— The clients whom wealth manager Gregory Curtis works
with typically have a net worth between $200 million and
several billion dollars.
like many financial advisers who manage money for people
with far less means, he is constantly preaching the
virtues of frugality — although frugality is a
relative idea for people who can have just about
anything they want.
clients are usually a family that just sold a company,
and now they’ve got all this money and they want to
buy a jet. My first comment to families like that is,
‘Don’t buy the jet,’" said Curtis, president
and founder of Greycourt & Co., a Pittsburgh-based
wealth advisory firm.
much as they may want to buy that jet, it sends the
wrong message to everybody," he said. "You are
going to spend $50 million on that jet, and then you’ve
got to hire pilots, you’ve got to have a hangar
somewhere and all this stuff. What it says is, ‘I am
spending money big time.’
is one of the great ways to destroy a portfolio."
matter how wealthy a family is, Curtis recommends
spending no more than 3 percent or 4 percent of assets.
For someone with $200 million, that comes out to about
$6 million a year.
of it this way: Every generation the size of the family
roughly doubles in terms of individuals," he said.
"But capital doesn’t compound as fast as families
compound. Three or four generations in, now you’ve got
100 people sharing what four people used to share in the
amount of capital.
on top of that, you’re spending like a drunken sailor,
buying jets and building a $100 million house in Palm
Beach and all that kind of stuff, that money is going to
nearly four decades of managing assets for ultra-wealthy
clients, starting with the Mellon family in 1979, Curtis
has seen great fortunes come and go. One Greycourt
client lost nearly $1 billion and effectively destroyed
her family by refusing to diversify her wealth, which
was concentrated in one company stock that she owned as
a result of her husband selling the company and
receiving the stock as payment.
was one of my partner’s clients," Curtis said.
"In every meeting, my partner said to her, ‘You’ve
got to diversify this portfolio.’
that time, the stock of the company just kept going up
year after year after year. Every time we would tell her
to sell, it would go up again."
the stock price eventually crashed, reducing her
fabulous net worth to a pile of rubble.
a 69-year-old father of six who lives in Pittsburgh with
his wife, Simin, draws on his experience to illustrate
how a great empire built by one generation can grow or
decline over the course of several generations in his
latest book, "Family Capital: Working with Wealthy
Families to Manage Their Money Across Generations."
book follows the fictitious Titan family of Pittsburgh,
which began in the mid-1800s with the pioneering
generation who started with nothing and was able to
amass a fortune. Over a period of five generations
leading to the present day, he shows how and why some
branches of the family did quite well while others did
a wealth management firm would only handle investments.
But often clients need more than that. Curtis said he is
often asked to render advice on how to handle the kids.
you are first generation and you make a couple hundred
million or a billion dollars in one generation, you didn’t
do it by staying home and reading bedtime stories to
your kids," Curtis said. "You did it by
working 90 hours a week and traveling all over the
place. You don’t even know your kids, and your kids
don’t know you.
how is that going to affect the second generation? The
kids will end up with $1 billion, but they don’t even
know their dad or mom if it was their mom who made it.
So you have this kind of built in resentfulness that
instead of a dad I have money. I’d rather have dad,
but I didn’t get that. I got money. So I’m (angry).
I’m entitled. I overspend. I over-drink."
is, he notes, not easy to make a billion dollars in one
what happens to your family in the meantime? So now you’ve
got the second generation who grew up resentful and what
kind of parents are they going to be?"
recalled one conversation he had with a client who was
born poor yet built a net worth of several billion
had young kids. They were just starting school and we
were talking about how to bring these kids up and not
have them be spoiled and useless," Curtis said.
"He said the way he was going to do it is tell
them, as soon as they were old enough to understand,
that he’s like Warren Buffett. He was leaving most of
his money to charity.
thought that was kind of interesting. As we were walking
back to his office, I asked if he had some figures in
mind as to how much he would give away and how much he
would leave to his kids? He said, ‘I figure I will
give each kid maybe $100 million.’"
winced. "Here was a guy who was born poor himself.
But now he’s so rich his whole scale of things had
changed. He thought leaving his kids $100 million was
really going to be a hardship on them."
advised against it. "If a kid is old enough to
understand what $100 million means, that’s not going
clients are located all around the world, with the
majority in the U.S. They do not come to the company’s
office unless they are new clients who want to see the
office and meet the people who work there while doing
due diligence. Otherwise, Greycourt advisers deliver its
services to the client’s front door.
said many of his clients are so unassuming, most people
would have no idea they are rich.
have clients who have hundreds of millions of dollars
who live in a perfectly normal neighborhood. Their
neighbors know they are well off, but they have no idea
how much money these people have," he said.
"And that’s the way they want it for their
neighbors, their kids and their friends.
people know you are really, really rich, they treat you
differently. And you never know whether they are really
your friend or if they just want to hang around and see
what falls off the table."