Douglas P McCormick - Family Inc.: Using Business Principles to Maximize Your Familys Wealth

Douglas P. McCormick

Cover design: Wiley

Cover images: Paper cut out family Tooga/Getty Images, Inc.; $100 bills background Cimmerian/Getty Images, Inc.; Family Inc. logo: Scott Hummel

Copyright 2016 by Douglas P. McCormick. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.

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ISBN 978-1-119-21973-6 (Hardcover)
ISBN 978-1-119-21976-7 (ePDF)
ISBN 978-1-119-21974-3 (ePub)

I have watched Doug McCormick employ the lessons and teachings of Family Inc. for over 25 years. We became good friends as cadets at the United States Military Academy, where we endured the Academy experiencethe rigors of school, military training, and the challenges of collegiate athletics; Doug as an accomplished wrestler and captain of the team and me battling on the gridiron for the football team. During that time, he established himself as a leader, an intense competitor, and a gifted, creative intellect, known for independent thinking. These attributes have propelled Doug to success through every stage of life: highest-ranking cadet and First Captain of the Corps, accomplished Army officer, distinguished student at Harvard Business School, and successful banker, investor, and entrepreneur as co-founder of HCI Equity Partners.

The breadth of his experience allows him to bring a unique perspective to the topic of personal finance. As an unemployed husband and father putting himself through Harvard Business School, Doug learned the challenges of acquiring wealth when you have none. Harvard exposed him to the best teachers and thinkers in finance. At Morgan Stanley, he developed an understanding of capital raising, mergers and acquisitions, and how Wall Street works and thinks. As a private equity investor and cofounder of his own firm, Doug understands business, entrepreneurship, and the tools corporate America uses to create enduring value. Few professionals have enjoyed such consistent success combined with such breadth of experience. His diverse life experience, educational accomplishments, and business experience make him uniquely qualified to advise us all on the pursuit of financial independence.

Family Inc. is a career road map and investment guide for everyone, regardless of life stage, education level, or profession. It offers valuable tools that would have helped me navigate my own career and financial progression as a student, Army officer, banker at Goldman Sachs, and CFO of the NFL and Twitter. In many cases, I was following Dougs recommendations intuitively, but without understanding how they fit into the Family Inc. paradigm. My experiences are not unique. The books teachings are relevant to the many people I have worked with throughout my careerfor the soldier transitioning to civilian life, the banker with significant financial knowledge, the professional athlete who acquires wealth early in life, the millennials in Silicon Valley pursuing entrepreneurship, and my college-age daughter. Quite simply, Family Inc. is required reading for the Noto family. If you are going to read ONE personal finance book, this should be it.

In a field where so much has been studied, written, and restudied, it is hard to believe that it is possible to offer new, fresh, and compelling advice. However, this is exactly what Doug accomplishes. Most financial planning advice emanates from the Wall Streetcentric perspective of professional investors and advisers, financial institutions, and organizations attempting to address your financial needs through products. Dougs approach is rooted in the insight that with the exception of the size of the numbers, corporate and family financial statements and the principles required to effectively manage them are essentially the same. He borrows best practices of corporate America and modifies them to fit your personal financial situation. This approach results in better decision making, which will lead to better outcomes and lower riskand, I daresay, the purchase of fewer financial products.

Throughout the book, you will be exposed to numerous novel ways to think about the financial game of life Doug refers to as Family Inc. Examples of these conclusions include:

• For most of us, our labor represents our most significant asset. Family Inc. provides advice on how to most efficiently harvest this asset through investment and career choices. When is the last time you discussed your labor capital with your financial adviser?
• Any accurate measure of wealth or asset allocation must include your expected labor and Social Security values. This changes everything and is unheard of on Wall Street!
• Most investment programs are designed to minimize price volatility over relatively short planning horizons. Family Inc. recommends a portfolio that maximizes long-term, real, after-tax purchasing power in spite of shorter-term volatility. This results in significantly higher equity exposure than traditional advice has.
• Buy a home, enjoy it, and use it to create wonderful memories, but dont justify the purchase as a good investment.
• Labor and capital are commodities. Through entrepreneurship, you can help shelter these assets from competition.