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Jun 6, 2019

In this episode, Matt Kerzner and Tim Schuster discuss the Family Office Environment with special guest Nancy Vailakis from IQ-EQ.

IQ-EQ is a leading investor services group supporting fund managers, global companies, family offices and private clients operating worldwide.

Nancy can be reached at


Tim Schuster:Welcome to our podcast for “Generations and Family Business, Past, Present, and Future.” Our host for this podcast are myself, Tim Schuster, and I'm a manager in The Center For Family Business Excellence. And along with me is Matt Kerzner, as always.

Matt Kerzner: Hi, this is Matt Kerzner.

Tim Schuster: What’s up. Matt is a senior manager in The Center Of Family Business Excellence. Today we have a special guest, Nancy Vailakis from IQEQ, and today we will be discussing the family office environment. Nancy, great to have you here today.

Nancy Vailakis: Oh, thank you so much, Tim and Matt, for having me. Pleased to be here and pleased to share my expertise with your clients and your family office colleagues who work with you.

Tim Schuster: That's fantastic. You want to tell us a little bit about yourself. We know you're from IQEQ.

Nancy Vailakis: For about 14 years, I worked in private equity and hedge funds in investor relations and fundraising with some pretty big groups. I'm currently a business development director with IQEQ. IQEQ is an investor solutions firm. Out of our New York office we focus on private equity administration, and one of our service lines is helping families with a multitude of different things, in a bespoke way because, frankly, most of the families that I've come in contact with over the course of my career have varied sort of needs and wants, but also, you know, the internal structures of their offices tend to not be the same. It's not a one-size-fits- all scenario when it comes to the family office environment.

Tim Schuster: I hope that's one of our takeaways today, that we're going to be doing more of a deep dive into the family office environment. What is the family office environment? Let's talk about that.

Nancy Vailakis: Yeah, sure. I mean that's a fairly broad term. I would say the family office environment, in my experience—on the alternative, asset management side—family offices are investing in hedge funds and private equity firms in record numbers. And increasingly over the last couple of years, they are investing in co-investments, or they're going directly into deals to save themselves on fees. The family office environment can be very broad in terms of how it's structured. So a family office could be running money as a result of someone who set up a very successful business, and that business had a liquidity event, and then there's money to be managed. That money could be managed by the prior owner of the business or the prior owner of the business and his family, or he/she could hire a team. There could be a vast build-out of an investment team that looks almost like a private equity firm or a hedge fund firm inside of the family office. So I've seen a broad diversity of structures and a broad diversity of complexity and also levels of investment expertise within the family office environment that I am familiar with as a result of my background.

Matt Kerzner: When we work with families they might have a family office already, or they might be thinking of starting one. What is the best way for someone like Tim and I who are working with families and let's say they have a family office already, but they want to take some opportunities to be diverse in their investments? What kind of advice and counsel can you give people like Tim and I who are working with these families on what they should be thinking about or doing?

Nancy Vailakis: So to the extent that families are not diverse in their investments and that's the primary way that families approach wealth protection versus risky wealth creation. Of course, people want to see an appreciation in their investment, but diversification is sort of the first thing that people consider. But if families are looking to build-out a team or they're looking to explore options within the available universe of firms that could be either hired or professionals that could be hired to help them out, to assess investments, I think that the important thing is to not rush the gate to explore all potential options, whether it be a consultant, a known consultant, or a lesser consultant that focuses on families, whether it be kind of joining a professional organization that exposes them to all of the current investment strategies that families and institutional investors are putting money to work in. But I think it's important to be thorough in that exploration process to make sure you're finding the right talent. I think often a pedigreed background experience with the investments that you're looking to get involved with or to put money to work in is critical. But certainly, to the extent that you want to be diverse, you might want to find someone who's more of a generalist who understands a multitude of strategies to help you get over the hump, if that's where you're at. And you want to understand where you could put your money to work and where the risks are in private equity or hedge funds or co-investments. And what the benefits of getting involved in each of those fears are and what the downside of getting involved in each of those fears.

Matt Kerzner: So let's say I'm working for the family and the next generation is starting to really get interested in investing in these diverse opportunities and they've never really dabbled. I'm just going to use an example of real estate. What does your firm do or your organization do or people like your organization, how would they work with them to help them understand what they need to know?

Nancy Vailakis: My organization IQEQ provides most specifically a middle-office portfolio-monitoring solution that is bespoke, that is customizable that is not cost- prohibitive and that can help families assess what they have in their portfolio. Sometimes, families may be looking at their varied investments, but not analyzing them across geography or not analyzing them across the sector strategy bucket or maybe not analyzing them across liquidity profile. Can I trade this today, or do I have to hold on to it for 10 years? What are the fees? So the middle office portfolio monitoring product that we have through Tableau is customizable, cost-effective, and helps families understand what's in their book currently. And if they're going to add something into that book, how would that additional investment, whether it be a fund, whether it be a co-investment, whether it be the purchase of a property, how would that broaden out my pool in terms of diversification? How would that help me mitigate risk? Or am I too concentrated? If I'm looking to go into real estate for the first time, is it best to go into real estate in the location that I am in now? Because I know the hype. If I know the Tampa, Florida, area, that's where my families live. Do I want to go into something I know or do I want to invest in something that would give me broad diversification? I think going slow and trying to find a trusted advisor who understands that investment strategy better than you do, but not pulling the trigger quickly because it's a friend or someone I knew from college. I think the wise thing for families to do is to inquire outside of that initial sphere of friends and family. There's no need to pull the trigger immediately on an investment advisor that you believe everyone else is using. You might frankly want to step outside that sphere, explore other options, maybe not pull the trigger, but learn a little bit more about what's out there before jumping into expensive investments that may be direct investments with no fees, but may not provide diversification, or maybe investments that you're not prepared to analyze fully. And then later down the line, you realize, oh gosh, if I had looked at this little more closely, maybe I would've been more cautious.

Tim Schuster: That makes sense. And actually that kind of goes hand-in-hand now with how often should someone really be assessing that portfolio? Especially now we're talking about diversification. We could be talking about real estate, but what would be a good gauge as to say, hey, we should judge once a year, once a quarter. What do you think, Nancy?

Nancy Vailakis: Sure. I mean I think when it comes to private portfolios, so real estate holdings that are going to be in your portfolio for 10 years or even private equity funds that are going to be in your portfolio for 10 years because you have a lock up, you want to be assessed, for the most part, people tend to assess their portfolios on a quarterly basis. That's the standard. Unless you're trading securities that are either moving around, there's some volatility and on a daily basis, if you're more on the equities fear, then you may want to be assessing on a daily basis. But the quarterly is sort of the wise choice for families who are first looking to set up formal processes around their investment analysis. And then annually for private investments is fairly standard. You'd have an auditor come in and really assess the value. You have an evaluation person come in, you have an auditor come in and really assess what's going on with that private holding at year-end is the standard. So I think those two general metrics are good, unless you're purely in public securities, public equities, freely traded securities wherein you check on a daily basis their marks, or maybe there's a period of volatility in the market where things are shooting up, been shooting down. You may want to take a closer look at that time. Quarterly and annually I'd say.

Matt Kerzner: So Nancy, could you walk our audience through if they needed to reach out to an organization like yours, say if they're just starting out. They have that liquidity event or are working with EisnerAmper, they're working with a Merrill Lynch or Goldman Sachs, and they're starting to think about their wealth management processes. How does your organization get involved with the family? How do they get introduced? How does the process work? And then give us an overview of the steps that you follow to start your process with the family.

Nancy Vailakis: When it comes to families, my experience has been that they want to get to know you perhaps with a modest bit of business first and then grow into their larger needs. They often have many needs, and if they get to know you and you become a trusted right hand, then they're willing to do work with you on many service lines. But sometimes we start with something as small as cash reconciliations on a monthly basis. In other instances, we do jump right to the middle office, or some arguably would say it's front office portfolio monitoring. It depends on who the firm is going to use so that people can assess what they have, because depending on how organized or standard the investment process has been up until the point that they call us in, they may be a bit surprised to understand the full exposure and that can be a real eureka moment.

Tim Schuster: Yeah, definitely. The first time you have that you're like, whoa.

Nancy Vailakis: It depends on how families have structured their investment teams in the past when we come in. I do believe our approach is correct for families. For the most part, they do bespoke organizational processes. They're not all doing it the same way. I would say post-credit crisis. I saw more families kind of hired the Goldman guy who was displeased and so there's more expertise in some instances. And then in other instances, there are people within the family who are pulling the trigger on investments that maybe don't have any investment experience but feel compelled by a certain sector or are very excited about; crypto is very trendy. And those trends do sometimes make people money. But I would be cautious if I opened up a family's portfolio and it was 90% crypto, especially right now. Going back to that theme of diversification, but also I would say watch and see the investment process because trends can be very fly-by- night and in the financial services world it is very good to have more classic investments as a bedrock for more speculative investments if you want to go the crypto route, hypothetically speaking.

Tim Schuster: That make sense? Well, Nancy, let me tell you, thank you so much for being with us today, and Matt it's a pleasure as always my friend. So Nancy, how does someone contact you if they have additional questions?

Nancy Vailakis: You can email me at

Tim Schuster: Thank you for listening to “Generations and Family Business, Past, Present, and Future” as part of the EisnerAmper podcast series. If you have any questions or there's a topic you'd like us to cover, email us at Visit for more information on this and a host of other topics. We look forward to having you listen to our next EisnerAmper podcast.

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Timothy Schuster

Mr. Schuster is a Senior Manager providing tax compliance services to individual filers, as well as assistance on tax returns for companies in the manufacturing and real estate industries.

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