Taking over a family business and living up to the challenges of older generations is a challenge for heirs, but it is one that Jonathan Crystal, of Frank Crystal & Company, has excelled in.
“My grandfather founded the firm… My father built the firm, and the challenge for my brothers and me is to build on that legacy,” says Crystal, executive vice president at the firm and head of its Private Client Services group.
He didn’t take a passive approach to his inheritance though, instead looking for ways to expand the privately-held insurance brokerage into new channels.
Frank Crystal is a full-service brokerage firm with a heritage working with financial services firms, with many clients in the hedge fund community, for example. Ten years ago it had a small division serving senior corporate executives.
“It was relatively immaterial from a revenue standpoint,” says Crystal. But he and other senior managers realized “there was an opportunity to develop a private-banking type experience within the insurance industry.” The firm’s history lent itself to this: “Our heritage in serving financial institutions informs our practice serving affluent families. Expectations for service, results, and quality are extraordinarily high.”
Over the past ten years, the Private Client Services group has grown from a staff of 15 to 65, serving around 5,000 individuals and families, including 18 members of the Forbes 400. Its average annual growth rate over the period has been around 12 per cent.
His strategy to achieve this growth? “Our people are our most critical asset,” says Crystal. He worked with a policy where new hires to the firm had to be highly experienced, with senior managers each bringing “in excess of twenty years of professional experience to the table.”
Meanwhile, the firm sought to bring “new energy to the industry,” investing resources to train and develop new professionals internally. “We made a concerted effort to invest in this segment,” said Crystal.
Heritage has shaped the firm in other ways. Crystal’s experience of being a third-generation member of a business-owning family affects the way he views multi-generational client families.
“One of the things I take from this background is thinking about the ‘Next Gen’,” he says. Younger family members can be “a nexus of risk,” he explains, due to their stage of life and their lifestyles, and to protect the family it is essential to focus on this in the insurance process.
It also gave him an understanding of family dynamics and the complexities of family relationships, such as the fact certain family members sometimes work with different advisors - and the necessity of delving into these matters.
The PCS Group decided from the beginning to focus on the super rich, but it defines ultra high net worth clients “not by their net worth, but rather by how complex their lifestyle is.” Factors such as art investment, yacht, plane or multiple home ownership all increase insurance needs greatly.
“Their risk profile doesn’t necessarily tie directly to their liquid net worth,” he explains.