(Dow Jones) Dain Kistner, a fifth-generation member of the wealthy Pitcairn family, wanted to join in the family's multifamily-office business in the early 1990s. Top executive Dirk Junge, his uncle, told him, "Go somewhere else."
So Kistner, then 21, went to work for a nursing-home company in California, and then a waste-composting business in Georgia, picking up skills in technology, finance and marketing. In his spare time, he joined an auxiliary board of the Pitcairn firm and became more familiar with its approach to wealth management for the Pitcairns and scores of other wealthy clients.
In 1999, Junge said it was time to come home.
Kistner now is chief information officer for Jenkintown, Pa.-based Pitcairn, a firm that prides itself on putting hurdles in the career paths of family members who want in to the company. "I got this job in spite of being a family member," Kistner says.
Still, the extended Pitcairn family wants to keep its members in key management roles at the firm. This has benefits in terms of continuity for what started as a single-family office in 1923 and became a commercial multifamily office in the late 1980s.
But it also creates the potential for nepotism and the distractions of family politics, among other drawbacks. A family-owned multifamily wealth-management business is open to suspicion that it favors the controlling family-or indeed, that it favors factions and branches of the controlling family over other family members and outsiders alike. On the other hand, the pendulum can swing too far the other way, with family members complaining that outsiders get preferential treatment.
Pitcairn's chief investment officer, Rick Pitcairn, points to the non-proprietary investment program and fee-only revenue model the firm adopted two years ago as helping assure equitable treatment. "The client assets sit right next to the family assets," he said.
Rick Pitcairn, 49, is from a Houston-based branch of the family. He worked for years in investing there before joining the family enterprise in 2004.
Since Pitcairn became a multifamily office, it has been structured so that family members can easily liquidate their shares and leave. Of the 600 or so living descendants of John Pitcairn, who made a fortune manufacturing plate glass and other businesses, about 300 have their wealth in the hands of the firm. Its 70 employees manage about $1 billion in Pitcairn family assets and $2 billion for 105 unrelated families.
As a guard against nepotism, an independent board member chairs the firm's compensation committee and there are strict performance reviews for employees, says Junge, who worked outside as a trust professional before joining the firm.