106: WealthOps the Accelerator to Building Your Micro Family Office

(0:00) You've made the money, your income is high, the equity is flowing in, net worth climbing. (0:07) But in reality, your wealth is a mess. It's a jumble of spreadsheets.

It's talking to five (0:12) different people listening to 10 different podcasts. You don't really know what's happening. (0:17) That's the reality for many people in tech who are building wealth.

But this is exactly the reason (0:22) that I built WealthOps, so that you can have a very systemized way that you can learn how to (0:27) build your wealth as a business. Let's dig in. Welcome to Managing Tech Millions, (0:33) the podcast for tech professionals navigating the journey from high earners to confident wealth (0:39) managers.

Struggling with equity compensation decisions? Are you curious about turning your (0:44) portfolio into a thriving, scalable business? You're in the right place. Master your millions, (0:51) own your legacy. Join us each week as we uncover strategies, share actionable insights, (0:58) and help you take charge as CEO of your financial future.

Welcome to Managing Tech Millions. I'm (1:05) your host, Christopher Nelson, and I'm excited to bring this episode to you on the architect and (1:11) build phase of WealthOps, which is part of our foundation series. We've been walking you through (1:16) some previous episodes of how do you think, like the ultra wealthy, what are the five key mindsets (1:23) that they have? How do you actually build a micro family office and what is that? Today, we're going (1:29) to talk about the two key phases of WealthOps, architect and build, and how important they are (1:35) to help you quickly go from zero to micro family office.

That's what we're going to break down. (1:43) Ultimately, for you to understand that I've built this to be something similar to what you already (1:51) understand. Number one, you're in a business building every day.

I'm going to map a lot of the (1:57) same things that you see, know, and understand in business to how you're building this micro (2:03) family office leveraging WealthOps. I've also structured it just like the DevOps framework, (2:08) where there are phases and then there's cycles. There's architect and build, two phases that you (2:14) go through, then you're in the run cycle, this infinite loop of iteration where you're continuing (2:20) to grow and scale your micro family office.

Today, we're going to talk about the architect, (2:26) how do you actually design what you want to build and how important that is, (2:30) and then how do you build. Just like DevOps, this is a framework that needs to be executed in order, (2:37) and anytime you skip a step, you're inviting pain into your life. (2:42) Let's get started with number one, architects.

Before we get into the architect phase, (2:47) let me tell you a quick story that creates a point here, is that there is a $10 million illusion (2:56) that's out there that truly exists in this world. It was highlighted by a television show that my (3:02) wife and I watched recently, which is Friends and Neighbors. Friends and Neighbors stars John (3:08) Hamm playing a character, Andy Cooper, who is a hedge fund manager.

He manages this hedge fund, (3:15) and arguably he is making millions of dollars every year when you look at his lifestyle. (3:21) In the first episode, he gets fired. He then talks to his accountant, his business manager, (3:27) and asks, how much runway do I have? He has six months.

He has six months before he starts (3:33) dipping into investments, having to start turning cars back over to dealerships, and so on and so (3:41) forth. In reality, the key thing that I want to tease out here is that when you build wealth, (3:49) it is easy to be overweight on focusing on your income and not spending any time on (3:57) what am I doing with my wealth? Am I really building a financial fortress to support me (4:02) through anything, or am I just believing a false belief that this income is going to continue (4:08) forever? Because life happens. Health happens.

Family happens. All this stuff happens. (4:14) I think the other thing to consider is that he's obviously treating, one, his income generation (4:22) as more important than managing his own personal wealth.

That is a concept that I really want to (4:29) challenge, and I think it's really important. When you do think of what you want your wealth to do (4:34) for you, you have to make it a first tier. This is something that we covered off in the first (4:40) episode of the Foundation series.

What's the mindset of the deck of millionaires? Well, (4:44) they treat their wealth as a legacy, as a generational business. That's a huge mindset (4:50) shift. When we start thinking about the fact that our wealth can be fragile, that we have to focus (4:58) on it, this is exactly why I created WealthOpps, so that there's a clear, systematic way to build (5:06) out an architect of your micro-family office.

This architect is based on the frameworks that (5:14) single-family offices used, scaled down, so it's the concentrated version of just what you would (5:20) need. This is where I would challenge any of my tech employees. You wouldn't deploy a product (5:28) without testing, metrics, version control, but this is how people manage most of their money, (5:35) is that they don't have a product lifecycle.

They don't have a design for it. They're just (5:41) going and implementing features with no clarity on what they want. This is where in the architect (5:48) phase, we say that you don't want to deploy capital until you are clear on where you want (5:55) to allocate it and why.

You want to ensure that you have that clarity. In the architect phase, (6:03) this is the blueprint phase. This is also where many people can skip it and they can go wrong.

(6:09) This is not what you want to do. You want to go and execute it. In the architect phase, we can (6:16) execute this in six weeks.

Architect phase is something that we can build together and we (6:24) can implement an investment thesis, a legacy statement, and also make sure you do an (6:31) assessment of your portfolio. You start then creating a list of where you want to start (6:37) deploying your capital. That is what an architect phase looks like.

The questions that you're asking (6:43) yourself, especially around this legacy statement, are you're asking yourself the questions of what (6:49) is the purpose that you want to give your money? How do you really want it to work for you? (6:55) It's so important that you think of it that way because ultimately, you're not going to be able (7:02) to have your money achieve any of its goals if you're not clear on what those goals are. You have to (7:07) paint the target to be able to go and hit it. Thinking about things if you did not have to (7:15) work for money, what would your purpose be? It's a big, heavy question, but it's also one that (7:21) once you start trying to answer it and you see what's written back on the page, that iteration (7:26) will then allow you to do another one and do another one.

Exactly just like launching a product (7:33) and building code, it's really about how do you get started, get off of a blank page, (7:39) look at something to start with, and then move forward. The investment thesis (7:45) then accompanies that because your legacy statement is really your why. Then you start (7:50) looking at your asset categories or what you want to invest in.

Then you say, how am I going (7:56) to measure it? Because the question that I would ask for you is, would you go to work for a company (8:02) that didn't have any way of measuring its results, whether it was a company that had no net promoter (8:09) score, or didn't know what customers thought about the product? Of course you wouldn't. You wouldn't go (8:16) because nothing can be managed if there's not a measurement to go with it. This is where it's (8:21) important that you start understanding and tracking how you want to measure success (8:26) in your micro family office.

Then ultimately that's going to then paint this picture of (8:33) where do you want to invest? You're going to start highlighting the jobs that you want your money to (8:39) do, and then you're going to be able to paint that. Ultimately, this framework of building (8:45) your wealth, building a business around your wealth, there is so much that you understand and (8:51) know today that you can map to how you're building this business, especially those who (8:59) have been in early stage companies and startups that have had multiple roles, seen across business. (9:04) When you start mapping it, you can do this.

This is why the WealthOps framework and how it's (9:09) structured is intended to map what you know and what you understand to then how you build this (9:16) business so that it doesn't take months. You're really executing this in weeks. This is where the (9:24) intention of WealthOps, the architect and builder, is done in 12 weeks where you're establishing your (9:30) architect, and then you're also building out the framework.

We're going to talk about build (9:36) next. The key thing is you can't skip this process. You can't.

Let me tell you a story. (9:43) The $3 million portfolio with no purpose, I had a gentleman who approached me for coaching. (9:51) He had five rental properties.

He had a couple angel deals, and he had a really robust 401k, (9:59) some equity compensation. My first question was, what goals are you trying to reach with this? (10:06) That was the question that he couldn't answer. Then when I dove in and I said, (10:12) is this portfolio, is it making you happy? Is it satisfying some educational goals or other (10:21) things? Sure, he'd commented anecdotally, I learned a few things from it, but what I'm (10:27) realizing is the more I grow and scale it, it's just becoming exhausting.

The point being is that (10:34) if you have clarity, for myself, having been managing my family office for close to 12 years (10:41) now, I have clarity on where I want to invest. I want three quarters of my portfolio to be (10:48) very passive, meaning that I do a lot of the work before I invest. I manage it very diligently, (10:54) but I'm not having to spend a lot of hours every single week on those investments.

I'm not getting (11:00) a lot of phone calls on those investments, single family properties. I want 25% of my portfolio to (11:06) be where it aligns really with passions. Also, I believe that I can impact the upside.

(11:12) That's clarity. That's what clarity sounds like, and that's what it feels like. I'm not (11:16) saying this to try and say I'm better than anyone.

I'm trying to say this so that you can (11:22) see clear examples of what this looks and feels like. That is the architect phase. That comes (11:29) first, and it has to come first because when you walk out of that and you have drafted your (11:33) investment thesis, your legacy statement, you're going to have so much clarity.

I did an episode (11:40) with my friend, Marco Quevedo, earlier this year, where he talked about how this investment thesis (11:45) are the compass in the business plan. They're actually the compass for the business plan (11:51) of single family offices worth billions of dollars. Whenever they make an investment, (11:57) they need to understand how it aligns with that thesis or not.

It's updated. They make (12:04) modifications to it annually to set the tone for the next year. Architect phase can't be missed, (12:11) and it's important that you walk away understanding that as a technology employee, (12:16) you can implement the architect phase in just a short number of weeks, and you can do it while (12:22) you're working a full-time job as well because it's structured to be done just like an executive (12:27) MBA.

I'm going to touch on the build here in a second, but I do want to let everyone know, (12:32) I mentioned it earlier on, that I do provide master classes. I'm running these monthly so that (12:40) you can get an opportunity to understand what it looks like to build your legacy statement. (12:46) You can come into the class.

You can get a deeper overview of what WealthOps really is, (12:52) and then in those two days, we walk you through generating a first draft of not just your legacy (12:57) statement, but also your investment thesis. If you want to learn more, please go to wealthops.live (13:03) right now, and you can see when our next class is scheduled, and you can apply now. Thank you.

(13:09) Okay. After you architect, now you build. Now you have the design.

You have the blueprint. (13:15) Just like if somebody is going to build a house and you don't have a blueprint, (13:19) good luck. I don't know how that's going to turn out.

It's probably going to look like a Salvador (13:23) Dali painting. Who knows? I'm excited to talk about the build because this is the infrastructure (13:31) that you need to run your portfolio as a business, and it's also talking about the team (13:35) because this isn't something that you're doing by yourself. You have a specialized team, (13:40) and you do it pay per service.

We're not at the size and scale where you're hiring people full (13:45) time, but it's pay per service, but all of this stuff we're going to be talking about is going to (13:50) be aligned with you understanding some of the skills that you already use in your day job. (13:55) How do you bring those over? Let's talk about the structure of the micro family office, (14:00) meaning that there's going to be a holding company, an LLC, an S Corp. Usually, you let (14:06) your tax people guide you.

If you start as an LLC, that's a very easy, low-risk way to start (14:12) where you can actually get some level of asset protection, start moving some assets in there, (14:17) and by structuring it, you start getting different levels of tax efficiency. (14:22) There are strategies where you can take non-deductible expenses and make them deductible (14:27) off your taxes, and this is, again, all operated with a team, but this is where setting up your (14:34) structure is done very easily in the Wealth Ops. We have a checklist that says, here is the (14:40) straight out of the box, and then we also identify here are some vendors that we know and that we (14:45) use.

Here's other vendors so that you can think about getting a business checking account that (14:50) has interest, getting some really low fee, but you have good travel points, credit cards, (14:57) but going through that list, setting up the LLC, making sure you're working with a registered (15:02) agent so that it doesn't have your home address on there. There's, again, more security that's (15:07) baked in there, making sure your operating statement is reviewed by a lawyer, and it's not (15:12) just a templated operating statement, but it's an operating statement for a holding company, (15:17) and then you start moving your assets in there. You start transitioning, whether it's cash into (15:22) the bank account or whether it's ownership of brokerage accounts and other things to the LLC (15:27) so that everything is owned and run out of that.

It starts becoming your business. Set up (15:33) accounting for it as well. This is when really the rubber meets the road and you start (15:38) realizing, oh my goodness, I'm running a startup company, and I think anybody who's (15:44) been involved in that idea to seed, you realize there is a, hey, we're working on something.

Now (15:51) we have to go get the entity. We've got to go get bank accounts. We've got the bank accounts (15:55) full.

This is real. It's important to understand that one of the factors of creating this entity (16:04) is to do that, is to make it separate, is to give it so that you can see in your head, (16:11) I have got this micro family office that is going to be focused on. It's a mission to grow (16:18) and protect my family's wealth.

That is arguably more important than my day job because I want this (16:24) to continue after this. Think about that for a moment. We're formalizing it into a business to (16:31) give it something.

I think even for us, we have put on our LLC names some historical family (16:39) names that are significant to us that again is part of this whole, the legacy. It's part of (16:46) the legacy. It's part of what we want to leave behind.

Setting up your structure is relatively (16:50) straightforward. Again, this is part of our 12 week sprint that we have to get people (16:54) through architect and build. As you go there, there's checklists and it's really more of to-do, (16:59) setting it up, moving it in, getting different questions answered.

I think where it gets (17:04) interesting is the team and the organizational chart. Who do you need when and how do you (17:14) actually engage them? Let's talk about that for a second because coming out of the architect phase, (17:20) there is a, in this 12 week sprint, there is a performing an assessment and part of the (17:25) assessment is operations. Looking at the performance of who you currently have on your team (17:32) and asking the question, what do you think of their performance? The shocking thing, (17:38) 90% of the people that I've worked with say that their tax person is meh, meh.

Okay. Shocking me. (17:47) Why is that? Because investing in a great tax person lets you keep more money, (17:54) lets you put more money in your pocket.

That's basically like saying I'm running a team at work (18:01) and my key person, my right-hand person, I'm going to make a below average or average higher. (18:08) That's really what that's saying. Taking that back a little bit in the build phase, it is so (18:14) important that you start understanding how you analyze, like build the requirements, (18:21) like roles and responsibilities, Doc, or who do you want to hire? Most people do not do that (18:26) when they're going out to hire.

Can you do taxes? Can you just get my taxes done? And they think (18:31) about it again with a middle-class mindset of I want my taxes prepared versus the ultra wealthy (18:38) mindset, which is that the tax code is a book of incentives. If somebody knows how to follow this, (18:43) I pay no taxes. Hey, can you help me unlock this thing? Can I work with you on the side and can I (18:51) save an extra 30, 50, a hundred grand a year? It's the difference in the mindset, but it also (18:56) results in the difference of hiring.

So you need to have requirements. And this is where we have (19:01) some processes baked out for our different specialists, whether that's estate planning, (19:07) tax strategy, or asset protection. What are your requirements that you need to put in? (19:15) How does that then create the questions that you need to ask? Where are places that you can go look (19:20) for them in your area if you need somebody that's state specific, maybe even city specific, (19:29) or maybe you can choose nationally, but then how do you go interview them? Get three to four of (19:34) them, interview them, go through the questions in there.

And we're obviously happy in the (19:39) Wealthbook Collective, I share my preferred vendors with people as well. So it's easy. (19:44) But it's important that you do look at this as a team and just like a team at work, (19:53) if somebody is coasting on your team and you're working in a hyper growth startup company, (20:00) it's incredibly unforgiving that you need to meet your deadlines.

How are you going to treat (20:05) that person? Well, you're probably going to put them on a PIP, a performance improvement plan, (20:10) and you're going to get to the point where you're going to walk them out the door. (20:13) It's true. So in this scenario as well, you also need to have commitments (20:21) and metrics with who you're working with to understand their timelines.

Are they meeting (20:25) their timelines? Are they customer centric? Are they taking care of you? Are they good partners? (20:30) Because if they're not, you do not have to work with them. Let me say this again, because I feel (20:36) like some people just don't understand this. You do not have to work with the same tax person you're (20:41) working with right now.

You don't have to work with the same estate planner. You can go change (20:45) them and you need to find somebody who works the way you work. I really enjoy my tax planners (20:51) because they have tools that allow them to shoot me texts and I can text back and we can communicate (20:57) that way.

I really like that. I don't want to have to be tied to emails or phone calls or (21:02) always formal meetings. I do a lot of asynchronous work.

They have a workflow and a thing where I can (21:07) then be working on questions. Hey, I have this idea. I can log that into a tool where then they (21:12) can then record that.

They can get back to me. They can bring that into our next strategy meeting. (21:17) These are important things that you understand because the more you ask for people to work with (21:23) at your cadence, you're a busy executive, you want to build a micro-family office, (21:27) you're looking for different checkpoints.

That's critical. You need to have an interview process (21:33) and then you want to track and measure results. Ultimately, again, this is a pay per service.

(21:40) You're looking to not hire full-time and you want to make sure that if you are working with people (21:45) that have some type of ongoing subscription services and you're not getting the value, (21:50) just cancel those things. The other thing that happens towards the end of build is (21:54) just implementing the core processes, the run state core processes where you start getting (22:00) an idea of what you need to do week over week, month over month, quarter over quarter to run (22:06) your micro family office. That is actually going to be what we're going to be talking about in the (22:11) next episode.

How do you actually run your micro family office and what does that really look (22:15) like? Not getting into all of the details of all of the steps, but just thinking about it as a (22:22) business owner. Part of what I'm trying to make sure that people understand in this episode and (22:27) the next is that this process was made for you so that you can execute this and build this micro (22:34) family office while you have a full-time job. Because I built this and ran this while I had (22:40) full-time jobs and it didn't, it didn't kill me.

I'm here to say, uh, and you can do the same (22:47) thing too. So it's so important that, you know, you think through the architect, how do I design it? (22:54) Build? How do I create the structure when you're done with that? And then you also have the (22:59) structure, you have the team, and then you also are clear on, okay, what are the processes I need (23:03) to execute? When you have those two phases done, you are ready to run. You're ready to start running (23:10) your business.

You actually have the core and you're ready to go. Okay. For many of you, I know (23:15) that you're just DIY.

You're just, you're sort of cobbling this thing together. And unfortunately, (23:22) what I've seen, and I've had hundreds of conversations with hundreds of technology (23:26) employees about this at this point in time. And what I see is that it's either there's people (23:32) who are burning baby burn.

They're just focused on income, income, income, trying to build that nest (23:38) and they're leveraging up their lifestyle. Or you have somebody who is just frozen, (23:44) like they're, they're, they're stuck. They don't know who to trust.

They don't know what to do next. (23:48) And so essentially what they're doing is nothing. They're treating their equity (23:53) compensation, like a savings account.

They're continuing to just put more and more in it, (23:58) watch it grow. When reality creates a lot of risk. Right.

And then the third one is, is the (24:06) DIY or the dabbler where the hobbyist, right, where they're in there and they have some (24:11) investments and they're doing things. The impact of that is the fact that, you know, they're there. (24:18) Many of them are building portfolios that then start taking more and more time.

And many of (24:23) them start feeling overweight, not overweight physically, but overweight in certain asset (24:30) classes or, or things they're trying to do so that they're losing a lot of time. (24:34) And then they don't understand. They can't see the benefit of it.

This is exactly why (24:39) wealth ops was built so that you get clear on what you're building up front and how you want (24:45) your wealth to unlock your lifestyle. Right? Let me say this again, is that when you build a (24:52) business around your wealth, you are essentially building a business. So you put your dollars to (24:57) work so that then you don't have to work as hard as you used to.

That's what you're doing. (25:03) But if you don't design it and you don't build it correctly, you should have no expectations (25:09) going to function how you want. You shouldn't, because if that's not clear, then what you're (25:15) doing is you're just, you're guessing.

You're just, you're sort of playing over here. (25:19) And I'm saying this because I want you to really take seriously the opportunity that is wealth (25:25) ops of really learning how to architect and build your wealth so that you can scale up without (25:32) burnout. You can leverage out of the box, repeatable processes, and you can get clear on (25:39) how you map the skills that you're using today to what you can use.

So it sort of demystifies (25:44) all of this. One of the things that I've heard out of the last two courses that we did with the (25:50) wealth ops way was people were saying, oh my gosh, like I thought it was so complicated, but it's not. (25:56) And when you remove the fluff, you remove the mystery.

And all of a sudden you see how you're (26:01) just creating a business and you're leveraging a lot of the same skills. All of a sudden, (26:07) you know that the true value of what this is gets unlocked. And then guess what? You can get your (26:13) wealth working for you and you can get to the lifestyle sooner.

I mean, that's the one thing (26:18) that I will wrap up with is that, you know, I started off just like everybody else. Like I (26:24) learned this the hard way. I learned this by tripping over my own shoelaces.

And ultimately (26:30) what I discovered was when I was a hobbyist, the more I just sort of hunted and pecked at this thing (26:36) and just sort of put time in when I could, like I wasn't getting the results I wanted. (26:41) When I made the decision to treat this as a business and really get laser focused and start (26:47) creating and walking through these steps of the architect, the build run, the results came (26:52) faster than I ever expected. And this is my hope for you is that you can take these processes.

(26:57) And unlike myself, who I had to work 10 years to get to my financial independence and freedom (27:03) and replace my paycheck, that you could do it even sooner. That's my hope for you. (27:08) So that wraps up this episode.

You know, what is WealthOps? You know, it's the highest level. (27:14) How does it really map to what you do as a business and how it relates to building and (27:21) a micro family office. And that was the architect and build.

Next episode, I'm going to dive into the (27:28) run. Remember, this is the foundation series where we're trying to remove all the noise, (27:32) remove all the fluff and give you the financial education that you've been looking for ever (27:37) since you came into wealth and you're trying to figure out how it really works? Well, (27:41) we are here. I will see you next time.

And I just want to say, if you want more information like (27:47) this, you know, this podcast, Managing Tech Millions also has a blog where we're producing (27:53) some long pillar posts on a lot of this information, very deep. And then we also have (27:59) a newsletter where we continue to give you strategies and tactics on how you grow, (28:04) build and protect your wealth, running it like a business. It's all in managing tech millions (28:09) dot com.

So you got to go there. Subscribe. You can subscribe to the subs stack.

You can follow (28:15) the podcast. We also have a YouTube channel as well. Managing Tech Millions.

Go follow us. (28:21) And I think your life will get better. We'll see you next week.