Andrew Auerbach (00:01) Well, hello everybody. Welcome to another edition of Beyond the Bank. I am very excited to have the guest we have on today, Mike Stritch. I'll give you a little bit about Mike's background and then we'll jump in. So Mike brings over 25 years of experience in the investment industry, particularly in the wealth management and family office spaces currently.

Mike is the CEO and the CIO of Bulletproof Capital, which is a single family office based in Chicago. Before Bulletproof, Mike was the CIO for BMO's US Wealth Management business and for the North American Family Office platform, which he successfully brought into Canada earlier in the decade. I've known Mike for many years and he really is just a terrific subject matter expert in both Canada

US Family Office, Ultra High Net Worth businesses. So I know it's going to be a really interesting conversation. Mike also just in background has a BA from Northwestern. He also has an MBA from Kellogg Graduate School at Northwestern, is a CFA charter holder. And I know he doesn't like this one broadcast, but also is a member of the Beta Gamma Sigma International Honor Society, which for my Canadian listeners,

means he's a really smart guy and did well in school. So Mike, welcome. Welcome to the podcast.

Mike Stritch (01:33) Thanks Andrew, great to be here. Should be fun.

Andrew Auerbach (01:37) Yeah, why don't we just start if you don't mind, just in your words, a little bit of the journey you have had such an interesting wealth management career. We often get a lot of questions about career advancement, how to choose your next role. You've done so many different things, both big corporate and now running a family office. So I know people would love to hear the story.

Mike Stritch (02:03) Yeah, sure. Thanks again for the opportunity to join you here on your new podcast. And I guess my journey has spanned, I would call it both, both poles of the investment industry, which is I started out of school at Morgan Stanley in the wealth management practice. I would call that a little more of a retail focus at the time. This was in the late nineties. So we've spent a lot of time in.

in the latter half of the decade, they were working with corporations because that was the tech bubble and lot of options were creating a lot of wealth for tech executives and such. Morgan Stanley was big in that area. so my team specifically worked with a lot of the employees at those companies and that was kind of our niche. And then through my career, I went all the way over to the other side and institutional investment management with a local

Asset manager here in Chicago, I worked at Calimosa Investments for a while and then led a team of quantitative researchers building hedge funds and models for hedge funds and prop trading firms and the like. And that was exciting. And along the way, I also had a chance to work at BMO for the first time in kind of the family office space, which I always say is kind of a mid ground between the pure kind of mass affluent advisory.

and the institutional market, is the family office world is very relationship driven because you're working with families still and not purely institutions. there's folks that those families would have on staff that would interface directly with you as a wealth management professional, which lend itself to a different type of relationship. And then also a different type of investment deliverable was often required for.

for families of that wealth. So for me, it always felt like a nice middle ground. And I offer that as in a prelude to my journey to where I am today, which is having gone through a number of different experiences and ending up back at BMO and really being fortunate enough to kind of go up in the ranks there to run the US wealth platform on the investment side and then work in the Canadian market as well. I always had a feeling that I really enjoyed the family office world.

A few years ago, someone that I knew through the bank actually was a client of the bank. Entrepreneur started a company about 20 years ago. It's been very, very successful. Decided to start his own office. And that was what got me to take the jump and leave a job that I enjoyed and lot of my friends at the bank for an entrepreneurial startup. And we just started this thing from scratch two years ago, just over two years ago. So that's kind of the journey in a nutshell, 20 some years, I guess.

Andrew Auerbach (05:01) Amazing a lot of questions because so many interesting experiences. Let's start with you right at a school. So First of all, did you always know you wanted to be in the investment business? Did you stumble into the investment business and a little bit of the experience of what it's like for your first job to experience a crisis, you know specifically tech meltdown

Mike Stritch (05:25) Yeah, yeah. I did not know I wanted to be in the investment business. I was an economics major undergrad. I also played baseball at Northwestern and I had aspirations to play baseball after Northwestern. And my story is one that I had a couple of reconstructive knee surgeries in college. And after the second one, I knew that was probably the end of

you know, my chances of playing beyond university. And so I went to the counselor, I said, well, geez, what am I going to do now? I thought I'd be playing minor leagues or something like that next year. And they said, well, we happen to have a career fair coming up. You should go to that, meet some folks. And it was there I met a guy that was running a local Morgan Stanley office. And he said, Mike, you should come out. And I did an internship there and then ended up going back there.

At the time, think it was called Morgan Stanley Dean Witter, the firm, because that was at the merger point of the two institutions in the US. And so that was how it got started, was I met a kind of leader within that business that convinced me to kind of come over and take an internship. And it was a bit happenstance in that regard, because it was at this career fair that I first sort of got my taste of wealth management in that whole industry.

Andrew Auerbach (06:48) Amazing. And as you sort of transitioned, mean, that is that's kind of not like, well, I studied psychology and ended up in a different field. You had aspirations to be a professional athlete. And I know you're a very modest guy, but you did very, very well through college. It must have been tough to recalibrate, not just in terms of what do I do for the next 40 years, but also I imagine the disappointment of having

that path and a little earlier than you would have hoped.

Mike Stritch (07:23) Yeah, I it wasn't great. It wasn't great. I, know, in hindsight, I think it was it was helpful in a way because I knew, you know, it's it's I don't know we want to spend how much time we to spend on the difficulties of getting to the major leagues in the United States for or Canada for baseball. I mean, you know, there's you know, if you rewind a lot of my friends that I've

Andrew Auerbach (07:39) This is the joy of a podcast. People are saying, please tell us, please tell us. People are interested.

Mike Stritch (07:50) played with at school or in summer leagues and stuff that went in and played in the minor leagues. Some did well, very few made it, which is obvious. That's just the nature of the law of large numbers, right? People get in the minors and it keeps shrinking as you go up. But what I found was most of my friends that did that, they ended up kind of toiling around in the minors and having some great experiences and having fun for three, four, five years. And then they came out and had to start where I started five years before.

So, you know, as you fast forward now 25 years from then, it's like that was a nice head start for me versus where I could have otherwise been because the reality of me making it to the major leagues and be able to a career that facilitated economic success and all that stuff is so slim that I was not naive enough to believe that was a you know, realistically high probability. So I like to look back and say it worked out the way it should have worked out because I got a little bit of a head start.

versus what I otherwise have done.

Andrew Auerbach (08:51) and you've done remarkably well in wealth management. So that's cool. So let's pivot to your first job during Tech Meltdown. What's that like being the junior person as calamities are unfolding all around you in such a sharp period?

Mike Stritch (09:01) Yeah.

Well, mean, the first couple of years, I mean, I started in 98, was tech melt up. I mean, it was like, wow, everything is going straight up. I'm just in this, you know, I was not a person that had an investment portfolio when I was in grade school or high school or anything like that. So I just learned about it in the books. And the books at that time hadn't said much about what we saw in the late nineties was, you know, just exponential growth.

of the market year over year, SMPF 20 % or something. And I'll never forget, I remember, I have this funny memory of guy barging out of his office, anyway, the little bullpen for the new guys in the middle of the office. And one of the senior folks on the wall barges out of his office one day because I think if I recall, there was an analyst named Henry Blodgett at Merrill Lynch. So that might not be the right name, but he, I think he was at Merrill Lynch at the time, a big tech. was a couple of people that were really,

big into the technology stock coverage. And I think he came out with something like a $400 price target on Amazon at the time, which was more of a book seller, but it was a new way of thinking about delivery and all this stuff. And this guy barges out the office and he couldn't believe it. This is unbelievable. How could you ever pay for that? Like they're kind of multiple on a company. This is ridiculous. You got to sell that stock, short that stock. This is crazy. And then it certainly went up, you know, doubled. then I think Amazon actually, you know, they're not in the

the bubble when it first came down and obviously we know what Amazon is today which if you would have just bought it in 98 and held it, unbelievably fantastic investment but it was a time of you know there was a new world that was emerging in the technology frontier and a lot of wealth was created on that and a lot of people got you know hooked into watching those stock prices

And I learned a lot about behavioral economics right at that time. I mean, I remember specifically having conversations with a number of people at these companies. because again, lot of the work that my group did was we'd go in and Morgan said, we take a company public. We would go in and work with the option plan of that company. So if you had, you know, 10 ,000 options and XYZ .com company, you call us up and say, Hey Mike, I want to.

I sell 5 ,000 options. What do you think? How should we price it? Where should we put it? I have this window. And obviously then our team's job was to figure out if there's a way to advise that family, that individual post -sale. But I just have this very explicit memory in a number of cases of someone saying, looking at their net worth statement, and it was several million dollars, and the stock was at $100, and then the stock goes to $90. And they say, well, if it gets back to $100, I'll sell it.

And then goes from 90 to 80. Well, if gets back to 90, I'll sell it. And then it goes from 80 to 75. Well, if gets back to 80, I'll sell it. And then they have earnings. then goes to 10, like overnight. And it's over. And it was just the kind of reference bias that you have, representative bias that you have for what's recently happened versus what's going to happen in the future. It was a you know, a live experiment, I guess, if you will. And it was.

really fascinating to watch it unfold in real time. And especially now looking back, and I think it's grounded me personally in my own views as a, you know, kind of this take everything with a grain of salt. The good times don't necessarily last. So you start your career in an environment. I I remember there was a stat in the financial crisis, fast forward 10 years later, that the market for the first time, I believe, again, might not be exact, in history hadn't gone up for a 10 year period. was like, exactly when I started,

to 10 years later, because the financial crisis brought everything back down after we kind of recovered a lot in the decade from the tech bubble. think to myself, wow, that was 10 years of essentially neutral in the market. that's kind of that conservative at the margin mindset, think, is something that's been ingrained in me from that original.

experience. But I also learned the power of diversification of assets because when the tech stocks imploded, the overall market was certainly dragged down. But things like real estate and some other areas, because value had been getting really beat up for years and years. And that did remarkably well on a relative basis. I can't remember if it was positive on an absolute basis, but relatively it was a standout. And people were just throwing out value at the end of the 1990s because they had several, several years of

of just dramatic on our performance, not unlike we've seen more recently, even with that sort of phenomenon unfold again.

Andrew Auerbach (13:53) There's a, there's a lot of people in the business today who haven't actually experienced the type of crisis events that you're describing. And as I reflect on my career, they're so formative, you know, when you live through the financial crisis of a wait and you live through the tech, the tech bubble, you're describing the generation before us. recall when I came in, they would describe what it was like to be in this business through the seventies where

Mike Stritch (14:21) Yeah. Yeah.

Andrew Auerbach (14:21) you know, basically nothing happened for the entire, you know, 10 year period in equity markets. What do you think of that? Like, do you think those events have kind of shaped, call it your worldview, the things you do today are informed by those events?

Mike Stritch (14:36) Yeah, 100%. Like I think again, I think it's leaned me to, you know, not get caught up in the craze, if you will, of the latest thing, which, you know, it's hard sometimes when, you know, a stock or an index or market is rocketing straight up, you know, that there's got to be an end to that. And it's, it's tough to call when the end would necessarily come. But I think it's

bit of a more protectionist mindset, seeing that you can have these venerable institutions in the financial crisis, for example, go out of business overnight was a real, I remember, you know, sitting in our offices at the time, which was, that was when I was more on an institutional and it was, you know, companies falling out of business left and right, or we worked with MF Global as another one that was sort of post

financial crisis, but they got themselves into some trouble. It's a name that's kind of been forgotten a lot. I remember talking to their trading desk because we did some business with them when I was on the research side. And then the next day, their phones were dead and the company was closed up. And so, yeah, you it does, you have to have balance. mean, you just have to have balance. have to certainly embrace. I think today's environment is one where, you know, you'll see a lot of articles and stuff about a bubble that's happening with something.

Andrew Auerbach (15:51) amazing.

Mike Stritch (16:05) maybe AI and the likes, right? When you have companies like Nvidia that are just rocketing up every day for a few years, you have to take it again with a grain of salt. There's definitely some foundational principles that are behind those kind of moves. But if you start to get a little bit of a slip, it can unwind really fast. So stairs up and the elevator down is something I guess I've

I've seen a number of times in my career and so it makes me, it does make me a little more wary than I would be without those experiences for sure.

Andrew Auerbach (16:39) Yeah, that's a great analogy. And you talk about the behavioral aspect of things and you've mentioned as well your shift from institutional to private client. You know, I've only known you in the context of private client of dealing with families. You're exceptional dealing with families. Talk about some of those differences. Why are some people simply not wired to make the transition you're describing? Being in the business on an institutional side or being in the business?

on a private client or family office site.

Mike Stritch (17:12) Yeah, well, you the industry is so huge that each each side has its own different roles within those. I if you're if you're in the institutional side and you're in a sales kind of relationship role, that's maybe more I guess, analogous to some of the kind of wealth management roles you might you might see. What I what I was speaking specifically about in my own personal journey was the investment management. So

I always liked it to the five or seven years that I was in the institutional world. And that was where I spent a lot of time, again, on the quantitative side. Economics major in college, I ended up sort of teaching myself programming on the side the first several years out of college. And that's what I was using at the time to build these models for hedge funds and pension funds and the like. And this is back in 2007, if you remember, hedge funds were at their heyday then. That was like,

everyone coming out of college wanted to work for a hedge fund and that was a big thing. And now they're not as sought after on an aggregate basis. It's almost like I liken the today to everyone wants to work in private equity, but in the mid 2000s, everyone wanted to work in the hedge fund industry, which has faced its share of challenges since then. And I would think there's a lot of money to be made in hedge funds if you get the call right.

Andrew Auerbach (18:24) You

Mike Stritch (18:39) And I would liken that to a number again, back to my, I had this fortunate experience of working in a company that we worked with a lot of the traders, with a lot of the desks, and we would help co -develop algorithms and models and stuff to trade. And there would be cases where some of these big shops that still exist today, they'll remain, I won't name them, but it would be very successful individual.

I mean, of course, if you're successful at a hedge fund, you are making a significant, significant amount of money. And then they'd have three bad weeks and they were fired. And it was just like, so it was a pure...

Andrew Auerbach (19:18) Yeah.

Mike Stritch (19:21) Yeah, so I was saying it was, you know, the institutional side of this is, you know, from what I was referring to was purely, you know, you live and die by your trading decisions, you live and die by your investment decisions all day, every day, which is, some people really like that, right? It's not as much about a relationship. It's just about the X's and O's of I decided to buy this or sell that, whatever the.

whatever the asset class and that's where my value is had. And then I think, you know, on the very way other side, it's much more about the relationship with the family, their goals and objectives. And, you know, if you underperform in a particular quarter versus your, whatever your work benchmark is, that it's not going to be as material or detrimental most likely to the relationship you have with that family. And then I think like, again, I go back to family office.

in the middle a little bit more, a little more scrutiny on the specific, you know, because there's a lot of family offices have investment committees and boards and all those things where you're going to get a very professionalized review of results. But at the same time, you have a family at the end of the day that's making the decision. So I think it's bit more of a middle ground between those two. So that's kind of how I would, and that's probably why.

you again, in terms of personality types, you think about who fits in those different buckets, right? The person that fits in the, you know, all day analyst bucket does not necessarily always fit in you know, all day relationship management bucket, right? Because that's not going to be what they want to spend their time doing, right? They're more about the family values and what they're trying to accomplish and how do they get from point A to point B most efficiently versus how do I...

you know, extract some value out of shorting the stock or the futures index or whatever.

Andrew Auerbach (21:20) How do you think about the family office market in the States? Maybe you could just take a couple of minutes and walk us through, particularly in Canada, where as you know, it's picking up steam, but it's nowhere near as evolved as it is in the US. So kind of the ultra high net worth family, the multifamily office, the single family office, maybe you could just take us through the landscape.

Mike Stritch (21:44) Yeah, I mean, it is robust in the US, the family office. It's robust, it's been growing quite significantly. And it's even more pronounced than I had thought prior to two years ago, because I spent a lot of time in the family office space in my career at BMO, primarily, advising offices and working in kind of a multifamily office construct.

I knew a lot of offices, just focused on Chicago for example, I knew a lot of offices in Chicago because of that work. And then you leave and I was, you know, through networking, which I view as a big part of the family office community, especially for offices like ourselves that sub 10 people, know, a lot of partnerships with other offices happen.

for scale purposes, for deal purposes, just education about best practices and the like. And I was turned on to so many offices that are similar size and statute that I had no idea existed right in our own backyard. I I'm talking 10, 20, 30, 40, like just office after office, three people, eight people, seven people, five people. It's remarkable. And I think, of course, there's been a lot of entrepreneurial success and a lot of

a lot of money that's been generated through a variety of different sort of, for a variety of different reasons. There's also been some, you know, there's some advantages via some case, some case law that's taken place in the US around setting up an office and how you can benefit from a tax standpoint as a family. So that's led to its continued acceleration of growth and more people setting up.

offices there, you know, there's a lot of great multifamily offices. I would say those are primarily, you know, for families with a little less of a net worth. And you see the family office, obviously, that's probably stated the obvious, but they do a really nice job of outsourcing services for let's call it someone that just around or just shy of like a nine figure net worth, right?

And that's where it's too expensive probably for someone to hire a staff. They're significantly obviously wealthy, very successful clearly, but would rely on a third party to help manage some of their tax affairs, their planning, their investments, the like. And you can have some maybe extra concierge services thrown in there on occasion by you know, by some teams. that's some, and mostly in the single family office environment, think engaging with

Financial institutions is usually more on a one -off basis like for a specific thing alone a deposit a specific investment idea not a whole list not as a holistic because again you have People on the other side of that relationship that are acting on The half of the family in a professional capacity, so it's unlikely that they would outsource everything in most cases So that's kind of the US but very robust growing very

significantly fueled by obviously asset values up and then a lot of you know some advantages for for taxes and then I think people like a lot of these folks are entrepreneurs that have these offices especially the the newer generations of offices because they've been around for a long time and some offices like you know I've got great friends at offices in Chicago for families that have been around over 100 years that offices have hundreds of

hundreds of clients effectively, but they're one family that's just spread out. So there's different types of offices. Again, it's very different than what we're doing as a Gen 1 family. most of the newer offices are entrepreneurs that started a business or ran a business and it was sold. And in that, they like that private business. They like having control. And you have a lot more control in an office because it's your own thing. And you can do a lot of things.

Andrew Auerbach (25:53) And so if you're if you're a family with significant wealth, let's say, as a result of the sale of a business that goes public, you create a significant amount of wealth. Clearly, the size is is one factor you've mentioned a number of let's say, you know, a decision tree of about $100 million in investible wealth, I'm just I'd like you to validate what number what other factors do you need to think about? Before you go down that road of do I

create my own family office or do I bolt onto the hundreds of multi -family offices that exist?

Mike Stritch (26:30) Yeah, I would probably put the, mean, there's different, I I'll use the cliche here. If you've seen one family office, you've kind of seen one family office. That's an often cited statement, which is so many different versions of what a family office is. Some might be just one person that does accounting and planning, help, and then they engage with all these others. But if you think about a full blown, I'm going to do kind of everything in source, CFO, investments, property management.

Andrew Auerbach (26:43) Mm -hmm.

Mike Stritch (27:00) whatever else, it's probably running a little north of 100 million just because you're going to have a big cost that's going to be embedded in there. it's going to be a trade -off. It might cost more to do that on an absolute basis points until you get to a certain level. Maybe it's more like 200 or 250 really is kind of the realistic level, I think, for an office. I don't have the numbers handy, but.

100 million years so people start talking about I think it's probably practice a little bit You know a little bit higher than that And so so you have the money and then you have that I would say that it's like how much Involvement do you want to have as the patriarch really, you know, are you interested? It's a lot of work to set up a family office Maybe if you have a trusted sometimes you have a situation where you had a business owner that had a CFO at their business They've working together forever. They trust them and they say hey CFO going

Andrew Auerbach (27:33) too low.

Yeah, that makes sense.

Mike Stritch (27:56) start my family office and I trust you and then you can handle all that stuff and I'm still going to be still going to be out. And then it's like what types of things do you want to do in the office if you're a group, you know, some families want to own operating companies and that's something you're not going to do via a third party firm. Some want to make, you know, minority investments in, you know, new growth companies. Typically not something the banks and the other multifamily offices are going to do. They're going to be more traditional.

venture capital funds and private equity funds and that's great. But if you want to get in the weeds on a specific deal or do that as a matter of your personal interest, then you're going to probably need some people in your office to do that because that's not something that you would find easily accessible even from the best multifamily offices because there's too much risk really in sending out an early stage company investment to a mass group of people and if the company doesn't work out.

you know, you have the potential for some unhappy clients that don't match expectations. Whereas if you have a family that knows exactly what they're doing, it's a little easier to stomach a loss because there's going to be a lot of losses if you're doing that specific type of investing style. So that's just a couple of the, I think the things that would be on people's minds as it relates to why I should do it or not do it.

Andrew Auerbach (29:16) And in your, it sounds like new discovery of the dozens of family offices you didn't actually know about now that you are running a family office. What are some of the planks beyond investments that these family offices are doing for the family members?

Mike Stritch (29:35) Yeah, so I mean you have clearly, you know, tax work. Sometimes if it's, you know, internal taxes actually being done by people in the office or you would sort of just do a lot of tax consulting, structuring work, and then you end up having that third party actually execute the taxes, which is more likely than not the case in most instances for families. So you have the financial aspect. That's another financial element, right? You've got investments.

taxes. The state then is another one. usually sometimes you'll have a state attorneys and such inside the family office advising on the structure, the trust and how that should work from the most efficient, you know, set up for the family given the goals and objectives and knowing them intimately. I think another part of the family office dynamic is that families like to think of it as a perpetual advisory service to their versus a

a bank or a RIA or something that may change their stripes a little bit at margin over time. So you kind of have something that's catering to you that you have that sort of consistency of structure and that's within the professionals themselves, but also the structure of the office. I just offer that because I think that's something that's often cited as a reason to do offices as well as that consistency, that longevity that you can, it would survive beyond you in the same fashion as opposed to that multifamily office might change exactly how they're.

executing and such. And so you have like, you know, you have the state, you have the financial pretty table stakes. And then then you get into, know, maybe there's property management that needs to get done because of family homes or whatever. Or maybe some families are specifically, you know, invested in real estate. So you might have a real estate team. It's widely varied. mean, I will tell you, there's a few message boards that I'm on for families that people can post things like question about this question about that.

You get crazy posts on that. like things all over the place. You know, I'm looking for, you know, someone, I'm, you know, I got traveling, kids are traveling in Europe and I want to have, understand exactly sort of the right security protocol. And this, that, and the other is an example, or, you know, I'm, doing something with the classic car collection. mean, it's like, does anyone know someone that can help me with that? So, you know, at end of the day, it's like a catch all. You can always go to your family office if you have them, to say, can you help me with this? And then there's networks out there.

Andrew Auerbach (31:33) Okay.

Mike Stritch (32:00) for family offices to say, yeah, I know someone that works on that or a lawyer that works on that or hey, I've got to, you I need someone to think about this private plane or other sort of asset that we have. What can we do with it? This collection of artwork. Anything you can think of in a family dynamic, people are working on in a family office. It's in some capacity, many times. Yeah.

Andrew Auerbach (32:18) So interesting, yeah. And before I pull you away, one question about legacy. You mentioned some of these family offices have been around for, 100 years, where it's been perhaps three, four, five gen that are involved in the family. Can you talk a little bit about that? That seems like something that would be exceptionally difficult to accomplish, to instill.

a sense of continuity that can last for five, six, seven longer generations.

Mike Stritch (32:53) Yeah, and I'll just make sure I'm clarifying. It's not really the family offices have been around 100 years, but it's the family been around 100 years and now has a family office. The office may have been around for 20 years or in some cases I can think of a few offhand that maybe have been around since the 80s. Maybe there's some from before that too that have been around. I'm sure there are. just don't know off the top of my head. But those firms are, yeah, it's a tricky proposition because you have all kinds of family dynamics.

Andrew Auerbach (32:59) Correct, sorry, yeah, yeah, yeah.

Mike Stritch (33:23) you if you and I are, happen to be the children of someone that had a fantastically successful career, and then I have five kids and you have one, my share goes down to five, yours goes down one, as an example. So now that your child has more ownership than not my five, because they're split, and then my five have kids and your one has one kid, you know, then it breaks up, so the ownership becomes very fragmented.

Andrew Auerbach (33:42) Hmm.

Mike Stritch (33:52) you know, over time in the various assets and things like that. And so that's where the power struggles can be sometimes in these. you have to be very like a lot of the best ones that I've seen operating are very institutionalized. They have a board of directors that run various, some family members are on there, some external members are on there. And it's very professional. It's very professionalized. If you don't do it that way, you run into too many, I think, you know, squabbles because these are big.

When you think out a few steps from your own, in your own personal circumstance, like, yeah, you might, you might have a good relationship. It's, know, in many cases, it's hard enough to have good relationship with your immediate family, but think then you go to cousins, cousins, cousins, you know, you keep expanding out. like, you don't know most of those people, but in these scenarios you do. And it also has a benefit like for, you know, the, some of these families do a great job of, of keeping the kids engaged on the history of the family. And that's a big part of like, they have family history. Another thing, what's in family office? Some have historians.

those types of things. if they have operating businesses that still are part of the original wealth creation, they might require or encourage family members to work in some capacity in those businesses for a short period of time at least to get a feeling for what it's like. And I'm not talking about working in, since some families they work on, not like popping in and being an executive, but you got to work in the business as a...

Andrew Auerbach (34:47) Amazing.

Mike Stritch (35:15) as a means to just understand. that's, it's harder to do over time, but I've seen some families hold it together and they tend to have the most, the most success as offices too, because there's kind of shared values that are passed on. It's almost, you know, it's like managing a business in that sense, right? What are the values of the family? What are the values that, do they want to do with the wealth? How they think about it? Yeah, it's a tricky proposition, but one when done successfully is pretty powerful in keeping.

and keeping people together.

Andrew Auerbach (35:49) Amazing. So let me shift a little bit here, Mike. It's such an interesting conversation. And talk about your work in the family office space at a bank, at BMO. That's where I had the opportunity to work with you. You've also been just a terrific resource and friend as we've been launching Delisle, which is greatly appreciated by Sandra and Jean and myself. You've seen clients in Canada and you've seen clients in the US in the family office space.

And maybe you could just describe the similarities and the differences in terms of what you would have observed as you dealt with families in Canada and families in the US.

Mike Stritch (36:30) Yeah, that's a question. You know, I would say when you're at the high end of the family office market in Canada, these would just make up a number and say north of a billion dollars roughly. So significant, significantly wealthy families. In terms of what they're actively seeking.

It feels pretty similar, it felt pretty similar to the US. And what do mean by that? I they want, I mean, all families, as a starting point, want some trusted advisors. They want to know someone's looking after their wealth. They want to, know, every family might have different objectives, but they're looking for trust. They're looking for value -added services that are done at a cost -effective delivery. At the highest end, I think they were becoming just like US families, to be honest with you, or were, felt like to me, very similar, where they wanted independence.

limited conflicts, wanted access to very, you know, I'll use this term cutting edge investment opportunities, or like a wide swath of investment opportunities, reporting capabilities that would capture everything that the family was doing in one space. So you can have a good discussion about what's working and what's not working. Just to name kind of a few.

few pieces and I think that's on par with what US offices are doing as well. In fact, a lot of those families in Canada, it struck me, it seemed like they a lot of times would have entities in the US to access a lot of the investment opportunities that maybe would not avail themselves on some of the Canadian platforms or they didn't have the capacity. I don't know all the intricacies of, I don't remember all the intricacies of how

The taxes work, they can do it offshore somehow, but sometimes they would set up entities in the US to do that, specifically because there's more flow of deals coming through, or products that are set up for US persons or institutions. And then if you step down a layer, I think it's starting to evolve where that's becoming more known of like that this is out there, these things are out there, that you should be looking to have aggregate performance reporting.

You should be thinking about what the conflicts are from your advisors that you're working with. You should be wanting access to different types of return generating investment opportunities that maybe were not something on offer three or five years ago in general. But it was in development stage. It was still kind of a learning, I think, situation in the most part.

You know, it felt a little like that element of the market was kind of a few years behind maybe where the US had been or the US was or is, you know, but it was probably coming because trickle down, you know, at the discussions about how these sort of families with virtually unlimited resources are setting up. You know, they talked to other folks in the business community and, that's interesting. You know, that's why I did that. I should think about.

I should think about that or, you know, we've got, we've heard all these things about how much private equity has generated returns for folks over the last 10, 15 years. I access to that. How do I get access to that? Where do I get access to that? And that, so I think that's, that was starting again. This is now I'm going back a couple of years when I transitioned out of that role, but it felt like it was coming. I think part of, look, when we started the family office in

that's family office business in BMO in Canada, boy, did that resonate. That's what we were trying to do is deliver those types of services. it was very, I think it still has been very successful keeping up with some of the team members I became friends with. But the story resonated about trying to do things like that for that group of clients, again, that were maybe hadn't thought about it before or didn't realize that that was what could be a best practice for the management of their personal family assets.

Andrew Auerbach (40:51) A little bit of trend watching then, as you think about Canada v the US, this notion of us being a little bit behind the curve, obviously wealth levels are starting to grow significantly. And that's creating a bit more of an awareness of what has happened in the US. Would your thesis be in the ultra high net worth space, that it will look more and more similar as we look forward that as wealth grows in Canada,

you're going to see the market start to mature the way it has in the US.

Mike Stritch (41:25) Yeah, I would, you know, there's a lot of there's there's I think from a I think about the offering characteristics of what differentiates less about how it gets delivered. Like if you want to start a family office in Canada, as I mentioned, maybe some of the benefits of the of the US tax sort of situation don't exist. I'm not sure if they do or not. But there might not be the same tailwinds for some of those things in Canada or in the US.

But from a service level, like what I would want as a family, I would think I would want aggregate report. I I think I want to have all my reports on aggregate reporting in one place. I want to have the ability to look at everything collectively at one time. want, as we've seen over the past several, let's call it years or decade or two, where you've seen.

you know, this explosion of private investments and their ability to deliver returns, quote, you know, if you have the right one in excess of the public markets, which are shrinking, the public markets have so much activity in the private markets, companies are not going public. So the number of listed stocks are down. So it's like by default, you almost have to get into the game over there. If I want to access those return opportunities, I need to, you know, broaden the scope of offerings that I'm going to be willing to consider or able to consider how

those firms being the people that are, know, the GPs, the general partners are delivering those funds and the like. Access Canada has been somewhat tricky, I think, in the past. But I feel like there's more and more of that going on today that you would expect to see. So that's another one that I check. Yes, makes me think that, of course you would naturally evolve in that direction. So I would say that my short answer is yes, think it should probably evolve directionally exactly the way, you know.

some of the firms have evolved in the US and maybe things will change over time too. Maybe there's some best practices in Canada that US firms will adapt. not saying everything has to go one way, but there's a few key tenants that seem like they should be on the radar of any family of significant wealth and it just makes sense logically to me. So that would suggest that it evolve that way over time.

Andrew Auerbach (43:41) And in the high net worth space, as we look at the overall wealth management market, this is a conversation that I have had with you a number of times of just how very different the markets are and how they've evolved differently in the U S and Canada, particularly around the boutique independent wealth management space. So in the U S as we think about the R I a space, which is almost 20 ,000 firms now, a third of the market, the fastest growing part of the market.

Canada for many advantages and many disadvantages is a much more concentrated market where we have five dominant players, six if we include national bank, and they largely have most of the market share in pretty well all of the categories, whether it's brokerage or investment counseling or other. Maybe you could just describe a little bit of those differences of the market dynamics in the US, the level of competitiveness in the US, a topic.

that has been much covered in Canada of late of our productivity problems. But these markets are so different. I think you have a unique lens having worked in.

Mike Stritch (44:50) Yeah. And then you nailed it. There's not much more to say other than it's very, I mean, I think maybe you've had other guests out and talked about the concentration versus the, you know, myriad of competitors you're to face in the U S I mean, competitors on every corner in every type of business. And so it's like, that's why I'm such a big fan of what you're doing and you're in Delisle and trying to work through a new type of offering that that would tap into.

into some of that and maybe break away from the traditional because that's what I'm used to. And I've seen it evolve. It's very favorable for clients. That's what competition breeds better outcomes for the consumer. And in this case, the consumer is all these people that are having their money advised on by trusted professionals. so it's better back to the reporting or the offerings. What are things that maybe

could be on offer that are not on offer of the current five major players. And does that something that a client might value? I would submit that probably they should. The history in the US, though, one of our AAs have been around forever. It really accelerated, and you may have covered this in other discussions, I think, post the financial crisis when there was much more of stringent focus on this fiduciary mindset.

And frankly, in the US too, a lot of people lost faith in lot of the banks, which didn't happen in Canada, right? Because the Canadian banks weathered that storm tremendously well, especially relative to the rest of the world and the US in particular. So there was a disenfranchising disconnect with the banks in general. And that led to a lot of these breakaway firms and people more willing to seek opportunities elsewhere. So it was like a push as much of a pull where people were saying, wow, is, hey, you know, rather just went out of business. I got to do something.

Andrew Auerbach (46:40) Mm -hmm.

Mike Stritch (46:43) Some people from Lumenbrüder started an RIA as an example. I'm sure that happened. I just made that one up as an anecdote. So that sort of kickstarted this movement. And then on the back of it, you had all of these providers that geared themselves towards this independent sort of collection of advisors, right? Because I don't think, and I think there's some more, especially now that I've watched you, that there's only recently been the ability to tap into some of this stuff.

in Canada, like a purpose or something that has trading platforms and you need a custodian and I need technology. We're able to do in the US things so efficiently because there's been this kind of scrappiness of everyone working on how to manage these things at a non -monster, non -big institutional level. mean, have, like the thing about our office, we have a digital assistant that processes all our...

our private equity capital statements, which is a very cumbersome task. You know, and if you don't have access to something like that, you have to hire people to do it because you have to read these things and download them and things like that. But we're doing it for a fraction of the cost of a person. And that person might be residing in one those big firms in Canada. If you don't have access to those types of that's doing it today, if you don't have access to those types of solutions, then it's harder to to be independent. I know that's something that you're you're pride yourself on at Delisle and working into some of these newer technologies which would give you the ability to kind of

Andrew Auerbach (47:43) Hmm.

Mike Stritch (48:09) to kind of that other option, different way of doing things. And then the last thing I'll say about the US, kind of, don't want to ramble on on this point too much is that there's, you know, it's an independence thing again, like control. People control their destiny, control their deliverable. They'd rather do it their own way. They think they could sell themselves better than they sell an institution. And it's sort of that entrepreneurial mindset. And fast forward, you know, people have...

been tremendously, tremendously successful. And I think now a lot of the folks that are residing at the traditional warehouses historically, back to where I started at Morgan Stanley, say to themselves, wow, could, if I wanna create my own legacy, monetize all this work I've put in, I'm better off creating my own firm and having that as opposed to just having something that's hanging off of the Morgan Stanley.

brand name, that's where you see, and you know, it's not for everyone again, for same reasons we talked about the family offices, like some people like the, the, the kind of the comfort, the solution set, the one, you know, the stuff that a big institution brings, but for those that are looking for a more nimble and creative outlet, I mean, that's, that's what, that's what the environment in the U .S. is like all kinds of different firms doing it. So now I'm not sure if I went off on a tangent relative to your original question, but that gives you a sense of

Andrew Auerbach (49:34) Not at all. that's yeah. That's that's yeah.

Mike Stritch (49:36) in the US, think, to see a Canadian landscape and mindset. So I feel like the dam is probably ripe to be broken open at some point, if you get enough of a move afoot for people to start doing this. And I the regulatory regimes are a lot different too. So it makes it little more challenging. You can set up shop here pretty easy in the US versus it's a much more cumbersome process in Canada. But maybe there'd be more of proliferation of

firms like yourself as you have technology that can allow you to compete effectively with the big banks, which was not probably an option, you know, three, five, 10 years ago for sure.

Andrew Auerbach (50:18) Yeah, that's a really good articulation. And it's been so helpful to get your flyover on these on these areas. And you hit it on the head, the advantage we have in Canada is there's probably not two countries that are more alike in so many ways, right? That, you know, when I meet a high net worth family in Chicago, or I meet a high net worth family in Calgary, they're pretty similar in terms of

the priorities, what they're trying to accomplish, their goals, ambitions, all of these things. And in fact, you you mentioned it earlier, the wealthier clients in Canada are even more commingled given most of them have property in the US, you know, our weather is not ideal and they head to Florida or Arizona or wherever they might be, they might be going. And so we have this window where we see how your market has evolved.

you articulated it really well, Mike, around the financial crisis that in a way, it was a very different trigger event for the acceleration of our eyes in, the US and that and that didn't happen in Canada. But we remain convinced that having more competition, having more options is in everybody's best interests, you know, and so that is something that we're convinced is going to keep accelerating.

You've been very generous with your time. I know that the listeners would have gotten a lot out of this conversation. I have a few more kind of closing questions. The first one is just the best leadership advice that you've received that you might want to pass along.

Mike Stritch (51:58) That's a good question.

You know, I think it was, I don't know if this was a direct piece of advice, meaning someone didn't tell me to do this, but I would say it was more of an observation working for someone. It's really, and it has to deal with empathy, I think. You know, being empathetic for the people you're working with, or maybe if you're fortunate enough to have people working for you, being empathetic about their...

their needs, their concerns, and same thing for clients too. I mean, being empathetic with clients. And I think that if you can meet people where they are, in that sense, you build up a loyalty, you build up a trust, it makes it easier to execute, especially when the times get a little tougher. So if I could answer the question by, you know, saying that, I think being highly empathetic and highly in tune to what...

others are thinking how they might be interpreting the situation is a great piece of advice for anyone.

Andrew Auerbach (53:09) Well, you've certainly taken that advice. mean, that is, I think something you're known for as a leader. And you've certainly proven it to me many times. For example, when we had this crazy idea of you running family office in Canada, you were just, sure, let's do it. Not that you didn't have your hands full already in the US and did an exceptional job of it. And did an exceptional job of it. As you mentioned, it's still going strong in Canada.

Mike Stritch (53:26) Yeah.

Andrew Auerbach (53:38) Before we close, Mike, anything we didn't cover, any topics you want to put into the mix.

Mike Stritch (53:45) No, this was great. I mean, really enjoyed it. Thanks for the time on your show here. And again, I think what you're doing is awesome. I know it's a lot of work and it's so fun. It was so fun to hear when you started this journey with Delisle what you were up to, because I had always thought to myself, seems like the market's ripe for something like that, you know? And the big banks do a great job. not saying they don't. Same in the US, they do a great job as well, but...

you know, it's not always for everyone. And I think there is another way to think about doing some of this stuff and you're trying to tap into that. And so of course, we'll stay in touch on it. I wish you the best of luck, but I think you really got something there.

Andrew Auerbach (54:26) Well, thank you for that. on a professional and personal level, you're a great friend to us. So thanks. Thanks again, Mike. This has been a terrific podcast. I hope you continue to follow our podcasts wherever you get your podcasts. And Mike, it's been an absolute pleasure. Thank you for your time.

Mike Stritch (54:33) All right.

Yeah, thanks Andrew.