Paul Marrella has spent the past 20 years building his passion into a family business alongside his father. Through their own family business, Marrella Financial, Paul and his family have helped other families build multi-generational wealth through their own small businesses.

In his new book, Mind Your Own Business, Paul discusses what small business owners should be thinking about when it comes to sustaining and growing their wealth in a way that will benefit their family for years to come.

Nikki Van Noy: Paul, thank you for joining us today.

Paul Marrella: Thank you for having me.

Nikki Van Noy: We’re talking about your new book, Mind Your Own Business, today and there’s a little bit of a meta angle to this because you’re writing to people who are running their own family businesses, but you also own and run a family business, correct?

Paul Marrella: I do, along with my family.

Nikki Van Noy: Amazing. Tell me how that came to be?

Paul Marrella: Well, it was a long process. I used to be an attorney and back when I was in law school, my dad needed some help, so I decided to come work in the family business.

I did that for a while, and when I got out of law school, I decided that it made a lot of sense to practice law. I was able to work for a really great guy–he was a tremendous mentor to me. And the only thing I wanted to do besides run a business was work on Wall Street, so I decided to leave the law and go to be a Wall Street trader, which I did for a bunch of years. Then my dad really needed help, so I came back to join the family business–to reinvent the family business with him, which we did back in 2001.

Nikki Van Noy: Wow, you’ve done a little bit of everything. How does this feel to you?

Paul Marrella: Well, it seems really natural now, it seemed really odd at the time. When you’re a law student there’s sort of this rite of passage that you go through law school to be a lawyer. I wasn’t sure if I was ever going to be a lawyer, but it gave me a lot of insight into a lot of different things. What I found being a lawyer is that you spend a lot of time fixing problems. 90% of your time was spent fixing problems.

90% of those problems could have been solved with some planning, so that was one angle to it and then I really about-faced and went into Wall Street trading. I really enjoyed that and then when my dad wanted me to come back and work reinventing the family business, it was everything I always wanted to be. I loved meeting people, and I always wanted to be a business owner and be a little bit entrepreneurial.

I liked the financial markets and my dad was in the business, so it was just sort of natural having the rules and the lessons of money being pounded into you all those years, it was just kind of a natural phenomenon–a natural way of living.

Nikki Van Noy: That makes sense. I’m always intrigued by people’s paths and how from the outside, it can see him like there are some jumps along the way, but there’s usually a linear trajectory to it or some overlap.

Paul Marrella: Yeah, expertise is a very broadly misunderstood, misconstrued topic and you don’t need to have expertise in everything. One of the things I always say is you need the right questions to ask. You can always find somebody with the right answers, so if you surround yourself with the right people, it makes it a little easier.

Nikki Van Noy: I like that. Much less intimidating.

Paul Marrella: Yes.

Multigenerational Wealth

Nikki Van Noy: Okay, so you specifically deal with helping small business owners build their wealth into multigenerational wealth. How did you land on that specific sector of wealth management?

Paul Marrella: Again, it was just a natural progression. My parents grew up very humbly and worked really hard to put themselves through college. My dad ended up being a schoolteacher and believe it or not, an old neighbor, who unfortunately passed away a couple of months ago, came up to him and said, “Paul, I think you’d be very good in this business.”

He looked at it and started doing it. Long story short, he only did for his clients what he did for himself. He put all of his four kids through college, and he had a lot of things that he wanted them to do.

He kept my sisters on the payroll, kept them working here, while the kids were younger because he wanted them to be stay at home moms, which was unique, you won’t hear very often, but the family part of it is really important. It’s a lifetime of really smart financial decisions with an eye on the end goal of having more money than you need and what do you do with it when you’re done. You want to pass it on to your kids.

When our dad passed away, about a month ago, unfortunately, from his death bed, he was barking out orders to his kids, “I want this done and I want that done,” which you shake your head and say, “That’s him.” But when you come from nothing and you build something out of it, it’s really important for you to keep it sustained and that’s not just the wealth part of it–money was never a big thing to my dad. It was really important because it allowed him to do things for his family and he wanted those values to transfer on from his generation through our generation to the next generation. When you see the statistics that money is gone by the second generation, you want to pull your hair out.

The value is the most important thing. Money was only secondary. That’s what we do for our clients and so again, we live out our lives through our clients. We tell them to do the same types of things that we did personally, which makes it a little bit easier. I think it comes across a little bit more meaningfully.

Nikki Van Noy: Absolutely. I’m so sorry to hear that first of all. What a poignant bittersweet time for this book to be coming out and for you to be thinking about all of these things, I would imagine.

Paul Marrella: It is. It was really difficult here at the outset and then what we saw was the outpouring of support for him, his toughness–he’s a pretty tough guy. All of the friends that he had and the clients and the letters­–it was part of our reviewing, and makes it a little easier to stomach, believe it or not. He lived a good life, so it’s kind of hard to be sad for him. He’s done a lot of great things for a lot of people, mainly, his kids and grandkids.

Nikki Van Noy: I’m curious if, with that in mind, your feelings about the importance of legacy or anything like that with family businesses have changed or evolved or risen more to the forefront perhaps from this?

Paul Marrella: It has, the drumbeat got a little louder, but there was always a pretty strong drumbeat. When you’re a little kid and your mom rings the dinner bell for you to come in and Wall Street week is on, and when they said something that’s been ingrained in us, and it’s just something that we’ve always done, we don’t really know how to not do it.

Nikki Van Noy: Yeah, what a great image, I love that. Let’s talk a little bit about what you’ve seen and maybe experienced yourself in terms of family-run businesses and some of the unique obstacles or challenges that they might confront?

The Challenge of Time

Paul Marrella: I think the biggest challenge is time. Owning a business is hard. It’s a lot of work. It never ends and you can leave on the weekend and go on vacation or fish or play golf or something, but at the end of the day, you’re thinking about it Sunday night. So, it’s a grind. What happens when there’s a grind is you need escapes, and everybody’s got their own way of doing it. I happen to play golf, some people fish, some people hunt, some people ski, some people run marathons. But you need that escape and the problem is, I think, for the business owner that you leave work, and you want to get to that escape as fast as you can.

You don’t want to be thinking about your estate planning or about long term care insurance planning or about taxes. I think the time element is the biggest thing. What we try to do–again, we’re not the smartest guys out there, we just try to provide good practical advice and prudent solutions for people to help them make decisions.

There are really three things they’ve got to worry about.

We use this metaphor of the goose that laid the golden egg, or eggs I should say. Every business owner has a goose, some lay big eggs, some lay small eggs, some lay a lot of eggs, some lay not very many eggs, but you’ve got the goose and you’ve got to take care of the goose, but you also have to take care of the eggs. What you do with the eggs is vitally important when you go to retire or pass it on to your family.

Then the other thing that they never really think about is themselves, so we tell them, “You have got to take care of the goose, that’s your job, that’s what you’re best at. We’ll help you take care of the eggs and we’ll help you take care of you and your family.” Sometimes when you can boil things down to simpler terms, they can get their arms around it in a shorter period of time and it’s more manageable in the day to day operation of their business.

Nikki Van Noy: Totally. Based on that analogy, I’m going to make a little bit of a leap here, and this is not a well-informed leap. I may be totally off base but just due to the nature of the personalities that I would imagine are particularly drawn to creating a sustainable family-ran business, it seems to me like there could be a tendency for more emphasis on taking care of the eggs than the goose. Do you find that with the people you tend to work with that they can get overly focused on providing for their family and longevity, as opposed to providing the lifestyle that they want to live?

Paul Marrella: People come in all shapes and styles and flavors. It depends, there are a lot of people that care too much about the goose and not about the eggs and a lot of people that don’t care about the eggs or themselves, they only care about the goose. Either way, it all depends on the person and if there’s an art to this at all, it’s recognizing that you really need to get to know people. This is not a cookie-cutter business where somebody comes in and then in 15 minutes, they are out the door and their money is managed. This is an ongoing, never-ending, lifelong process. It’s a journey.

It’s really important for those people that somebody asks the right questions to help identify where they are and where they want to go and how they’re going to get there. This is not a skill people have. Some are, but it’s the great minority, not the majority.

Nikki Van Noy: What are some of those questions that people need to be thinking about?

Paul Marrella: Well, we have a list of questions that we ask everybody, and we call it discovery meeting. But the first question is, “What’s important to you about money?” Everybody has a different answer. To some people it’s, “I just want a bigger boat and the guy at the slip next to me–last year, he got a bigger boat. I want to have a bigger boat than him.” That’s not me. That’s the way some people think.

Other people say, “I just want my grandkids educated,” and again, any planning is goals-based. What is it that you want to accomplish? But, until you ask the right questions of yourself, how do you know where you’re going? If you’re going to drive from Philadelphia to Los Angeles, you can leave city hall in Philadelphia and turn right and you’ll get there, but you may not get there as quickly as you want.

Or, do you want to plan out a map and say, “I’m going to take this interstate to that interstate and I’m going to stop by Las Vegas on my way through.” You would plan a trip just like any other journey and this is no different.

Nikki Van Noy: What do you think that’s about? Do you think it’s that we sort of have this preset notion of what investing looks like and just sort of go about doing what we’re told to be doing without thinking things through? What do you think is happening there?

Many Aspects of Life

Paul Marrella: That’s a really good question and I wish I had a good answer to it. I find it mindboggling when somebody comes to us and says, “Nobody ever asked me those questions before.” These are not Ph.D. level questions we ask. In fact, they’re not even really technically financially related.

When you walk into a doctor, he doesn’t say, “Jeez, does your neck hurt? Maybe I should start there?” He says, what’s wrong? “Well, my elbow hurts.” “It’s not your neck, it’s your elbow.” They diagnose the problem and they figure out how you’re going to get better. I think, our business has done a poor job of educating the consumer to try to help them accomplish what they’re trying to accomplish.

This also requires a lot of experience and a lot of knowledge. It’s not just building a portfolio. It’s taxes, estate planning, it’s insurance planning, and it’s charitable giving planning–along with investment management, but that’s what everybody does. To really plan for a multi-generational outcome, you’ve got to start early, be disciplined and stick with it. It involves a lot of different aspects of life, and lives are always changing, and the market is always changing.

Nikki Van Noy: Yeah, so talk to me a little bit about that idea of sticking with it? That seems like one of the things that would really vary when you’re looking to grow multigenerational wealth as opposed to saving for retirement or whatever the case may be–these more individual goals.

Paul Marrella: That is a really great question and it’s no different than exercising. Quick story, it’s a dumb story but I’ll tell it anyway. I was at the gym one day and a buddy of mine used to work out pretty early in the morning and there was always this special ops guy there. He would be around for a couple of months and he wouldn’t be around for a couple of months. One day I was walking in to shave and I was just exhausted, I think it was a Friday and I said, “It’s over,” and he looked at me and he said, “It’s never over.”

I thought, “He’s kind of right. I’m going to come back tomorrow, and I’ve got to come back next week and the next week.” I think this multigenerational wealth stuff is really no different. You can’t let your guard down and you’ve got to stick with it. In a lifetime, you’re going to have five or 10 really hard decisions that you’ve got to make. You’ve got to have the confidence that you’re making the right one.

Without the confidence of having somebody at your side to help you, the possibility or potential for bad decision making is far greater. There are going to be things that you don’t want to do, that you’ve got to do, and there are things that might seem counterintuitive and everything is hard. To save is hard. It’s easy to spend, it’s hard to save. It’s hard to manage. It’s hard when you put money into something and it goes down in value, but you’ve got to have the conviction that what you’re doing over the long term is toward that outcome and that goal that you want to achieve–educating the grandkids, passing wealth on to them, helping them buy their first house, whatever that may be.

And, equally, that’s where the values come from too.

Nikki Van Noy: Yeah, you know it is so interesting to me. So many people have this story, but I look back at my grandparents who were immigrants and they had nothing. They were blue-collar, worked any number of blue-collar jobs and yet, they were able to save and to invest and to stick with it and support a lot of grandchildren from there and I feel like that is a lost art for generations like mine. It comes down to spending versus savings.

Paul Marrella: My family was very similar, and my parents were children of immigrants. I remember my grandmother, who was a piece work sewer at hosiery mill, and if she sewed 100 pairs of stockings in a day, she got paid more than the person that made 50. She was tough as nails because she had to be. It was the only way that you survived.

Well, when you have that grit, it lends itself very well to managing wealth, because you got to do things that people don’t want to do. It’s hard. So, it is hard when the markets are working against you, but you have just got to truck through and those people that truck through are usually the ones that find success on the other end.

Nikki Van Noy: Yeah, that makes sense. So, that brings the question to mind with what you do. I know that you are working with each person as an individual first and foremost, but I am wondering if you tend to see any differences when you are working with boomers who are creating these businesses that they want to see live on in the family versus millennials.

Paul Marrella: We read a lot of articles about this. Our clients tend to be 50 plus. We have heard for years that the internet was going to put us out of business, back in 1999-2000, and it didn’t. If there is one constant in the history of mankind, it is human nature and human nature doesn’t really change a whole lot. We have the same fears, the same greed, the same everything.

So, I think one of the questions is when the millennials get to be baby boomer age will they still behave the same as when they were millennials? My guess is they may morph into their parents more so than they don’t.

Nikki Van Noy: As an Gen X-er, I can say that is probably true. I am watching that path began to be paved right now before my eyes. It is funny how that happens.

Paul Marrella: Yeah, but they still have the same needs. They still have to fund their retirement and if you want to have $100,000 a year income in retirement, you are going to need a certain amount of wealth to be able to accomplish that.

Nikki Van Noy: Right.

Paul Marrella: There are tax challenges and there are many other challenges. It is still the same math problem. So, the same math problem of return and income planning and I presume at least that human nature is the same. How many more variables are there that are going to change the way they need to think about this, right? They will come from a different angle, I understand, but we still have to be considering some of the same things, the same planning items, “Where do I want to go, where am I today, and how am I going to get there?”

Nikki Van Noy: Yeah that makes sense and I do feel that idea of grit that you were talking about that we saw in our grandparents, that I feel like so many people saw in their grandparents, I do feel like there is always an element of that in life. It just looks different and especially now with technology that means something different than it did then.

Paul Marrella: It did and we could talk about Zuckerberg who started Facebook, and there is only one of him, and I think and we’re a lot of individuals. We think there are a lot of people out there that have done really great things in the world but that is the top 1% of the 1%. You know if we move back to the, let’s just say higher net worth individual, higher net worth family, they are a lot more prevalent and are they going to have the same problem?

Are they going to have to have and make the same decisions under duress? Are they going to have the same emotional intelligence while on the road that they are on to make the right decision? I think they are. So, one of the stories in my book is from the 2008 US Open, Tiger Woods is down by one, his last shot of the 72-hold match. He grabs a wedge, which is a wafted club that you would use closer to grill and his caddy said, “You know, Tiger, I think you ought to hit this one, not that one.”

He said, “Why?” He told him the reason why, and Tiger hit it 12 feet and so he’s got to make the putt to go up an 18-hole playoff for the 5^th day. So he’s got this guy over his shoulder saying, “I think you have to put it to the right edge of the cup,” and the greens were bumpy and I remember watching the putt go in, and what do you think happened? He made it. So, arguably one of the greatest golfers in the world, in the history of mankind, he’s got some guy over his shoulder saying, “This is what I think you ought to do.” How valuable is that?

Keys of Wealth Management

Nikki Van Noy: Yeah, I like that. Yeah, there is something very comforting about hearing that. So, getting a little bit more technical here, in your book you talk about how there are some key philosophies of wealth management that go beyond just investing. Can you speak a little bit about what those are?

Paul Marrella: Our job is pretty simple if you think about it. We battle those emotions, right? We are recording this on Cyber Monday and my inbox today was full of sales. Everybody has a sale for Cyber Monday regardless of whether there are sales or not, but everybody wants to sell me something for less than what they sold it for on the day before Cyber Monday or the day after Cyber Monday.

So, what are people doing? They are just maxing out their credit cards. They are buying all of this stuff because it is on sale. When we are an investor, when markets go down everybody wants to sell. Nobody wants to buy. It is sort of counterintuitive. It is part of human nature. We are wired to do things opposite. So, there are little things like that, buy while it is still high, which sounds really oversimplified.

When things go down you may not want to sell them, maybe you just want to stick with them, it depends on what you are doing, of course, but from a bigger picture standpoint.

Spend less than you earn, is that a really novel concept? It really isn’t. You know there are three things you need to take care of. You need to take care of the goose and you need to take care of the eggs and you’ve got to take care of you because you need to care for the goose.

I try to not be too technical. I think when you use those types of metaphors with business owners they tend to say, “Yeah, I think you’re right. That makes sense.”

When you can take a complex topic into terms that somebody can understand, and when we give them a decision based on something they understand they tend to have a lot more confidence in it.

When we make confident decisions over a lifetime, you tend to make better decisions more often than not, and if you do that and then under emotional duress and you say, “I am sticking with my decision because I think it is the right decision at the time I made it.” That is a really valuable tool. Confidence usually isn’t born by somebody on their own. Confidence is usually born with another human being interacting with them.

Nikki Van Noy: You’re right, especially hearing you talk about this stuff makes things simpler for me in a good way. As a non-financial person, these topics can start to make my head spin and then I get stressed out. It is a bad cycle of things.

Paul Marrella: And then what do you do? You do nothing.

Nikki Van Noy: Exactly, but you are right, just asking questions really mitigates all of that. It is not that complicated.

Paul Marrella: The managing of wealth is really, really complicated but it is just like fixing a car. I can tell you that we need to change the valves in your car, and you say why, and the mechanic will tell you why you need to do that. What do you say? “Okay, great,” and then you’ll go home, and you pick the car up tomorrow because we just spent the last six hours changing the valves in your car, which is a highly technical skill, but you didn’t have to worry about that.

You could go back to work, doing your podcast or whatever I set out to do that day knowing that you had somebody to fix the car. So, there is something comforting, you know. It is the thinking part that is hard, and it is the making the time to think hard, and getting the right tax people, and the right attorneys, and the right team around you, which is what we try to do for our clients. We try to build a team around them so that they can go back because they need to focus on the goose. No client has ever asked me to come in and help them make widgets.

Nikki Van Noy: So, my last question for you that seems like it would be particularly relevant with what you do and what you are talking about is this idea of transferring. Since we are aiming at multigenerational businesses and wealth, are there any particular things that people should be thinking about when it comes to what that looks like as time goes on?

Paul Marrella: We tend to have more family-oriented clients than not, I think because we are a family business and family is very, very important to us. So, they tend to be family-oriented almost by definition, but the challenge of it is that it is technical, and we are planning today to transfer wealth either tomorrow or five years down the road or 25 years down the road or maybe 50 years down the road.

Hopefully, we will visit the planning but when you look at transferring values and transferring your wealth in a way that, what if your grandkid marries the wrong person? What if one of your granddaughters marries a guy with a gambling debt or has a business and goes into bankruptcy? You need to plan for a lot of contingencies. There is a lot to it in that regard.

So, you know the value is the hard thing to transfer that takes decades of passing on what is important to you.

Nikki Van Noy: And you are dealing with people’s finances. So obviously a lot of this is confidential, but I am just wondering if you have any stories that really stand out to you of families or family businesses you’ve worked with for a long time and really seen how wealth management has possibly impacted them.

Paul Marrella: The one that’s impacted me the most is my own family because there was a guy that was really good at it that established it and started pounding it into us at about the age of four and everything he did throughout his life was, “How do I make it and keep it and then enhance it and protect it and transfer it.” So, every step along the way until his very final breath, his very final day, was doing everything and we would always analyze the legal aspects and the tax aspects of the business.

The smartest thing we ever did is hire really smart people to make him look good, and I am not talking about me. I am talking about his tax people, his legal people. Then that has transferred itself onto lots and lots of families who have had very similar experiences and continue to have similar experiences.

Everyone is different because the families are different, the business is different, the wealth is different, where they live is different, and their objectives are different.

Nikki Van Noy: Love it and appropriately this book is dedicated to your dad.

Paul Marrella: Yes, he was a tough cookie. I happen to be probably the biggest troublemaker of the four and I think he had to work extra special hard on me, but I think the end result was okay.

Nikki Van Noy: Very good, obviously so. Wonderful. Paul is there anything else you’d like to add?

Paul Marrella: No, if anybody is interested I am happy to send a free copy of the book and they can contact us at the office, 610-655-9700 and get a copy of the book sent out or they can reach me at [email protected] and we’d be happy to send a copy to you.

Nikki Van Noy: Perfect and is there a website they should go to for your business or is email or phone the best way to get you?

Paul Marrella: Yes, the website is very simple. It is just marrella.com.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. It is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Any opinions are those of Paul Marrella are not necessarily of those of Raymond James.