Brian C. Adams: The importance of helping family offices to survive and thrive
When it comes to ensuring the ongoing stability and success of multi-generational families, Brian C. Adams is what the Next Gen would call ‘inspiration goals’.
The fact that he’s become such a vital component to the smooth running of Sirrom Partners, the family office established by the heirs of American founding father Robert Morris, is all the more remarkable given that Adams is an in-law – or a ‘non-lineal’ as he liked to describe himself.
A qualified lawyer with a strong moral compass (“Early in my career, I was a prosecutor for the district attorney's office in Davidson County, Nashville,” he says. “I did that as a way of trying to give back to the community and then I veered into the entrepreneurial space”), Adams serves on the board of his wife, Jessie Morris Adams, family’s vehicle and thus has helped to continue the legacy set by past generations, while keeping a firm eye on the future.
Additionally, Adams parlays his vast decade-plus experience in real estate and private investment as the board Principal of real estate private equity firm Priam Ventures, and his own private equity firm Excelsior Capital, which he formed in 2019 (named it after the motto of his home state New York, meaning ‘Ever Upward’).
Here, in his own words, Adams talks about respecting family history and paying forward knowledge and experience…
BUILDING ON PREVIOUS GENERATIONS
My own decade-plus experience in the private investment space [during which time Brian has assembled a portfolio of more than $650 million in real estate assets] dovetails nicely with the story of the family itself.
The Morris family came over from Wales in the 17th Century, settled in what is today New York City and had a large holding of real estate in what became Manhattan and Queens.
This was obviously a long time ago, but the concept that real estate is a persistent, steady asset class where you can maintain and accrue wealth remains something that the family believes in strongly.
So, when I was exploring my entrepreneurial vigour 15 years ago now, I had the opportunity to attend a class at Vanderbilt University's Owen Graduate School of Management here in Nashville.
On the first day, the business school professor explained that the wealthiest individuals or families in the world (if you remove inherited wealth or married wealth from the equation) fell into three buckets. The first is people who had a great idea in the garage and ended up creating a wonderful company like Apple or Google. The second is people who had a corporate career and amassed stock options in a company that ended up being publicly traded. And the third is people who had exposure to real assets… timber, oil and gas, real estate etc.
I thought, well, I don't have a great idea and I don't want to do a corporate gig, but real estate is something that I could do, especially given my law background… so I got into real estate!
According to Campden Wealth’s North America Family Business Report 2022, family businesses ranked real estate as their primary investment focus. More than 91% of all millionaires in America have investment exposure to real estate beyond their primary residence. There's this concept of ‘don't fight the Fed’ when you're making investments or allocating capital, but, when it comes to real estate investment, what I like to say is ‘don't fight the IRS’.
Tax codes are basically a series of incentives or disincentives to encourage or discourage certain behaviours. The IRS wants you to be married, own your own home, have children and invest into real estate. If you look at the tax advantages, plus the ability to have cash flow-appreciating assets, real estate makes a lot of sense for ultra-high-net-worth (UHNW) individuals and families because it has that sweet spot of creating current income, having long-term appreciation and giving huge tax advantages.
GETTING ON BOARD WITH THE IN-LAWS
It's still rare for people who marry into families to become, not only a part of the family business but also part of the family office, which I am in a non-voting, non-beneficiary capacity.
My role serving on the board of Sirrom Partners came about after what I jokingly refer to as a battlefield promotion! My wife and her sisters all had day jobs and my father in law was the chief trauma surgeon at Vanderbilt University Medical Center, and was naturally a very busy man… So he needed an aide de camp to represent the family.
I graduated law school in 2009 – which is probably one of the worst times ever to graduate law school – and I unfortunately had my offer rescinded and had some time on my hands, so I stepped up. I think once you're in that position, people just look to you to do things.
There was the business side of things, but I also worked hard to establish a relationship with all the family members so people felt comfortable talking about all aspects of the family enterprise.
We're not a very large family in terms of households and the culture is that everyone has a day job. We have third-party professionals that we work with and no family members work exclusively within the family office. The concept is that the family partnership gives all of us the opportunity to be entrepreneurial or to be of service – we believe that every generation needs to be a wealth creator in order to sustain the family moving forward.
The family has been in the financial services or entrepreneurial space since the 17th Century and there's a realisation that no matter how successful any given generation is, taxes, time and all other kinds of factors come into account to degrade that corpus of assets. It's imbued in the family DNA that no matter what the AUM is or how successful one given generation is, you know that the next generation needs to carry the torch forward.
We’ve talked a lot about the shirtsleeves-to-shirtsleeves adage, but the reality is, if your spend rate is 4-5% in terms of maintaining your quality of life and then inflation is historically 3-4% (naturally it’s higher now!) and then you've got the exponential growth of the family, you need to be clocking north of 10% annualised returns year over year to maintain that. Unless you have an operating company that is achieving that alpha, it's really hard to do as a purely financial family. Obviously, you try to do things on an asset allocation and estate planning basis, but even the best hedge funds in the world can’t accomplish that so why would we be able to?
I think it's also a case of displaying humility and communicating the need to support family members to go out there and try to create something on their own to maintain that quality of life over the long term.
Family offices and family-held businesses are the backbone of the American economy, and we need to help them.
RESPECTING FAMILY LEGACY
My wife’s family can be traced back to Robert Morris, best known as the ‘Financier of the American Revolution’ and a signatory of the United States Constitution and Declaration of Independence, amongst other vital documents.
Marrying into such a storied family and being involved in the family office as a non-lineal is still something I struggle with. I'm always going to be known as Dr. Morris's son in law in many circles and, for a long time, I pushed back against that. But now I've come to peace with it and I look at it as an opportunity and a legacy that I want to support.
The family have all kinds of old New York legacy assets and it’s easy to become overwhelmed by something like that. However, as I’ve discovered having been part of the family for a long time, we’ve all got foibles like every other family.
We do, however, have a different setup to many other families. Many of us live on a family compound in Nashville and we all sit down to have Sunday supper every week – I think those things help a lot.
One of the challenges we have as a family, that I'm sure a lot of others do, is we have a lot of very hardworking entrepreneurial people. And so, while we're all out there trying to conquer the world and be great spouses and great parents, it can be very hard to corral us all and not be distracted. Third-party facilitators have been really helpful on that front.
Getting outside of our typical venue can be really powerful, too. We have an annual retreat, usually to the Great Smoky Mountains and we go to Nantucket in the summer to try to enjoy a slower pace of life and spend some time talking.
PAYING KNOWLEDGE FORWARD
Having joined Mack International [a family office C-suite executive search firm founded by Linda Mack], as well as serving on multiple investment and advisory committees and hosting The Capital Club Podcast, [a series which talks to investors and industry leaders about all the subjects that matter in the world of business], I’ve realised that knowledge sharing is very important to me.
Linda Mack has been doing what she’s been doing for more than 25 years and she’s a leader in her field. A lot of the families she works with are undergoing a leadership transition from Baby Boomer to Millennial / Gen Z and I wanted to work with someone who could be empathetic to that generational cohort. I think she has a terrific business and I knew I could contribute with my own experience and network.
There’s a dearth of resources available to UHNW families. Even though there are more conversations, events and organisations taking place than ever before – Campden Wealth and the Institute for Private Investors, for example, do incredible work – frankly, there aren't a lot of centres of influence that don't have an ulterior motive. It's an under-served marketplace.
Family offices and family-held businesses are the backbone of the American economy, and we need to help them. Just because they have a lot of zeros on their bank statement doesn't mean they don't have real problems and challenges. So, to be able to have an empathetic conversation with them and offer them a solution, I think is just a really great thing.
I think for a lot of Next Gens, even though we're ambitious and entrepreneurial and we're well connected, we really want somebody to teach us a skill set and receive that mentorship. So, for Linda to invite me to join her to build her business and introduce me to her network is very powerful. And if I could then pass on that knowledge to the next generation, then that can only be a good thing.
