The 3 Pillars Podcast: Accountability – You Get What You Measure
In the second installment of Asena Advisors’ new podcast, our Managing Director and CEO: Peter Harper discusses with a special guest the value of a family office and wealth education in taking accountability.
Peter and special guest Thor Conklin, discuss how accountability, goal setting, and education can perpetuate a successful family office when combined with data.
To watch or listen to the full podcast, click the link below or just press play:
Peter Harper: [00:00:33] So welcome, everyone.
Peter Harper: [00:00:39] We’re here for the next installment of Three Pillars podcast where we are focusing on items that I view as critical success factors, pillars to a successful family office, and one of the topics – last week we talked about the legacy and the impact that it has to the values of a family and purpose of a family – Today, I wanted to focus on accountability and how a strong value system, measured and connected with a strong system of accountability, can make family strive.
Peter Harper: [00:01:30] So I’m joined today by my partner in Asena Consulting: Thor Conklin, and Thor has been assisting entrepreneurs with accountability for over 20 years, and I’ve used Thor to help myself with various aspects within my business when it came to accountability and I found the way he thinks is super impactful. So I’m excited to have you here with me today. Thanks for joining Thor.
Thor Conklin: [00:01:58] Well, hey, thanks for having me.
Peter Harper: [00:02:01] So, buddy, would you mind just giving everyone a bit of background about yourself and how you came to do what you do?
Thor Conklin: [00:02:07] Yeah, so in the early part of my career, I was in New York working with private equity firms, helping them with their deal transactions, entering and exiting and the risk management of those programs and those portfolio companies. And then I turned in to become an entrepreneur about twenty one years ago and about five years ago, really drove into the coaching and the accountability piece. Because what I found, Peter, was on the surface, so many entrepreneurs seemed to have everything all together. It looked great and shiny on the outside. And you lift up the hood and you very quickly started to uncover some things that were going to bring the house down or potentially bring the house down. And all they needed to do was to make some shifts. And if they were able to make these shifts, they were able to shore up that foundation. So I wanted not only to have entrepreneurs that look good on the outside, but also work well on the inside.
Peter Harper: [00:03:02] And that’s awesome. And actually, one big thing that you focus on is profitability. How do you think that notion of profitability really delve back to accountability and to determine if we’re going to successful sort of family dynamics?
Thor Conklin: [00:03:22] Well, yeah. You know, it goes back to everyone seems to like this shiny exterior. And when you get around some friends at the country club, you start talking. How’s business going? What’s everyone talking about? Oh, we had 10 percent top line growth this year; yeah we’re expected to close this big deal. Very rarely is the discussion about the profitability. But at the end of the day, that’s really what it’s all about. What sort of profits can you bring to the bottom line? Because there’s only one reason why a business goes out of business, and that’s because of lack of cash, lack of cash as a result of poor profitability. And what really drove me into this area, Peter, was after several successful exits of other businesses, I found myself – I purchased the manufacturing company – and found myself deep in the mire of a business that it was very difficult. It was kind of like a roller coaster. And at the end of the day, we just weren’t able to produce the profits that we were able to. And through that lesson, that painful lesson, I realized that there were so many other entrepreneurs out there that were having difficulty figuring out how to, quite frankly, make a sizeable profit. And it’s something that I wanted to change.
Peter Harper: [00:04:39] And it’s actually it’s interesting, you know, when we first connected and we started to talk about this in a lot of depth, we’ve both been members of EO. The thing that kind of intrigued me about that organization was a lot of folks in there are obsessed with this idea of this big exit without spending the time and effort to really plan on one of the fundamental economic changes when it makes my business and my lifestyle to make that happen. And the thing I always love to talk about is, is that an exit is just an acceleration of cash flow. Right. If you take away cash flow from this side and you’ve got to preserve it on the other side, then that doesn’t necessarily seem very exciting to me and that’s actually what drove me into this idea of helping families with family office planning is one: making them really pull back and understand decisions that have been made historically around that were sort of, that were driving economic outcomes and really being focused on what their actual needs are.
Peter Harper: [00:05:54] And I think that’s one thing that that you do will when you bring back the accountability, it’s like, okay, what’s this all about? Why we why are we doing this? And I think we’ve talked about this a lot: Is the impact of accountability to the family unit. Regardless of the best-slated plans, if everyone doesn’t buy into buying what the family stands for, whether it’s financially motivated or not, and I do not hold each other accountable to those decisions, then you find yourself where you’ve got folks that are at cross purposes. And I mean, I imagine at a very simple level, people don’t ever seem to have don’t seem to have these issues when they’re talking about holding people accountable with their own business. But when it gets to the family dynamic, that that can that can change dramatically. Would you mind just sharing your thoughts and stories around seeing that kind of play out?
Thor Conklin: [00:07:10] Yeah, you know, one of the misconceptions I think a lot is, is that accountability is for those that haven’t made it yet. You know, you look at Fortune 500 CEOs, what do they have? They have accountability with their chairman. You take the best in sports. Michael Jordan, he had accountability to his other teammates and he had accountability with his coaches. They’re always having someone advisors around them that are holding them to the highest standard. You know, very few of us. Don’t know what to do, not what to do. We all know what to do, but we don’t do what we already know. Why is that? What does that change? Why aren’t we doing those things that we know we should be doing? Yeah, look, good health. It’s pretty easy, right? Great diet, exercise, we don’t need another diet book or an exercise book, but we need someone that’s going to hold us accountable and drive us towards those ultimate visions and those goals that we set for ourselves. And what I find is – it’s come up. I’m blessed to deal with and work with clients that have networks from ten to a quarter billion dollars. And what’s interesting is, is that very few of them have a plan of what they’re doing, why they’re doing what they’re doing, and very few are involving their family and their spouses and their kids. And I just had a client that I onboarded this morning, a matter of fact, that is basically inherited – his dad passed away – and inherited a very prominent Atlanta family business that’s been going on for one hundred years. And he found himself just kind of thrown into this position. It’s like here you have to now run this. And he’s like, I didn’t really dad never talk to me about running the business. I wasn’t involved in the business. Now he’s hiring me to help him become a business leader because there was no mentoring, there was no plan, there was no handoff. The death was not – there was a sickness and illness – so it wasn’t like a sudden event.
Thor Conklin: [00:09:23] But families that have substantial wealth need to have a plan. There needs to be a succession of, OK, why are you building this wealth, managing that wealth, and then advising and bringing the entire family in on the process?
Peter Harper: [00:09:43] Yeah, that’s a great story. On the last podcast, we had a gentleman Rick Harig, and he’s a legacy strategist and he talks about this concept of this arc – this story arc of an entrepreneur. Right. And so the challenge that he says a lot of children have with their parents is that they don’t buy in and understand the story arc.
Peter Harper: [00:10:18] And the reason for that is that a lot of parents are very bad at telling the really painful stories right now. In fact, it’s through the pain, if it’s through sharing the painful stories with the children that they can get to understand the challenges, that they start to feel empathy and maybe that they’re some common cause that they can get motivated around. I mean, that’s great.
Peter Harper: [00:10:40] I mean, one of the things that we’ve talked about and this is the cornerstone, I think, of what we’re we’re trying to collaborate with on together, is that when it comes to folks that are sitting in the ultra wealth category, it’s this notion of, well, I’ve got enough money to weather the storm and maybe I don’t care about the buying them on children because it’s just I’m going to live forever. That’s not something that’s front of mind or the buying of my spouse.
Peter Harper: [00:11:18] And so, you know, as you’ve talked about just now with this story, there’s a situation where they get to the latter part of their life and they’re trying to retrofit purpose in a very short period of time. Right. And I think the thing that we talk about that’s very impactful is that if you if the family builds a robust governance framework, they get each other to engage whether it’s through storytelling or shared experiences with the shared vision and then can build accountability frameworks around this. And this is like a business. This is a journey we’re trying to go on and this is the direction we’re hoping to go in, what success means to the family, then people a lot more willing to be accountable to that. I mean, is that your experience?
Thor Conklin: [00:12:17] Yeah, look, wealth building, wealth preservation, you know, think about it. Let’s look at it as a company. Let’s look at the family unit as a company, could you imagine running the company as the CEO or chairman and not involving anyone else in the organization about how things are done, where things are? I can’t tell you the number of clients that literally don’t know where everything is. It’s spread out all over the place. The client uncovered ten million dollars. He’s like, “I think I’ve got 10 million in a bank in London. Yeah, I think I’ve almost forgot about that account”. Like, it might be good to know where all your stuff is, the data is all over the place and you’ve got it in my mind.
Thor Conklin: [00:13:08] If you’re running a successful organization and a family is nothing more than an organization, what do you do with your organization? You bring people in. Your family is obviously already in, but you advise them: This is how we do business. This is what we stand for. This is where we’re going. This is our mission. These are the assets that we have. This is how we do what we do. And when it comes to the family unit, so often it’s the matriarch of that family that doesn’t share with the rest. And a big concern with a lot of clients is: “I’m going to be leaving my kids an awful lot of money. I don’t know who they’re going to be and what they’re going to do and are they prepared to be in that position to get this windfall? And who are they going to turn out to as individuals? How is this going to affect their lives? How is this going to affect the lives of my grandkids?”. These things need to be discussed, there needs to be a plan now.
Peter Harper: [00:14:07] I mean, it’s a really, really interesting point. I mean, I was having this exact discussion with a group of entrepreneurs about four to six weeks back, and we’re stepping to reach these things. We were talking about, you know, we were actually talking about the psychology of wealth. And, you know, some of the folks there were very motivated by money outwardly. And then others who had been in family environments where people were outwardly motivated by money were adversely impacted by that experience with like no money. They had this motivation to be more philanthropic in their their nature. I mean, I think the biggest thing that I think that’s consistently overlooked is that: You may not want to think that they are having an impact on the financial decisions of their children because they’re not discussing money, they absolutely are molding their children in a way. It might be – it might be by accident,
Thor Conklin: [00:15:15] Most times it is
Peter Harper: [00:15:15] Yes, most times it is by accident. So, you know, that’s a big, big thing. It’s like everyone who has this big fear that the kid’s going to blow the money. It’s probably a pretty good chance they are going to blow the money because those people have not invested the time in being intentional in the way in which they should educate the kids and how they should be carrying on the legacy for the next generation.
Thor Conklin: [00:15:39] Yeah, and what most people don’t understand that they don’t have considerable wealth is that things don’t get easier as you get wealthier. Yes, you have more means, but there’s a lot more responsibility and burden that that comes with that. And one of the biggest issues that I have with my wealthiest client is they spend nothing. It’s almost that. Going back to the mindset, what is your mindset around money? What is it? What’s it used for? What’s the mindset? How is it established? What do you think about spending money? I got a client that is worth hundreds of millions that will never, has never – I don’t know never – but will not fly business because his whole mindset is, well, if the coach ticket to Europe is a thousand and the business class ticket is six thousand, that’s a five thousand dollar swing. Five thousand dollars invested for the next ten years at a 12 percent IRR is going to produce ____. I can’t do that.
Thor Conklin: [00:16:47] So they’ve lived their entire life. Their mindset around money has created the wealth. But now that they have it, it’s continuing and they’re miserable because they’re caught in this scarcity model. They have more than enough, and in this particular case, they spend three percent of their annual income, which is fine. So my next question to this individual was: “Why are you doing this? Are you trying to build up as much wealth as possible so you can give it to your kids? Fine. You want to give it away?” No answer. Not a clue, not a clue, but it was things that he picked up in his childhood, the things that he saw from his parents, he adopted their blueprint and it worked very successfully.
Thor Conklin: [00:17:42] But there comes a time in life where you might want to pull out the blueprint, Apple, Apple phone, right, great product. They all update their software generally 12 to 13 times a year. Why? Because the old model, the old blueprint was great for then, but now it needs to be updated. And most people haven’t looked at their financial blueprint and people that really should be living amazing, happy, successful, fulfilled lives, almost see wealth as a burden sometimes.
Peter Harper: [00:18:18] It’s really fascinating because this was actually another topic that came up recently where we had another colleague of mine and we were talking about purpose-driven minds. And I think a lot of a challenge for folks – everyone in the mine has an idea of what success looks like, and most of the time when folks get there, it’s what’s next for them. And so for people that adapt to this. Bill Gates, a great example of this. Right. He’s like “Okay. In order to still be driven by purpose, you need to find something that’s not attainable. So I’m going to get everyone who’s wealthy to give their money away.” I’m like, that’s a huge bag. Might not be able to achieve it, but he’s got a purpose – he’s got real purpose around that.
Peter Harper: [00:19:09] Where folks don’t make that next leap, right, They tend to look inward and tend to put their arms around their money and become quite protectionist in the way they live their lives. Because in many cases., they’ve hit their objective, they’ve hit their purpose, but they haven’t been able to reshape what their next steps look like.
Thor Conklin: [00:19:32] They live in fear.
Peter Harper: [00:19:33] Yeah, and, you know, I think I think the biggest thing I want folks to sort of take away from today is to say: “okay, it is wise to accept that everyone has some predetermined psychology that’s probably being developed in their childhood around money, right, and around accountability associated with it. That if you have children, there’s probably a pretty good chance that your children are going to have some – maybe carry some of the same issues you have if you don’t address it. And then, you know, financial habits for children will exist, whether you’re intentional about it or whether you do it by way of accident, right.”
Peter Harper: [00:20:31] So, again, the thing that when we first – when I first met you, we started doing the thing that was super impactful in the way in which you sort of drive accountability is, one, understanding the baseline for your existing blueprint: is it working or is the broken and then what does accountability have to look like for yourself in the broader family?
Thor Conklin: [00:20:58] Yeah.
Peter Harper: [00:21:00] So, Thor, the final sort of thing, I wanted to step through, question for you.
Peter Harper: [00:21:16] What are the three things, for folks that don’t have their accountability locked down and whether it’s fiscal accountability or some other part of their life that they’re not happy with, what would be the three things that you would suggest that they should focus on?
Thor Conklin: [00:21:32] Number one is you got to understand your approach to money. What is it? What has it been? What is it now and what does it need to be in order to achieve the vision that you have set and if you don’t have a vision? Well, we’ve got to start there. Where are you going? Where are you now? Where you’re going? What’s been your mindset for the money and what does it need to be? Does it need to change? Sometimes it doesn’t have to change. I’m always after – I believe success is happiness and fulfillment and wealth is a piece of it. But it’s a piece. And if you have the wealth piece but you don’t have the happiness and fulfillment piece, something needs to shift.
Thor Conklin: [00:22:11] Next is you’ve got to really understand the numbers. You’ve got to understand the data. You need to have a system where everything is captured in one place and you’re looking at this at a minimum of once a month. Once a month, you’ve got to be looking at everything, where are things, where are they going? What has been the performance? You’ve got a track and you’ve got to measure. And then based on that track and the measuring, you can start to make the adjustments. Most people don’t know what to do and what changes to make because they don’t understand the data.
Thor Conklin: [00:22:46] A client, a matter of fact, saying on Thursday, is he thought he was going broke. I was like, all right, well, let’s go through the numbers. So we did a best-case scenario, a normal case, and a worst-case. I said here’s basically what has to happen for you to go broke: You’re going to have to quadruple your spending; The housing market is going to have to go down by seventy five percent and remain there; Commercial assets have to go down at least seventy-five percent and remain there for the next 20 years; You’re going to have to make some bad investments; You’re probably going to lose all of your capital in a couple investments. And even when you’re done with all of that, you’re still not going to go broke. So. I’m not quite frankly, I don’t know how to make you go broke, if you wanted to go, but if your goal was: how do I end up losing all my money? I don’t know how to get you there. But he couldn’t sleep. He’s like, the world is ending and I’m going to go broke. It’s like – I can’t see it. I can’t come up with a scenario.
Thor Conklin: [00:23:51] And then finally is, and we talked about this earlier, is you’ve got to involve a family. Approach this as a family. What’s been interesting in the last probably 18 months, I’ve gotten engaged more than I would have thought to work with family members, work with college students, work with kids that are going getting ready to go to college. Because so often our educational system doesn’t train these kids, young adults, for the next phase of their life, who’s teaching them? Who is teaching them money management? They can’t even balance a checkbook.
Thor Conklin: [00:24:30] I said that to somebody recently. It was a millennial that is a very successful millennial. And she’s like, “I’ve never balance a checkbook”. She’s worth probably 20 million dollars. And she goes, “I did one”. And she’s trying to come up with a course to teach grammar school, middle school, high school and college students life skills and part of those life skills is financial management because they don’t get it and they’re not getting it’s not part of the school curriculum. So if you’re not getting in school, they’ve got to get it somewhere. And like you said before, they’re seeing what you’re doing as the leader of a family and they’re going to emulate that style, whatever that is. And it’s not what you say, it’s what you do.
Peter Harper: [00:25:20] Yeah, that’s fantastic. That’s great advice. And I couldn’t agree more with you. It’s all about data and getting what you measure mean. And you know, I think, when families who are intentional and focus on strong education for their children – teach them fiscal and life skills rather than saying, “Hey, this is a something that they have to worry about when they’re adults or whenever adulthood is these days”. I think those guys are the families that thrive. And win.
Peter Harper: [00:25:55] And so Thor, thank you very, very much for joining us. It’s been an absolute pleasure to have you on, as always. I really enjoyed discussing this topic with you and looking forward to see you next time.
Thor Conklin: [00:26:08] Peter, I really appreciate it. As you can tell, I’m really passionate about this. It is such an important topic. And I just wish that more people would pay attention to it because it sets the direction for their kids. And as far as a parent, I think that’s so important.
Thor Conklin: [00:26:30] I tell a quick story and will sign off here. When my daughter was a senior in high school, she wanted to buy a car. And I said, well, I’m not the kind of dad that just buys cars and gives them to kids. I said, you can work for she goes, “Well, I’m in school. I’m supposed to be working doing that”. I said, “Fine, I’m going to hire you and I want you to do a P&L and a balance sheet every month, and I’ll pay you a salary to prevent that from her babysitting and all of the other jobs”. She hated it. She despised. And I said, “If you’re more than five days late, you don’t get your salary for the month before. And then if you don’t pay the car note, then the car gets repossessed”. And I actually even charged her 10 percent. My wife hated that idea. I’m like, “Look, this is real life, right? You know, banks don’t loan even money for no credit.” So now they almost loan it to you for nothing.
Thor Conklin: [00:27:21] But I’m like, I want to teach my kids life lessons. And she hated it. Even my wife hated that I was doing this. But she came to me – she was probably about twenty-three, twenty four. And she said “Dad, that was the best lesson ever” because she realized that she was spending too much money on Starbucks and she’s like, “you know, in the course of a year I spent seven hundred dollars on Starbucks, I could have taken that and I could have gone on vacation, I could have done something else with it.”
Thor Conklin: [00:27:50] So it wasn’t about her spending the money, it was about the realization of where it was going. And she started to understand. How many kids are senior in high school, and understand what a P&L and balance sheet are? Not many.
Peter Harper: [00:28:03] That’s fantastic. Really, really great stories, Thor. Thanks for being on.
Thor Conklin: [00:28:08] Thank you.
Peter Harper: [00:28:09] Bye
Thor Conklin: [00:28:09] Bye