out there, like your content is great, but like ultimately getting people around you that are dealing with the same kind of problems really helps. So I love introducing clients, and I find that that networking piece is important. It's a little awkward at first because you're kind of out there, you're kind of like, okay, I'm looking for a different type of relationship. but I found that to be really essential. Beyond that, you know, when we think of the due diligence process, of course we think of FP&A, like financial planning and analysis, but I think the due diligence process for new allocators needs to focus more on the types of partners, the type of partnership that they want, and what the relational expectations are, because they're learning now how to be LPs or GPs for the first time. The due diligence process, while there's a financial aspect, there also really needs to be a good relational fit. When I create a due diligence document, there's an internal one that's like your values, what kind of communication you want to have, those kind of things, how we're going to work through conflict. It's not a contract. No one's signing it, but bringing that kind of clarity as a new allocator allows you to be set up to win. Because you need to know what you want. And then I think the third thing along with the due diligence process is a generosity thesis or charitable thesis of this is the impact I want to make in the world. So in the same way as we're maybe allocating for new investments, there also might be charities or, you know, different organizations we want to impact and being clear about that as well.

Yeah, very cool. Let's shift a little bit to kind of the investing side of it. You know, how do you approach alternatives as a firm, as someone advising your clients? And when was that something that you kind of started bringing into part of the portfolio?

Well, the great thing about entrepreneurs and serving them as a family office director is they're creative. So they're very naturally drawn to alternatives because they want things that are high return. They want things that are just going to beat what's standard in the market. There's so many different types of alternatives to get excited about. I mean, there's different things that can happen with life insurance. I have clients that are very engaged in that. There's art investing, there's energy grid, you know, I mean, you name it, right? And it's just, I think the creativity is a big pull to people who have been entrepreneurs. I think that's exciting for them. And I think along with that is you need a due diligence team. And so that's where, as a family office director myself, the strategist I work with, the CIO, you know, we would help vet those investments. And I think it's always good to run before you walk, right? You know, make something that you can lose and then, okay, the team's winning and I'm building trust with them and okay, now I'm going to go in further. And you know, it's always better as an allocator to test things out than go all in with the money that you've been stewarding. And so yeah, that's my thinking there.

What are some of the key things you look for due diligence-wise when you're evaluating opportunities? To evaluate, you know, if this is worth investing in?

Well, I mean, simply put, it's how do I get paid back and when? So that's the simple answer. The more complicated that answer is, is sometimes just a good signal of the investment. It doesn't mean the person's dishonest. It just might mean they're not ready to take on investors yet. And so that's one, this very simple question. You know, you're looking for that illustration. I think another aspect is the entity structure. You know, are you properly protected by taking on these investments? And do you have a holding company or something of that nature that allows you some protection, especially if you're a GP in that investment? And are the clients' worlds organized in that kind of way as well? I'll oftentimes, if I'm looking at a private investment with a client, I'll just go simply to opencorporates.com. And I'll say, okay, what else are these guys invested in? What are they up to? You know, are those entities active? What's going on with them? So you're understanding a little bit of the entity structure and also the team and their history there from a technical status as well. Of course, we're looking for returns, right? You know, last year the market ripped, so everyone was super excited about wealth management. Here in 2025, we're not having the same experience. And so, you know, what does it look like to push into that 12%, 15%, 18% return on investment? Is it something like private credit? That's going to be a very different due diligence process. It's going to be more character reference almost, and, you know, understanding the geographic nature of that particular business and their growth plans and outlook. Do they have a solid advisory team themselves? What do their books look like? You know, when I ask for a quick data room peek, is it ready? Is it clean, but maybe 6 months behind? Or am I getting a collection of Google Sheets and PDFs that tells you something? And those kind of tells over time create a story. And that story is, this is a ready environment for my investment, or these are good people, let's connect with them and perhaps see what stage I end up next time with them. Or actually, this isn't the right team for me.

Yeah, I actually, I love that because I think So much of the time when people are saying due diligence, they're looking for what's that one big skeleton in the closet. But a lot of times there's not one thing. If there is one thing, then run, right? If there is a big skeleton in the closet, run. But most of the time it's the amalgamation of little pieces that you're putting together to create a story. So I love that perspective. Let's just talk percentages a little bit. You can talk generally because this is more of a client standpoint, but Say someone's coming at a $25 million net worth or a $50 million net worth, you know, somewhere in that range. What do you generally see as far as allocation percentages across publics, privates, insurance, maybe some other non-correlated assets?

Yeah, most of my clients would define their future success as financial freedom, not necessarily retirement. So with that, the investment in qualified accounts is typically a lower percentage because with their creativity, they feel that they can get higher returns elsewhere. And so I'm supportive of their goals in that aspect. So at a $20 to $25 million client range, we're still typically a very high percentage of the net worth is in the business. And that's where actually a lot of clients would start. And so there might be clients listening to this and say, am I right fit for like an Ark Financial family office? Like, I think I have a high net worth, but like, Sometimes there's cash or there's a— I'm like, hey, let's build a plan to get you there, you know, over time at that range. It's obviously still a very substantial net worth, but they might not feel that they have the amount of money to invest in the market for some reason because it's tied up in the business or whatever.

It's not investable assets that would be readily available to wire or something.

Yeah, exactly. As I see clients move into that $50 million range, they're typically putting a higher amount into real estate. Estate. I think that's where the growth really happens as what I've seen in my clients between $25 to $50 million. And additionally, other types of alternatives. Uh, some of that real estate might be Qualified Opportunity Zones. Some of that real estate might be, uh, multifamily syndicates. That's an extremely popular investment and that's also tax advantaged as well. And moving into that $50 million range, it also might be okay. Like I'm in a place now as an allocator, where I want to use my wisdom and insight to impact other businesses. And so there might be people that they're kind of mentoring and investing in their businesses as well and creating an ecosystem of success around them. So it might not be just their own operating businesses, but other businesses also.

What about public markets? Where do you generally see his allocations there?

In my world, I have clients that have as low as 1% in public markets. And I have clients with a very high percentage, you know, maybe as high as 15, 20% in public markets. Maybe someone's post-exit might have most of their net worth in a taxable brokerage account for a season, you know, before they're making other allocations. So it just depends on what stage they're at. But again, the way that a client defines their goals typically determines where they allocate. So I'm not here saying, well, you know, the typical family office has this or that. Percentage, you need to do that. My big question for clients is, what are your goals? And what are the investments we can make to get you there? And is that longer holds, or you want to do something creative here, or, you know, how do we want to build? And so it really comes down to goals.

Yeah, let's talk a little bit about the goals. And you mentioned a lot of your clients are financial freedom, not necessarily to retire. And financial freedom to me would, would mean cash flow, you have some level of cash being generated, some dividends, some yield, and probably some level of security, right? Lower risks. So how do you define the goals? And what are the types of goals you're generally trying to help clients think about on the front end while you're putting together this plan?

Yeah, at ARK Financial, we put together a family office roadmap. And that roadmap is part of the build of the family office. And that roadmap contains 3 kinds of goals. Current priorities. These are typically pain points. And then there's 3 to 5 year. These are goals, but they're things that are going to be accomplished on the way to something else. And then there's lifetime goals. So that's the framework that I'm working with. And to maybe reverse engineer lifetime goals, again, that's community impact, that's legacy. It can be hard to think that way. Sometimes it takes someone a little time. It takes them some space. To really get there on their lifetime goals. That's okay. Sometimes those come out as values initially, and then as they develop values, they develop goals. When I think of goals, I think of topic, outcome, meaning, and measurement. And that's how I like to define goals for myself and also for clients. So thinking through that on a lifetime thing would be important. There are so many opinions on how to pass down wealth and the best way to do it. I'm of the conviction that there's a right way to do it. You know, you don't necessarily need to die with zero.

Tell us the right way, because I'm curious. I've heard all the above.

Well, I think to me, here's the gold standard. Can your children and their children articulate the values and live the values, not that sustain the money, but also created it? Because there was a particular kind of focus, sacrifice, discipline, network that allowed for a business to be built and born and sold? And can they articulate those things as part of the family story that's going to get passed down through lessons learned, stories, values, and then habits? And that needs to be built into a family's long-term plan. So that's the lifetime stuff. The 3 to 5 year goals, those are going to typically be milestones that they're wanting to reach. It might be, hey, we want to have this much cash coming in passively so that we don't have to work as much. Or it might be, I want to sell this other business for this much, or it just depends on the client and, you know, what's going on in their world and how they want to move forward.

Love it. Let's shift kind of to the takeaways here. I'd love just from your perspective, you know, what are maybe a story or two from clients that maybe had some regret or they did some things wrong, what are some like takeaways or lessons or like, man, if I could just say this to every client before they're a client, we would have so many less issues?

That's a great question. The first thing I would say is don't be naive about taxes.

Oh, yes.

It's your biggest expense. Double-check everything. It's probably worth paying another person. I mean, that's what we do that to some extent, but it's probably worth paying another person to double-check it. It's not that you're a bad client or a jerk, but like, man, you report something wrong, you can be chasing that down for years. And so I'm all about paying the legal amount of taxes that you owe, so I'm not looking for shortcuts here, but I mean, mistakes can really, really hurt you, and it hurts your cognitive load as well because, you know, you're thinking, am I gonna— you get that letter in the mail, it says IRS on it, I mean, that can send some people You know, it's not a good feeling. So that would be number 1. Number 2, embrace simplicity. It's really fun to be 1 or 2% in all these different things. But then, you know, sometimes you pull up an entity map and you're spending more on the accounting fees than you are on what you're getting from the investments. So you have to think about the cost of administrative overhead to saying yes. And as a long-term allocator, you're trying to keep that administrative overhead as low as possible so that you can have financial freedom one day. So don't get lazy with that. Continue to have good due diligence, have a good mindset about that, and think about highest and best use, every dollar having a purpose, not just, okay, a little bit here, a little bit there. I love that.

Those are two great insights. Okay, last question.

Sure.

Bringing it back to where we're at now. Right? In 2025, there's a lot of concern in the economy, concern, you know, with tariffs and business growth, etc. What are you hearing from clients? Like, what are impressions and what are kind of themes that you are helping people remember or see, or how are you guys positioning and where are you seeing potential opportunities, or what are things that you guys are thinking about this year given some of the the turmoil going on?

Well, part of what I do as a family office director is I help a client maximize their relationships with their other advisors. And so I'd say this, if your wealth manager hasn't reached out to you with a proactive plan in 2025, that's probably telling you something. It's probably telling they're a little bit in a reactive state. So think about that, you know, and I've had clients with some of them have excellent wealth managers who have really, really created a great plan for navigating this market. And I think that's gonna bring them some success. And so I'm not a macroeconomic commenter, but here's what you and I both know, Ben, entrepreneurship changes lives because it allows people a chance to create wealth and it changes the communities in which these businesses are started. And so people that are optimistic and they're looking for opportunities and they're looking to start businesses, they're just as optimistic as ever. Their use case may have changed. The type of business they might be looking at may have changed, but Of course, we see some trends in 2025. People are getting really into home services, you know, things that are AI-proof and then things that are AI-embracing and kind of everything in between is maybe a little less attractive.

Kendall, this was really fun. I really appreciated your insights and loved how you weaved the mindset, the values, the goals along with the practical and love some of the nuggets you dropped. So appreciate you coming on. What's the best way for folks to learn more about you and, and ARK Financial if they want to hear more?

ARKFinancial.com. We have a great test that you can take to evaluate the state of your family office. I'll actually send that to you in the show notes. It's a little survey that people can take. And then my coaching practice is called At the Helm, atthehelm.co. All right.

Thanks so much.

Thanks, Ben.

That was a really interesting conversation, and it showed me again just how accessible the tools that the ultra-wealthy are using can be today for the average millionaires. I loved hearing how Kendall is seeing the same patterns and having worked with so many post-exit founders. Most think of a business exit or a liquidity event as being such a big win, which it is, but it's important to remember that it can come with a big identity shakeup. And right after a liquidity event, you're vulnerable to making some common mistakes. Making mistakes, lending to people that you know, investing in your friends' projects without vetting them, or buying a second home without a plan. People who suddenly find themselves with an influx of cash need some outside help to think strategically about making every dollar work. Be sure to tune into the show next week. Bob and I are going to be talking through some headlines to help you weather the storms and take advantage of the moment we're in in 2025. See you there.