Transcript
Intro
Stephan Shipe: Welcome back to the Scholar Wealth Podcast. Today, we have a question from a listener who’s building out a family office and trying to think about how to start lean without creating complexity that ends up causing problems later. Then we’ll turn to a question on saving for children, with new 530A accounts, sometimes referred to as Trump Accounts, becoming available in 2026. We’ll look at how they fit alongside 529 plans, UGMAs, and parent-held brokerage accounts, and when adding another account actually helps versus when it just adds noise.
We’ll close out with our From the Field segment featuring Christian Haller, for a conversation on angel investing and how early-stage investors think about risk and concentration. So let’s go ahead and get started with our first question.
Question 1 – Building out a Family Office
Listener: We’re early in building out a family office and trying not to overbuild too quickly. I’m seeing more offices start with fractional roles like a CFO or a CIO, outsource things like cybersecurity, and plan to hire in-house later. Is that a cleaner way to scale up, or do families end up paying for it later in complexity and rework?
Stephan Shipe: There’s a couple of ways to think about this, but I think the biggest factor is where you’re at in the stage and maybe help with some benchmarks that we typically see. We don’t typically see a full-fledged family office layout until you start really getting to that hundred to $150 million mark in investments or even net worth, depending on how the structure is set up, because you have enough complexity there and there’s enough, frankly, enough returns that are being thrown off of that to justify you having a full family office set up for you personally.
And that’s assuming we’re looking at family office as a true family office. You have your own in-house CIO, you have your own in-house tax professional and attorney. So you have hundreds of thousands of dollars of payroll that are on your books, which when you start looking at rough numbers, let’s say it’s just 1% of assets that you’re willing to allocate toward the family office, that gives you a million, $2 million or so of overall infrastructure and payroll that you can put into the family office.
So that’s why it starts to make sense. When you get down to, say, the $20 to $30 million range, what ends up happening is complexity is going up where a family office starts sounding nice. Some of the things that are out there, you’re like, that would be nice. I would like not to have to worry about X. So a family office would be good, but the returns aren’t there to justify a full family office build-out.
So unless you go from day zero of not having anything to the next day having $150 million that you want to put into a family office, that’s fine. It’s still a slow process. And the reason for that is because you want to build out all of these different experts. It would be just like building any other type of business or any other type of team. There’s going to be time that needs to go into that.
Now in your case, where you’re talking about building this out slowly, I think that’s going to be the natural progression anyway. So if you’re looking at this, whether you’re just starting off and you have that income from the investments or that type of wealth, or you’re building up to that, having a kind of game plan of what you’re going to start outsourcing first makes a ton of sense.
Unfortunately, this is becoming more and more of a problem. There are a lot of different services out there that try to fit in one level of expertise. You can have a company come in that you outsource home management to. You can start interviewing CPAs and different tax professionals that are really good in your area. Maybe you’re starting to work with a partner in a firm as opposed to an associate at another firm you were working with previously.
So you start building out your team. That’s what we see first. You build a team where you have a trusted estate attorney, a trusted advisor on the financial side, and a trusted tax professional. Then for some of the other items, those are easier to outsource. Bookkeeping is another big one, and sometimes that comes in with the accounting side of it, where you just want someone to write the checks. Someone to make transfers and pay property taxes or handle bills throughout the month. Those are easier things to outsource, and that gets you a long way there.
What changes over time is that those jobs start to become more complex because the complexity of your investments starts to go up. So you could say, “I have my family office built out with four or five people, and it’s working fine.” And it probably would work fine at $20 to $50 million, and even above that, if you don’t have a high level of complexity.
But then let’s say you get to the scenario where you’re at $80 to $100 million and you’re investing in 20 or 30 different investments. You’re taking fractional ownership of smaller companies or being a larger owner across a bunch of different real estate investments. Then an in-house CIO starts to make a lot more sense, just to make sure all the ducks are in a row with all the different investments you have.
Then you look at gifting and trust structures and everything else and say, “There’s a lot going on here.” Maybe it makes sense to have a closer connection with an attorney. Now they’re helping with estate considerations and legal aspects of your investments. They’re writing lease agreements, handling divestitures of real estate, or drafting operating agreements for companies you’re starting.
That’s when you start looking at it and saying, “I’m paying my attorney $60,000 or $70,000 a year in retainer fees. Why don’t I just pay $120,000 or $150,000 and have someone in-house?” That’s what naturally starts to happen as you progress through this. It’s the same with investment advice and the same with accountants. Eventually you hit a point where it’s cheaper to hire someone in-house who only deals with your family’s finances.
So I think the path you’re describing makes perfect sense. I don’t think you’re adding unnecessary complexity that you’ll pay for later and wish you’d done something different. There are firms that can coordinate some of this earlier, of course. But starting small, identifying what you actually need done, and outsourcing those things to high-quality operators makes a lot of sense.
Then over time, as your needs increase, you can decide, “You know what, I’m just going to hire a full-time bookkeeper.” That’s often the lowest-hanging fruit. We see this even with home management. At first, you outsource it. Later, you hire someone full time. Same with a housekeeper or a chef. It happens gradually.
And you want it to happen gradually. You don’t want to go from day zero, knowing nobody, to day one with a group of strangers running all of your family’s finances. It takes time to build trust and vet people. You get to a point where you say, “Joe’s been doing the bookkeeping for a while. I trust him. I’m going to offer him a full-time role.”
So I don’t think going slow is a problem at all. In fact, taking your time and building this team deliberately is going to be well worth it in the end.
Question 2 – Trump Account and Saving for Children
Listener: In 2026, 530A accounts, also known as Trump accounts, are becoming a new option for tax-advantaged savings for children. Where do you see these accounts being useful alongside existing options like 529s, UGMAs, and parent-held brokerage accounts?
Stephan Shipe:
So these are really neat, obviously a really new thing. So we’ve been digging into these and they’re starting to come up more in conversations, even with clients, of whether or not they should be contributing to them and how they work. And there’s a lot of buzz around them, mostly because there’s some seed funding from the government in these accounts.
So if a child is born from January 1st of 2025 to December 31st of 2028, when you fill out your forms, your tax forms, in fact, probably a greater level of branding there, the form that needs to be filled out for the Trump account to be opened is Form 4547. Find the 45th and 47th president of the United States. So kind of a neat Easter egg there when you’re filling out tax forms, not that there’s neat things to say about tax forms. So that was appreciated.
So when you’re filling it out, and if you qualify, your child qualifies, then they’ll actually get $1,000 in that account. Which has a big impact. You think about a child just born, you put $1,000 in what is essentially an IRA, a custodial IRA, that it’s worth, on an average return of seven or eight percent, you’re looking at probably $150,000 at retirement for every thousand that’s put in.
So the limit to contribute to the account is $5,000 per year, excluding that $1,000 seed funding. And that does not have a requirement that a child has to be born during those first few years. So if you have a child under the age of 18, you could absolutely open up a Trump account, throw the maximum of $5,000 in there, and what’ll happen is upon turning 18, it essentially turns into an IRA.
So if you want an easy way to think about this, to your question of where does the 529, the UGMA, and brokerage accounts all fit in, where this fits in is essentially as a custodial IRA that you’re just starting to fund your child’s IRA really early.
And it doesn’t have the same restrictions as a 529. So 529 is only going to be used for education. You can’t use the 530 accounts, or the Trump accounts, for education. That’s going to be a retirement account. It’s going to have the same restrictions of 59 and a half to withdraw, ten percent penalties, and everything else.
The UGMAs give a lot more flexibility, but they’re still taxable. So you’re still jumping into a taxable account. Parent-held brokerage accounts are still a taxable account. The benefit here is that this is a tax-deferred account that you could start for a child. So it gives those tax benefits early and may add to, and this is yet to be seen, but I imagine it will add to a little bit more simplicity and a little bit less of a headache that comes with handling UGMAs and brokerage accounts and everything for kids.
Because you’re always dealing with the kiddie tax laws, or should you take interest or gains on the kids’ brokerage account, because that’s going to count toward their tax rate. But if you go over a certain level, now it counts toward your tax rate. It removes all of that. It just says you can put $5,000 a year into this account.
And if you were to do that, $5,000 a year for a child up until 18, that’s a significant amount of money. You’re talking about $90,000 or so that you could contribute to this account. And over time, that would go a long way toward funding their retirement.
So it has the typical trade-offs though. You get the tax deferral, but what’s the downside? Of course, the downside is that you don’t have the flexibility to spend it on whatever they want. That’s going to be for retirement. But it’s a great way to kind of super-fund a retirement account.
One of the big things I was concerned about with this account going into it was what type of investment funds were going to be available. Because there’s always these issues, and 529s are notorious for this as well. Fortunately, with 529s you can invest in any 529 regardless of the state. But one of the things I wanted to make sure of is that there’d be decent investment options, because it would be horrible to put five grand into an account and all the funds have 150 basis point fees or one and a half percent in fees.
The Trump account actually has the requirement to be in low-cost index funds, with a cap at ten basis points, so 0.1 percent. There’s no leverage allowed in the account. It’s a really good setup, I think, if you’re looking at this and saying maybe you already have 529s set up for your kids and you’re not having to worry about it. You want them to save, you want to save some money for them, but maybe you don’t want them to have hundreds of thousands of dollars when they turn 18 that’s in their name, for whatever reason.
This could be a nice way to add that little level of difficulty of accessing the funds, because it would be a restricted account for retirement, and be able to put money in there. And this money could come from you. It could actually come from employers. Employers can fund these new Trump accounts as well for kids.
So it really ends up being a great option. It doesn’t have the income requirement that’s been typical for Roth IRAs or anything like that. So we’ll see how everything goes. It’s obviously still a pilot program now for the seed funding of the accounts, but these accounts will be able to be funded starting for the 250th anniversary on July 5th of 2026. You’ll be able to fund a Trump account for your kids.
So for right now, it looks like a good option. Looks like a pretty neat option for a different way to save that fills that gap of 529s only being used for college, or going all out with a pure brokerage account. Why can’t I just fund an IRA for my kids? So that’s where it fits in the realm of possibilities.
From the Field – Christian Haller, Keiretsu Forum
Stephan Shipe:
So next we’ll turn to our From the Field segment and explore how experienced operators make investment decisions when the data is limited and the stakes are high.
Today we’re joined by Christian Haller, an experienced entrepreneur and angel investor. Christian works closely with founders and investors navigating the transition from operating a business to deploying capital as an angel investor. I’m pretty excited about this one. It’s a comment and a request that I hear often.
So Christian, welcome to the Scholar Wealth Podcast. To start, why don’t you give us a little bit of your background? What got you into this, and how did you make that shift?
Christian Haller:
Well, thank you. It’s great to be here. I think everyone has a different story, but my story is fairly common. I started out as a guy into business. I started as an industry guy, and actually, in my case, I was an engineer. I went into business school, which is pretty common.
I was a service provider for many years, working for startups. We were taking startup ideas and turning them into commercial products. I did that for about 20-some years, and I realized as the company got bigger, I didn’t just want to serve other people. I wanted to actually go try to do it myself.
So I put all that behind me, wisely or unwisely, and I started my first startup. Ultimately, I did six startups. The first six were all in the medical device or therapeutic area. That’s a high concentration of startup activity in the country. I had four good exits and a couple that I learned a lot of lessons from.
I also still now have another startup that’s actually in the food service industry, which is completely different. But associated with that, it’s a common story for guys who start out as entrepreneurs. You have a couple of good exits, and then you feel like you have a need to give back to the community. You also realize you still have a lot to learn.
So you get involved in an incubator or an accelerator. In my case, I became an angel investor to work with other startups and then somehow got roped into actually running the largest angel group in the country. That’s Keiretsu Forum MST.
Stephan Shipe:
Great. And I think you just nailed it. This is a common scenario. The “giving back” aspect, or the one I hear all the time, is: I learned so much going through building my business that now, if I could just apply that to other businesses, I could accelerate that process at a much higher rate.
How do people go about that? When a founder has an exit, what does that transition usually look like in terms of timing? How do they source deals? Where do they go from saying, “I just had an exit, I have some play money, so to speak, that I want to deploy somewhere else”? How do they go about finding that first deal?
Christian Haller:
Well, usually the first thing you do is your worst one, because you go to people you know in industry and you try to wing it on your own. You say, “Hey, I know a whole lot. I’ve done this before. I’ve been doing this a long time. I can make investment decisions. I don’t need a lot of help.”
Then you realize that’s not really true. You really need a team of people to work with and to bring a lot of great minds together. That’s where these angel groups are proving to be so useful.
In our group, we have hundreds of members across the United States. They come from industry, legal backgrounds, and entrepreneurial backgrounds. We’ve got business people, IP lawyers, medical doctors, all involved. When you have an opportunity, you’re able to look at it from all different sides.
You don’t just have your own narrow vignette view from your experience. You have a whole lot of other people involved, so you can really take the opportunity to fully vet the deal.
Stephan Shipe:
So how does that compare? And for those who are unfamiliar with this space, when you’re throwing around terms like incubators, accelerators, and angel groups, can you give a quick comparison? Even at a 10,000-foot view, what are those, and how do they differ?
Christian Haller:
Sure.
Incubator and accelerator, there’s a little bit of a fluid line there. Basically, if you’re an entrepreneur, you’ve never done this before, and you just don’t know what to do, one approach is to go to these programs. Every region has them. In Richmond, I think we have something like eight of them.
An incubator is a place where you go and they have experienced advisors, people like myself or others who are trying to give back. They say, “Here’s what being an entrepreneur actually means. You have a great idea, but there’s all this other stuff you have to do.” There are business licenses and articles of incorporation and all that. That’s the simple stuff. Then you have the patent, and that’s still the simple stuff.
Then you have to realize product market fit, and now that’s the hard part. Then you have to get into how you’re actually going to sell and grow traction. So an incubator is really about people explaining what all of that is and walking you through it.
An accelerator is almost the same thing, except it’s usually a defined program rather than open-ended. It might be six weeks to six months, and usually there’s an equity component. They might take a percent or two in exchange for putting in a little bit of money.
An angel group is an entirely different thing. We look at companies that are already founded and already have a product of some sort. Different groups have different criteria. At Keiretsu and other groups we’ve been involved with, we’ve learned to focus on what we call Series A investments.
These are companies that already have at least a prototype of their product. They have an idea of their market. They’re sophisticated enough to have financial projections that we can evaluate. They’ve got some water under the keel, if you will. They’re not brand new anymore.
So we go in and look at those companies and do a lot of due diligence. We look at their financials. We do a detailed review of all their legal documents and their IP. We actually call people in the industry and ask, “What do you really think? Is there really a market for this?”
Depending on where they are, we might get into details like cost of goods, how they’re going to manufacture, and how they’re going to sell. We also have a side path where sometimes we get into these companies and we see that there really is something there. It’s a great product and a great product market fit, but the company is still very early.
In those cases, the best place for the founder might be to stay on as a chief technical officer or advisor, and we’ll bring in an experienced CEO. The founder learns from that process, and when they do their next company, they have all that experience. That’s what’s typically called the studio model, where we actively build a company versus just investing in a company.
Stephan Shipe:
How important is that industry knowledge for a founder going in to invest in these situations? What I’m hearing is that it helps to have background knowledge to know whether a CEO is needed or where the skill sets are missing. If I recently had an exit, let’s say in the medical field, and I want to start deploying capital, should I only be investing in medical companies because of that background?
Christian Haller:
Well, it certainly helps if you know the industry. I have a medical background, so I’m more comfortable there. But I also invest in FinTech, FoodTech, and GreenTech. I would never do that on my own.
I learned that you have to bring in other people who know how to do that. It’s also really important as an investor to have diversification. We’ve all heard that somewhere along the line. If I just have a portfolio of ten medical device companies, even if I’m a really good picker, I’m pretty exposed from a risk standpoint. That whole industry could tank.
I’d much rather have exposure across a number of different industries. Our thesis is that we need distribution across a variety of industries as we invest as a group.
Stephan Shipe:
On both the group side and the individual side, where someone is writing a check into an individual company, what does the average check size look like? And how many companies or exposures would you typically want in a portfolio to achieve diversification?
Christian Haller:
Sure. If you look at the Angel Capital Association, the typical deal we see starts with a minimum investment of about $25,000. The reason for that is if a company is raising $5 million, you don’t want an enormous number of individual names on the cap table.
If you do take smaller checks, you’d usually form an SPV, a special purpose vehicle, to aggregate those smaller checks into one entry. Everyone on your cap table is effectively your boss, so you don’t want a hundred bosses.
Once you get good at this, some companies can command $50,000 or $100,000 minimums. It depends on where you are, how good the idea is, and the industry. In today’s market, though, I wouldn’t set the minimum too high because people aren’t writing a lot of checks right now. It’s a tough environment.
Stephan Shipe:
Got it. So that’s the advantage of the angel group. You can support larger raises and split them up, whereas if someone is deploying $100,000 or $200,000 on their own, that’s probably going into a single company rather than multiple ones.
Christian Haller:
Well, people have different thresholds, but we try to encourage people to have investments in around 20 companies. That’s generally the target for building a diversified angel portfolio.
The advantage of angel groups is the herd mentality. You have a lot of people putting their minds together to come up with a better answer than you could on your own.
The other key point, especially for entrepreneurs listening, is that an individual writing a $25,000 or $50,000 check can only get you so far. As an angel group, we have a minimum raise size of $1 million. We won’t look at a deal that’s not raising at least that amount, and we can carry as much as $50 million into a deal.
By pitching to a collective, founders can do a much bigger raise. We also syndicate across other angel groups. We’re somewhat unique because of our size, but syndication allows founders to raise significantly more capital than they could from a single group alone.
Stephan Shipe
Interesting. Yeah, that’s almost more of a non-competitive setup there with those types of check sizes. You start getting to $50 million and such for an investment. That’s a number.
Christian Haller
Well, you better know what your exit is before you make those kinds of investments.
Stephan Shipe
Yeah, and that actually leads into another question. When you’re thinking about misconceptions or mistakes people make, the biggest one I tend to see upfront, before they even get into the room, is the excitement. It’s that feeling that the money is burning a hole in your pocket. Angel investing sounds fun. Everything you’re talking about sounds fun. You keep writing $25,000 checks, you have all these cool companies in your portfolio.
What are the biggest mistakes or misconceptions you see when people show up to this group, they’re ready, the first pitch is being made, and they already have the check written?
Christian Haller
That’s right. So if you were to come to BNC and say, “I want to be an angel investor today,” I’d say, fantastic. What we really want you to do is watch deal flow for at least a year. We want you to see exposure to a bunch of different companies so you get an understanding of the pros and cons, and you get to see good companies and bad companies. That helps you learn to identify them.
The second thing we’d ask you to do is participate in at least two due diligence programs. We do our own due diligence, and that’s where you dig in deep. You don’t just expose flaws, you identify strengths and weaknesses. And we want everyone to understand that all opportunities have both.
You need to learn how to identify those and work with them, and you only get there through time. You’re right, people can get very enamored with these companies, very emotional. They can say, “Hey, we’re saving babies,” and if you’re not careful, that can drive the decision.
But if you wait a year, you’ll find there are 20 companies in deal flow that all save babies. So how do you pick the baby-saving company? You have to pick the right one. It’s really important to get exposure to a lot of opportunities. It’s like when you were young and your mother said, “Don’t marry the first girl you meet.” Same idea. You need exposure before you commit.
Stephan Shipe
Yeah, that makes sense. I’ve always thought about the value of seeing due diligence, but to your point, you don’t even know whether the deal you’re seeing is good or bad until you’ve seen a lot of them. How often are you being pitched deals?
Christian Haller
It feels like every day. Formally, we have two processes. Most groups have some kind of cadence. In our group, it’s monthly. Every month we have a screening meeting. Companies apply to us, and we usually screen at least ten companies a month.
From there, we down-select, and those companies pitch to the broader membership. Then we decide whether to take them into due diligence. That’s usually a two- to three-month process, maybe closer to two months these days with AI.
After that, they come out of due diligence, we see the strengths and weaknesses, and the group can make an informed investment decision.
That’s the front door. The second path is scouting. There are a lot of industry events. We’ve all heard of CES, but there are many others. I was recently at the JP Morgan conference in San Francisco. You go to these events and meet 50, 100, even 200 companies in a week. You’re scouting, like a sports scout, looking for the best of the best, and then you bring them back to the group for screening.
Scouting tends to produce better results, but it takes more effort.
Stephan Shipe
As we wrap up, thinking about your experience and the investors you see who are really successful, what early decisions did they make that had long-term impacts on their portfolios?
Christian Haller
The people I know who are doing really well have learned to take emotion out of the decisions and operations. They don’t get wrapped up in the idea. They focus on the numbers. That’s fundamental.
The second thing is being willing to take corrective action. We usually do that through board activity. We require board seats. When a company is doing a lot of things right, you still have to watch for signs. It’s like being a parent. Sometimes you stay out of the way and let them grow. Other times, when they need adult supervision, you have to step in, even if it’s tough love.
Stephan Shipe
I was going to wrap up there, but that leads to another question. How do you choose board seats? If you have a large group of investors all writing $20,000 or $50,000 checks, who actually sits on the board?
Christian Haller
That’s a great question. It comes down to a few factors. First, the term sheet and the cap table define the company. You really need to understand both.
Our term sheet requires a five-person board. Two are common shareholders, usually the founders or their designees. Two represent the Series A shareholders, and those four choose an independent board member. That creates balance.
But it’s not just about numbers. It’s about skills. When we pick our two Series A board members, we look at where the company is strong and where it’s weak. If they’re strong technically but weak in sales or manufacturing, we bring in board members who fill those gaps. If they struggle with fundraising, we bring in someone who can help there.
We want board members who can pull rope, not just act like the principal’s office. They need to collaborate with founders and help move the company forward.
Stephan Shipe
That answers my wrap-up question. I really appreciate you coming on today. This is a topic I hear about regularly, and I’m looking forward to sharing this episode with founders thinking about how to put post-exit capital to work through angel investing.
Christian Haller
Fantastic. Thank you.
Outro
Stephan Shipe: And that’s our show. Thanks for listening and we’ll see you next week!
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