Episode 123 - The Role of a Family Office with Ronald Blue Trust
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Ronald Blue Trust advisors apply biblical wisdom and technical expertise to help the clients they serve make wise financial decisions when it comes to money, family, and generations. On this episode of the Faith Driven Investor Podcast, we talk with Scott Calhoun, Skip Perkins, and Kyle Kutz about the benefits of a family office and the importance of finding balance in life, investing in the next generation, and leaving a godly legacy.
All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. This podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization.
Episode Transcript
Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it.
Rusty Rueff: Hi everyone thinks once again for finding us here at the Faith Driven Investor podcast. It's great to have you. So what is a family office? Well, some of the confusion may stem from the fact that the original family offices manage the financial affairs of a single, extremely wealthy family, such as the Rockefellers or the Vanderbilts or the DuPonts. Such single family offices still exist, but the wealth management industry has evolved so that multifamily offices can bring a higher level of expertize than most single families can attract a family office as well. It's not for everyone, but for those with significant assets, complicated financial lives and a desire to make the mundane as well as the complex flow just a bit smoother. A family office could be an ideal solution. Ronald Blue Trust advisors go a step further by applying biblical wisdom and technical expertize to help the clients they serve make wise financial decisions when it comes to money, family and generations. On this episode of the Faith Driven Investor podcast, we talk with Scott Calhoun, Skip Perkins and Kyle Kutz about the benefits of a family office and the importance of finding balance in life, investing in the next generation, and most importantly, leaving a godly legacy. Let's listen in.
John Coleman: Welcome back to another episode of the Faith Driven Investor podcast today. We're very fortunate to have three guests with us to talk about family offices, single family offices, multifamily offices, how they're structured and how they invest. All of our guests are from Ronald Blue Trust in Alpharetta, Georgia. And we're privileged to have with us Scott Calhoun, Skip Perkins and Kyle Kutz today. Welcome, gentlemen. How are you all?
Scott Calhoun: All right, John. Thank you.
Speaker 6: Thanks for having me.
John Coleman: Well, look, it's going to be a fun discussion today. I know you're all experts in this field and you've got a lot of great stories. But maybe I'll start with you, Scott, just a little of your background. Why did you get into the family office space and why are you passionate about it and what gets you up in the morning?
Scott Calhoun: Yeah, certainly, John, thanks again for having us. I got to admit, is really by accident. I started my career in public accounting as a tax consultant with KPMG here in Atlanta. And my wife and I, we're actually from south Georgia and we decided to go back home to raise a family. And one thing led to another. And I went to work for a bank that had a trust company that had a multifamily office embedded inside. And so I was kind of brought on board to be kind of the estate planning. Financial planning consultant for this multifamily office had worked with some family offices during my KPMG days, but that was my first kind of venture into the family office world. And so I started in the multifamily office world, kind of did a quick detour of my career into the investment consulting arena, and then really just kind of a Lord put it on my heart, kind of want to come back to the family office world coming back to be that global problem solver, as we like to say, but really intentionally looking to how can I do that, incorporate my faith and bring honor and glory to the Lord's kingdom in doing so.
John Coleman: That's an awesome story, Scott. And tell us. You had mentioned as we were catching up in advance of the call that each of the three of you have kind of different backgrounds that are complementary given the family office. Skip and Kyle, I was wondering if, just as a complement to what Scott articulated, if you just give us a few seconds on your backgrounds and how you came to this as well.
Skip Perkins: Yeah, so I'll go first. I was practicing law and actually recommitted my life to Christ about five years into my career and really felt called in a different direction. And I wasn't sure what direction that was going to be, but I wound up talking to a friend of mine from law school and he had gone to work for a family office. As it turns out, the same one Scott was working for at the time, and he kind of explained a little bit about what they were doing and able to help families and serve families. And so I made the change from the private practice to the family office world. And then after about 15 years of working there, Scott called me up because he had just gone to work at Ron Blue and just shared this vision of being able to serve families from a biblical perspective and bring, you know, biblical wisdom into the picture of serving these families. And I just was like I told Scott, I'm really not looking to leave, but wow, how do I not do that? So that's a little background on how I got here.
Kyle Kutz: Yeah, and similar story. I think we all have different God stories of what has led us to where we are now. But when my wife and I moved to Atlanta in 2015, before that, I had done some public accounting CPA track, sort of the tax world. So I'm a recovering tax accountant now, a little bit out of that, but still, that might happen every now and then. But when I came to Atlanta, joined a large multifamily office in Buckhead in the Atlanta area and thought I'd be there probably forever. Great team, really great experience serving some great families. But really through that interaction with some folks at my church, I had heard about Ronald Blue Trust and had heard that they had a family office division and thought, Well, maybe someday God will lead me there. But never thought it would be earlier in my career. And the story I like to tell folks that when I was at my previous multifamily office firm, you know, again, great families, but some of them I remember going through some of the exercises on retirement planning and there was a gentleman there who was an inheritor in his forties, Harvard guys, super smart guy. I mean, he can make a buck, but for every buck he made, he spent $2. And I remember just doing retirement planning for him thinking this guy's inheriting a $300 million fortune and he's finally making $1,000,000 a year, at least, if not more. But he had gotten to the point where he was spending upwards and some month of $1,000,000 a month personally. And we were worried that he wouldn't have enough to retire. I remember sitting there thinking, Scratch my head. Is this normal to most people who are inheriting $300 million after worry about having enough at the end of their life? But I think that was part of just God's story in my interaction with some of those situations and thinking maybe someday God will lead me to a spot where we can have a multifamily office environment and serve individuals who are looking more out into the future. From eternal perspective and using their capital in ways that influence lives here on Earth. And that's what led me to Ronald Blue trust. So tax background, estate and trust background, a little bit of an investment background, but that's what led me here to this time working with Scott and Skip.
John Coleman: That's great. And Scott, just this set the table for us. You know, most of us don't have a family office or aren't a part of a family office, and there are some out there who are considering it. Would you just explain to us what is a family office and how does a family think about choosing between a single family office and a multifamily office like the one you all run?
Scott Calhoun: Yeah, good question, John. I mean, I think there's actually a great saying in our industry and it's if you've seen a family office, you've seen a family office because each and every one of them are so, so different. So a multifamily office, by definition, is a group of professionals that serve multiple, unrelated families. For instance, Ronald Blue, we serve a little over 30 different distinct families across the United States, single family offices where a family's situation is so complex and so large that it really kind of commands, Hey, we're going to create our own single family office that serves us, our family and our family only. Sometimes that single family office actually might be embedded in their business. Sometimes it might be external. There's actually another one that's kind of in between. It's actually called a private family office. A private family office is a dedicated team of professionals that serves one family and one family only when it's actually embedded inside a multifamily office. And we actually have that here at Ronald Blue, where we've got advisors that serve multiple families. I serve about ten or 12 different families, but we also have advisors and teams that serve one family and one family only. I think the key, the determining factor is it's really complexity. It's hey, has the family situation gets so complex on the private business front, the investment front, the estate planning foundation front, all of those various things that kind of add to complexity as the family's wealth grows. Has that complexity gotten so great that we need some form of a family office?
Skip Perkins: Yeah. And John is going to add to that a little bit. Just to say, you know, a lot of times when we go around the country, people have different ideas as to what family office means. So we didn't found that geographical and a little bit like a lot of times when we're in Texas, they think it's oil and gas. It's bookkeepers keeping up with oil and gas rights. And if you're in New England, it's the office where they go to get their tickets, to go to, you know, go out of town or to go to the, you know, the ballgame or whatever else. And, you know, different people have different ideas. And a lot of times people won't, like, create a it's almost like a business. So they've had a liquidity event or they've had a, you know, something that has happened. And they say, you know, we want to pool our assets and, you know, we can do things better together. So we may have a portfolio of operating companies or we may have a portfolio of marketable securities and some private investments or whatever else. Every family kind of sees it differently, and that's sort of what we think. Our goal, our job is really is to sort of help families identify, you know, what is the goal, you know, what are we trying to do here and how do we bring you know, we've got that sort of joke when we add up. The years we've been doing this together, we bring, you know, almost 60 years of experience, which still makes me kind of shudder. But it is true, I think. But, you know, how do we bring that experience to say, what is it you're looking to do and how can we help you do it? And how can we build your office to fit that.
John Coleman: Well and that's fascinating, Skip, because you're picking up on a topic, I think when a lot of folks think single family office or multifamily office, they're thinking investments, right? Somebody construct the investment portfolio. And that's obviously a very important part of a family office that we'll circle back to. But I think fewer people are aware of just the complexity of family offices and the different services that are offered maybe to pick up on that thread. And Kyle, you could start us off. What are the major functions within a family office is Skip was beginning to articulate and what can those look like for families as they participate?
Kyle Kutz: Yeah, great question. I mean, a lot of times we start serving new families. We'll spend a lot of time with them just really understanding their needs, their goals, really where they're at, whether they're first gen wealth creators, second or third gen wealth inheritors. And the more generations that there might be within a family, there's more complexity. I just typically comes with both family enterprises, whether it's the family business, whether it's family inherited wealth. So let's discuss a little bit. Sometimes it's a regional difference, but some of the key tenets that are out there in the secular space, you know, would sort of be that wealth management side. Okay, investment management, asset management, tax planning, estate planning. Then what we call is support services, maybe family office support services, which might be a little bit more execution on a day to day basis, could be bill paying, could be reporting, could be a, you know, accounting of the activity, could be concierge services like helping folks on their travel expenditures or going to buy a car, getting a house insured, those kind of items. But we like to distinguish ourselves a little bit differently, especially it's done in their previous multifamily office experience, where they just noticed as the generations got more and more complex and larger and maybe they spread out more, there was a mission services aspect that was ignored. A lot of times the focus might just be on the dollars and cents and every decision to maybe push through what's the most tax efficient way, what's the best way to gain a dollar in every decision that's made? But the personal relationship side is often ignored. So what we like to do is also focus on those family mission services, family governance, how to families come together and maintain the mission of the family. As their situation gets more complex and grows in value, how do they ensure that their philanthropic goals are accomplished? How do they make sure if they're coming from a position of faith that each generation doesn't forget about God, the Creator of everything that is provided to them that well? So there's a couple of different pillars that we like to look at with families, the family wealth management side, the family support services side, and then the family mission services side. Scott and Skip feel free to jump in and maybe add anything that I missed.
Scott Calhoun: John I'll add there too I think, you know, even in the secular family office world, a number of different surveys, surveys are taken every year from family office exchange, family wealth alliance. And when they interview families of substantial wealth and they ask, you know, what's the thing that keeps you up at night? It's generally not the taxes, it's not the estate plan, it's not the investment returns. Although all those are important, it almost always tends to be focused on the next generation of the family. How are we going to prepare and equip the next generation of the family? A lot of it, I think, may be more fear based in terms of, hey, are we going to destroy the work ethic in the next generation? You know, back to that situation that Kyle alluded to, if they're going inherit 300 million to the year and even do not have to work. So, you know, how do we continue to perpetuate that idea regarding stewardship and work ethic and understanding, you know, your giftedness and all that? And so that's why we probably put so much focus on kind of that family mission services bucket, because that pretty much dictates the conversation everywhere you've got to start there before you even think about diving into the estate plan or the investment plan and that foundational focus of the family and the next generation, you know, how do we prepare and equip the next generation as opposed to protecting and insulating them from their own mistakes? You know, how do we teach this understanding of you've been blessed to be a blessing and actually you've been blessed even beyond just your financial wealth. You've got individual giftedness that you're really kind of commanded to understand and take that giftedness and take it into the world, you know, really kind of changing the vernacular. So it's not about what you're going to get, it's about what you've been entrusted with. Again, the financial wealth, individual giftedness, the relationships that you steward, all of that. And so that's why we put so much focus on the family mission component before we even try to, you know, tackle the things and the wealth management side.
John Coleman: Yeah, I know. We interacted recently with a family that was very thoughtful about this. They were in their fifth generation, although the third generation was currently leading the company and they had approached really diligently the idea of kind of biannual whole family meetings, board meetings, where they get training and things like that, how they'd select leaders for the company, how they would steward wealth across the family and what values they had. And I was just so impressed at how complicated that was and how important the governance and generational transition was. Skip I'm really fascinated by this idea of a family mission as well as just the idea of governance. And maybe if we could pause on that for a moment, you know, we as a family also have a mission statement for our kids, like how do we want our kids to grow up and what do we want the in state to look like? What does the family mission look like for a family and how do you, as one of their advisors, help them to structure a process where they can engage together on that mission and try and decide what this looks like across generations?
Skip Perkins: Yeah. So in a way, we start with, you know, you may start at the senior level or you start with whoever is kind of engaged immediately with the family to just understand, you know, a lot of times we start with their values, you know, what are those values that the family shares? What are the values that they hold like really, really deeply and they anchor into? And, you know, the difference between really where I was before and being at Ronald Blue is it's funny when you start with a blank slate and you kind of get to make up your values or, you know, kind of make up what's important. But for us, you know, our families, we really try to anchor them and root them in values that are eternal values that, you know, come from the Bible, come from scriptures and but really understand what's important to the family and then build on that. And really, you know, I think what you said or Scott said was really important. It's being intentional about it. It's because, you know, especially when you get to future generations, you have to think about and be intentional about how you're going to instill into them values that motivate them or get them to work. I mean, to instill purpose, frankly. That's really what your you know, they have to have purpose. I think God makes us to have purpose. And we have to figure out how the family can encourage and instill that sense of purpose in each family member. You know, I give you an example of one way we do it and it's kind of fun, I think, you know, I do this with a couple of families, but one stands out because they're a lot more intentional, a lot more dramatic about it. But we have like initiation. So like we actually go through it. We've identified the values of the family. We've created a mission statement for the family. And that's just an exercise we go through and we try to engage everybody because we want everybody in the family to feel bought into it. You know, very often if you have somebody who says, all right, this is our family mission, and then you go out and tell everybody what it is, you don't have the same buying as you do when they're part of kind of building that. But in this case, what we do is we actually have an initiation when kids turn 13. And so there are eight gen threes in this family and four of them so far have gone through this initiation. And we've got a kind of a timeline of early you learn about very bare bones about the family business. You learn about the family mission, the values. They really spend time talking about the family story. These are immigrants. So there's a powerful, powerful story of them coming to the United States and building this and having a history of even being homeless at one point. I mean, it's amazing story. And then you build on that story, but you share that with the kids. And as they get older, you provide them various opportunities for development, for education, for learning about the family, about investments, about how to give, how to do all these things. And you give them opportunities to join in mission trips and things like that that you help develop them. And it's really hard to give kids grit. Like when you grow up and you don't have anything. It's really hard to give kids grit, but you can instill a sense of purpose and values in them that can help get them that kind of that meaningful purpose and grit that they need to where they're not looking at this, I think Scott said it earlier, they're not looking at what's going to come down the line is what am I going to get? You're really empowering them to contribute to the kingdom purpose that the family is doing and the family is trying to accomplish with what they've been entrusted with.
Scott Calhoun: And John, I think I'll just add there, especially as the family goes forward and new generations are born and new generations are born into wealth, and there's this disconnect between the sacrifices of the senior generation. It gets really hard. It gets harder for them to understand and truly comprehend. I had a family in Arkansas we were working with and we had three generations for a family meeting. Family business been around for about 100 years. The patriarch at the time got up to kind of tell his story of kind of stewarding this family company for the last 40 years. And we we really asked them to be very open, transparent and vulnerable, which is very unlike him. But he followed our direction and. Basically told his children and grandchildren the four times over 40 years that he had to leverage his personal balance sheet in order to keep the business afloat. And I tell this story a lot, and he had two grandsons came up to him afterwards, and the responses were priceless. And the first one said, Granddaddy, thank you so much for telling us that story, because we weren't quite sure what you did on a day to day basis. But the second one was priceless when he said, Granddaddy, thank you so much for telling us that story. We never knew our family ever experienced hard times. I mean, these were kids that grew up traveling on a private jet, going to exotic locations, going to private schools, understanding that they lived in a very different economic environment than a lot of their friends, but never really had that direct connection with the sacrifices and the stewardship that kind of came along with that. And so that becomes a very intentional part of our process. How do we create an environment where we can continue to perpetuate that understanding into the fourth, the fifth, the sixth generation that understands the stories, the values and the connections, even if they weren't part of the original sacrifice.
John Coleman: Man, I love that. And you know, even in my own personal family, which isn't quite as well off as you're describing, you know, I grew up with nothing. And we worry about the kids not having that grit, as you mentioned, Skip. And how do we instill that in a kid while also you want to provide for them, right? You want to give them good educational options. You want them to be able to travel to see new things. And yet you also want them to learn what it means to be hungry, to have to succeed on their own, to be independent. And that's a real tension. You know, one of the things I think is important in Christian family offices in particular that I haven't heard you touch on just yet is giving. Before we circle back to the investment portfolios, would you guys mind picking up this topic of giving and what role that plays in your advice or counsel to to families?
Scott Calhoun: Yeah, I think I'll start. I mean, I think fortunately, although not all of the families we serve are Christians, a lot of families have actually intentionally engaged us because we come from this value perspective. But fortunately, most of our clients are Christians, and so the giving conversation is easier. So we're all kind of starting at that basic starting point, and that is God owns it all. And if God does own it all, how are we supposed to effectively steward the assets that he's been blessed us with, including giving back? And so giving back and really kind of fostering that idea of giving back has never really been a challenge. And I think especially for our clients who have the financial wherewithal to give exceedingly and to give exponentially, that is there. I think the biggest thing, though, for our families is how do we instead of just writing the check, because the stewardship doesn't end after we write that check. It goes on. So how do we bring the family into the family giving story so the family understands. Okay, here's where my passion of giving comes from. Here's where I've given. But really kind of inviting the family into the story because guess what? At some point, time, gen two, gen three or gen four beyond, they're going to be making the decisions of where these resources go. And so, again, I think creating a conversation where we can honor, you know, multiple perspectives on how we can share these resources and how we can give exponentially, but also understanding that the stewardship component doesn't stop after we write the check. In fact, if anything, for large givers, your stewardship responsibility is actually even greater if you're giving a check, if you're writing a check for 100,000, 500,000, etcetera, to one particular charity, you've got to understand, are there negative implications, potential negative implications for writing such a big check? Are we creating a a sense of dependency? Are they expecting that same check year after year and are not taking kind of the actions they need in order to be able to attract other donors? And so, again, I think the family story, the culture is very important, but also understanding that stewardship doesn't end after we write that check.
John Coleman: Yeah, I love that. And, you know, one of the things that's been most impressive to me as I've entered the Faith Driven Investor in community is just how generous people are. I mean, I've been blown away, Kyle and Skip, any stories that stand out of generosity before we move on or things that you've seen that have just impressed you that some of your families have done?
Skip Perkins: Well, I'll go. Although I feel like we're not giving Kyle as much time as we could. But I'll jump in real quick, okay?
Kyle Kutz: I'm a good listener.
Skip Perkins: Yeah, there's so many. I mean, you know, that's one of the things about working, you know, with a bunch of generous families is that it's so amazing to have seen. So, like, I've got this sort of slew of things running through my mind to choose from. But a couple that come to mind is, you know, as we've been working with the next generation in multiple families, but, you know, one that I'm kind of thinking of in particular, they as they give the children these opportunities to kind of learn about what giving is and that God owns it all and that the whole they see the picture of the family being generous and helping folks. It's neat when you see the next generation start to step up and find things that they're passionate about. One client who their a 17 year old son is just he was passionate about homelessness. And so he went and just really came up with his own ideas that he brought back to the family and was like, I really want to do this and I really want to do that. And to see the family, it was almost like create an entrepreneurial spirit in his giving as he was trying to go make a difference and help. And, you know, the family kind of encouraging him and supporting him to understand that, you know, this is God's heart for people, that this is God's heart and this is where this comes from. And this doesn't just feel good because it feels good. It feels good because God is wired us that way. And again, that's part of that. When you think about the next generation learning that same family, actually, they go on a vacation every year that we actually facilitate where they go, somewhere where they've given to something. And it's not to get any credit. Like they don't have like a big crowd that follows them. It's for the kids to see. We have a company. This is the kind of stuff that can happen when you're using your money for the right things. And we've had some powerful, powerful trips where the kids have really been able to see some incredible stuff and you see them beginning to learn. You know, that's just what it's about. Like that's normal is that we're going to give and we're going to make an impact. We're going to be intentional and we're going be careful about it.
Kyle Kutz: Yeah. And just to follow up on what Skip said, it's neat to see how God leads the hearts of different individuals to give to different causes. And we've got some clients who are a couple different families who are very focused on education. Some of them write $500,000 checks, some of them write $10 million checks. And God blesses both of those. Right. I mean, it's impressive to see it in their communities, how they can sort of impact those around them in a loving way. We've got another client who loves giving towards retired pastors and realizes that those in the ministry usually have taken some kind of financial sacrifice through life. And at the end, when they get to that retirement age or they move on from being a minister, that there's usually a shortage of cash and ability to live off of. So we've got one client who just really tries to help lift up those who've maybe retired from different ministries. I leave you with maybe just five different reasons. I mean, some listeners might think, why should we give from a heart of a Christian? Why should I give? And just to keep it real quick and simple, the first reason it's sort of been mentioned a few times that giving is a tangible way to acknowledge the ultimate ownership of God and how a sovereign God rules over our lives. So sometimes if you're like me, you can have some of this best approach. We don't want to let go of things that supposedly open our hands. That's just a tangible way to say, God, I understand that you own it. So I need to give to recognize that the second reason we can find some of these sort of scriptural references in Proverbs chapter three, but we show honor and obedience to God when we give, and the God even gives us commandments to give throughout Scripture. It's it's pretty hard to miss those commandments look, because he knows that money and Mammon and the attractions of this world are going to keep us from him, and if we don't decide to let go and follow after him. So the second reason be to honor and obey. The third reason is that charitable giving is done in order to help prioritize issues in life. I know that when my wife and I give, a lot of times it's easier to realize what's the most important thing. So giving breaks, the power of money. And then the fourth and fifth reason. The fourth reason would be that charitable giving is done to meet the needs of others. You see this all throughout Scripture. You see in second Chorinthians chapter nine, Paul commands, and it says, Hey, open your eyes for those around you to essentially realize where a need is. And then the final reason, and this isn't really the main reason, but there's also promises in Scripture that there's rewards, eternal rewards from giving and following Christ. And we get to understand that we can lay up our treasures in heaven instead of laying them up here on Earth. And there's a promise that God gives us to give. So we love to help people along their giving strategy. And when you think through what makes maybe that philanthropy plan successful, especially when you're dealing with family office clients and multi generations, we like to define that success by determining the appropriate vision for the family and then the structure and the training that goes along with that to ensure that future generations experience that joy of giving.
John Coleman: Man Kyle coming in with the five points framework. The former McKinsey consultant and.
Kyle Kutz: I got to keep
Kyle Kutz: It simple.
John Coleman: if you could come with a two by two chart. Kyle next time I think.
Kyle Kutz: Next time I finished out.
Kyle Kutz: Bullet point excel.
Scott Calhoun: Hey John. I'm sorry I can't help but add to Kyle's last point in terms of the joy of giving. I mean, clearly, you know, one component of giving is the tax advantage for the last couple of years, when they expanded the deductibility under the CARES Act so that you basically our clients could donate 100% of their income as cash gifts directly to public charities. In the first year it came out, we had a number of clients that took full advantage of that. I mean, clients that gave literally 20, 30, 5000 dollars Million or more in 2020. And we came back to them when they extended it into 2021. It is interesting because, you know, if you're in the secular world, some clients might respond by saying, oh my gosh, I wish I had waited. And, you know, said doing a 20, 20, I wish I'd waited, done in 2021. Our clients were different almost uniformly. They came back and they're like, Wait, I get to do it all over again. Wow. So that was the first component. That it was just really kind of giving beyond all expectations. The other was this is some of those same clients have come under audit by the United States Treasury because the IRS comes in and says nobody gives away this kind of money and these are just cash gifts to public charities. So it's not like there's anything surreptitious going on here like. No, there actually are people that give away this kind of money. And so it's almost like this badge of honor that, hey, if the IRS is questioning because I gave away so much, I must be doing something right. And I've never seen this before in my 30 years career. I literally have clients who are looking forward to that next IRS letter. I'm just waiting for them to send me a letter on 2021 saying nobody gives this kind of money away.
John Coleman: Scott Calhoun, witnessing to IRS agents.
Kyle Kutz: And telling them.
John Coleman: I like him sharing the gospel.
Kyle Kutz: Yeah, the IRS agents. It's like, who does this? Well, let me tell you about this person named Jesus. I mean, they had no idea what they were signing up for to audit that return, but.
John Coleman: It's right. Well, I want to shift focus just a bit, guys, before we end here and do deep dive on the investment part of this. Because, you know, obviously, as your wealth grows, the complexity of your investment portfolio grows and you guys have a great window into some really interesting asset allocation into the types of assets that you try and get access to. Maybe, Scott, just to start with you and then we can feed off of that. Talk to us about what your family office portfolios look like in terms of the assets that you guys are trying to allocate to and how families think about that mixture of personal assets. Like you said, they own real estate. They own a family business versus the portfolios that they have.
Scott Calhoun: Yeah, yeah. I think this is probably one of the areas that we're most excited about, John, because I think we're seeing so many evolutions and we're just loving the participation with Faith Driven Investor because again, I think especially over the last ten years, we've seen this dramatic shift and new opportunities and new understanding that I think clients are understanding new ways of how they can incorporate their faith into their finances, whether it's their investment portfolio, their business, etc.. But also the options are ever increasing and I think the understanding is ever increasing. Clients are starting to understand I don't have to sacrifice investment return in order to make an impact. And so I think in direct answer your question, we're seeing it, everything's all across the board because clients are in different levels of understanding in terms of that spectrum of the different ways you can incorporate faith into your portfolio and that how they personally, through prayerful discernment, are led to incorporate their faith into their portfolio. So it's really all over the board. We may have some that still have what I'll call a more traditional secular asset allocation between, you know, public equities, public credit, as well as private assets. But others are starting to understand, hey, I can incorporate faith here, maybe through screening out certain industries that are, you know, I'm just going to personally have issue with others might be more on a factor basis of really kind of intentionally investing in things that are productive conduits of how I can incorporate my faith. And so I think it's a great conversation. Clients are really being challenged on. If God owns at all, then the next question is how am I prayerfully discerning how I should be investing or stewarding these assets? And it looks different for every client. I think that's the beauty of it from our standpoint is it's not a one size fits all, it's a multitude and the client can kind of grow and understand what those new investment solutions look like.
John Coleman: Yeah, that's fantastic. And I think the faith driven component of it is a really interesting one where it's a supply and a demand problem. We discuss that here at FDI a lot, which is a asset managers have to come up with a lot more innovative ways in which to express faith through a portfolio, particularly positive ways in addition to negative screening. And then clients or limited partners or family office clients have to demand that right. They have to be on the lookout for that, wanting to allocate it to it. And there's a little bit of a fax machine problem there and that the products don't exist without a market and the market doesn't exist without a product. And so it's kind of growing slowly as we've seen. One of the more interesting things about a family office portfolio, especially as they grow, is that they can begin to incorporate different types of assets beyond public equities and fixed income, which you talked about. Scott, is there a threshold at which families begin to think about that? And how do you advise a family on which of their assets to tie up in longer term strategies and just how they think about those timelines? Because it's you know, it's scary for a lot of folks to look and think, I'm tying up assets for ten years or five years or 12 years. At what point do you begin to broach that with families and how do they think about that longer term horizon?
Scott Calhoun: Yeah, no, I think it's a great question, John. And I think we kind of go back to the fact that Ronald Blue as a firm, was started as a Christian financial planning firm. And so everything we do from a financial advisory standpoint comes we start with the financial plan. So whether you're worth $1,000,000 or you're worth $1,000,000,000 from an investment allocation. Standpoint, we start with, okay, what's your financial plan look like? What are your sources of income? What are your expenses? How does that change over the next ten, 20, 30, 40, 50 years? And then really kind of start the asset allocation process based on those investment time horizons. So, you know, that two year bucket, that 5 to 7 year bucket, that ten, 15, 20 plus year bucket. And so making sure that they understand that trade off between need for liquidity and potential volatility in asset classes. And so really trying to target the portfolio from an asset allocation standpoint based on those time horizons is first. The second is, again, when we get into those longer term investment buckets, for those that have the wherewithal to tie it up into illiquid structures that may be illiquid for eight, ten, 12 years, making sure that we've got that properly allocated. So even if it is in the 20 plus year bucket, we've got an allocation balance between, okay, what is liquid and what is kind of long term. But I think in answer to your first question is what's the threshold? I think the beauty is because of the new introduction of new solutions, both public as well as private, literally every single client has a way of incorporating their faith into their portfolio in some shape or form. Now, granted, as you go up the spectrum, the options become more and more, especially as we enter the private market, the alternative market. But even if you've got a client that's solely focused on public exposure, there are tremendous ways of incorporating faith in their portfolio.
John Coleman: Skip and Kyle any thoughts on how you've seen clients navigate either faith driven investing as a topic or just their asset allocation in their portfolios?
Kyle Kutz: Sure. Yeah. This is Kyle. I think Scott hit the nail on the head there. Just talking through when we help clients think through how God leads them. Right. Just prayerfully discerning and sort of seeing where their hearts are when it comes to how they want to integrate faith into their portfolio. What we do with every client is sort of go through that time based analysis of you know helping them meet their goals, but then also make sure that there's enough liquidity in the short term where they can meet capital calls, meet maybe just different investing opportunities that might come up, meet different giving opportunities that might come up within the family. So we're always sort of looking at the whole portfolio from a global OCIO type perspective to make sure that there's tactical decisions all along the way. But what's been fun on the faith integration side is just, again, to see more and more options, whether it's private or public, that are coming to the table, that we can add to the menu, items to offer the clients that then even when it comes down to the nitty gritty, you know, investment policy statements, right? I mean, there's probably some listeners on this call who've drafted investment policy statements to make sure, you know, the IPS is your map, your guardrails, to ensure that there's a fiduciary mindset and a proper allocation mindset that they don't get over concentrated in a position that may hurt the overall portfolio. But then what we've seen a lot of families of faith do is start integrating their values in that investment policy statement, which takes it from a more of a nerdy process to a spirit led process of saying, Hey, how do I want to make sure that as I maybe there's a trust that's set up for my kid, there's a large pool of capital there that I want them to be able to access someday. But I also, in the meantime, want that capital to be put to work in a more impact type way. And I want my kids and my grandkids and my great grandkids, if that pool is still around at that point, to understand what my values were here at this point in time. And I maybe funded that trust. So we've even seen IPS construction changed drastically over the last ten years when it comes to Faith Driven Investing.
Skip Perkins: Yeah. And I would say it's interesting, you know, and I may be restating things that have been said different ways before, a couple of ways, but one is the walls breaking down between thinking of giving versus investing for a purpose. I mean, the walls are just coming down to where they're saying, this is all God's money and I'll give over here where that's going to be helpful. But even as I invest, I want to understand how I can invest and it make a difference. And then, like you said, John, really, you know, what's happening now is I think as that's becoming more and more common and, you know, you're starting to be able to give them better tools to do that, you know, how can you help them? You know, like Scott meant, you know, in the public realm, you think about, well, I don't want to be part of this. Well, guess what? If you are invested in that, then you might have a voice at the shareholder meeting, or you may have a voice to the CEO. You may, you know, actually, by engaging, you may be able to actually go have some influence on those places. And then, of course, with private opportunities of going investing in companies that are going to be value driven or faith driven or whatever else, I mean, it's just it's really finding opportunities to let your money go, have a kingdom impact and breaking down that wall of whether that's going to a five or 1c3 or whether that's going to a company that's going to go, you know, create a profit that will, again, you know, allow even more giving and allow even more kingdom work.
John Coleman: One, you know, one of the interesting things we touch on is the typical foundation or even DAF structure is such that obviously Scott, on one hand, there are those who just give away in the current year, which is amazing. Many people. Put money in a DAF or in foundation, and then they really focus on that 5% or 7% that they're giving away each year, but don't really focus on the 93% or 95% that they're investing in the impact that that can have. And really thinking of that portfolio as one as a way to make a positive impact, I think is one of the more exciting ways in which we can start to view the future.
Scott Calhoun: Yeah, and I'll tell you a story, and this also is a great story of how, you know, the walls are coming down between the philanthropic story in conversation and the investment story. But it's also an incredible story in terms of kind of this generational linkage we were talking about. So there was a family that basically was taking a vision trip to Africa. The next generation, Gen three, was really passionate about a charity in southern Ethiopia, and they brought kind of genuine the patriarch along and he came along a little bit begrudgingly. He was excited that his grandkids were passionate about this, and so he wanted to be there and supportive. Well, during the course of their vision trip, they came to understand. They toured the orphanage, but then they came across an investment opportunity there, basically trying to build a water treatment plant. And they're trying to raise $4 million of capital, you know, to create a water treatment plant that would basically benefit the entire region, not just the orphanage. And it's going to be a for profit capital investment. Well, the patriarch, he basically cut his teeth for the last 50 years, building industrial power plants, so literally producing billion dollar power plants. Now, he didn't necessarily get water treatment, but he knew industrial power. And so he brought his expertize and his knowledge, not just from an industrial power plant, but from a private investor standpoint and understanding kind of the nature of this private investment. And all of a sudden there was this link between the families. So now Gen one was able to impart their wisdom, their value prop, their giftedness so that the next generation could see the value component. At the same time, the younger generation was kind of sharing their passion for these orphans in southern Ethiopia. And so it was really just kind of this beautiful connection, but also this great understanding for the family that God truly does own it all. Not just the assets that were looking to invest in a power plant in Ethiopia, but also, you know, the money that's going to support God's children in the orphanage.
John Coleman: You know one what Henry and Luke and I often talk about is there are some things that are done better through charity. There are some things that are done better through private capital or through capitalism. We believe capitalism has helped to destroy poverty in many parts of the world. It unleashes a lot of really positive influences, although there are some negative influences, the materialism, etc. and there are things that capitalism can't do, like properly fund children's health care, maybe in certain areas or other topics, for there's just not a private market solution. But where you can actually stand up a business that can then operate for a long time, you can create meaningful, lasting change.
Scott Calhoun: Yeah. And I think, John, just one last point is I think we're fortunate given that, look, most of our families, the wealth originated in a family run business. In fact, a lot of our families, the wealth is still heavily concentrated in operating companies, but virtually bar on almost every one of those situations are situations where the family were actually trying to incorporate their faith into that privately owned business. And so even after they sometimes monetize and sell that business, they still have that understanding, that deep understanding of what it look like to incorporate your faith into your business. And so it's a really kind of just a natural extension of that to say, well, how do we incorporate our faith into philanthropy, into our investment portfolio? It's just kind of part of their DNA.
John Coleman: Well, I want to end with a 60 seconds question for each of you that we try and ask everyone we have on. And that's one thing that God is teaching you in your life today. And so what I might do is start with our friend Kyle and then you Skip and then you Scott. So, Kyle, what's one thing that you feel like God is teaching you today?
Skip Perkins: Okay, I don't always want to be a rule breaker, but I'm going to give you two things. I would say there's been two things that have been been providing really comfort to me in the last year or two. I know we've all probably had a rough couple of years in different ways with COVID and just dislocation of family and different items. That just happened personally in a nice life with our extended family. And there's been two sort of promises from Scripture, I guess one promise and one command, one of them being, you know, in Luke Chapter 12, where we're told that Jesus and God, they know the very hairs on our head that they're all numbered. And there's no reason to be afraid or to be worried about the future because of his eyes on the sparrow. Surely he's looking after his children. So that's one thing that it's been very comforting to me over just the last couple of months. And then the other command from Scripture that has really caught my attention lately is just Jesus saying, seek first the kingdom. So all that you do throughout each day, seek first the Kingdom of God, and just let that be your inspiration. Let that be your reason to wake up each day. And that's what it is for me to get excited, to go to work and serve our families and just continue to do what God has for me in my life.
John Coleman: Skip No pressure, but Kyle had two verses locked and loaded there. Man. What's on your. Yeah.
Skip Perkins: That's great. Hard to follow that a no. You know for me, I mean. Matthew seven just really has always been a verse that has resonated with me, you know? You know, seek and you shall found ask and you shall receive and knock and door will be open. And to me and I don't even know how. For me, it's somehow that God uses that to translate almost everything. It's like, you know, before I do something, let me ask him, you know, seek him first. You know, Scott, Kyle and I each have technical backgrounds and technical understanding, and so often we sort of jump into it and we just want to seek him first and then ask, you know, ask. We don't always have the in fact, we rarely really have the true answer, you know, so we need to ask the one who does and then, you know, just sort of that, knock, and I even think of that as just as consistent, keep on knockin and keep on knocking because the door will be open. And, you know, that helps us as advisors to know how we approach our clients and it helps us as we advise our clients for them to understand that there's all these things before them, especially in the family office, there's a almost endless set of opportunities in front of them. And, you know, we try to help them seek God's guidance, ask him and then knock if there's something that's preventing it, you know, just be persistent and continue to knock and the door will be open.
John Coleman: It's a good word. Scott, wrap us up.
Scott Calhoun: Yeah, I think, you know, and Skip and Kyle, I've heard this ad nauseum, so I apologize, guys, but Acts1:8. Acts1:8 keeps coming back to me day in and day out. And it's, you know, the Holy Spirit will come upon you and you'll be my witnesses in Jerusalem, Judea, Samaria and to the ends of the Earth. And we understand kind of the geographic component that of city, state, nation and the globe. But what we're finding is we're incredibly blessed. People come alongside some very intentional families, and we're finding ways of, in addition to serve that family, how can we connect families with each other? Because guess what? Each family has their own Jerusalem. It could be a family here in Atlanta. Atlanta is their Jerusalem. That's where their business is. It might be where a lot of their philanthropic focus is. But we've got clients in Charlotte and Baltimore and Boston and Miami and all points around the globe, and those are their own respective Jerusalem's. And so how can we connect these families to create opportunities for collaboration that they can understand their passion for building schools in Charlotte, they can understand their passion for serving the underprivileged in South Florida. And so really kind of that opportunity to come alongside and serve families, but also bring those families together for the benefit and the glory of the kingdom.
John Coleman: Guys, this has been a fascinating discussion. Thank you all for the work that you're doing, enabling others to steward their resources. Well, and I hope we get to have you back on some time. This is a great discussion. Thank you for coming.
Skip Perkins: Right. Thanks for having us.
Scott Calhoun: Thanks, John.
Luke Roush: Hey, everyone. All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosted guests may maintain positions in the companies of securities. Discussed in this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening. We are grateful for the opportunity to serve this community and see listeners come in from more than 100 countries. Faith Driven Investor It can be a lonely journey, but it doesn't have to be. The best way to stay connected is to join a group study with other investors looking to get the same answers to questions you have and find great community as they do. So there's no cost, no catch. In person or online, you can meet an hour a week with other peers from your backyard or the other side of the world. You can also stay connected by signing up for a monthly newsletter and faith driven investing dot org. This podcast won't be possible without the help of many of our friends. Executive Producer Justin Foreman. Intro Mixed and arranged by Summer Dregs Audio and Editing by Richard Barley. Our theme song is Sweet Ever After by Ellie Holcomb.