What Do Centimillionaires Do Differently With Their Money?
Short answer. Many centimillionaire families divide wealth across distinct purposes: diversified public markets and funds, cash-flowing real estate, and direct interests in businesses they understand. The proportions vary by family. In my experience, the useful distinction is to match each part of the portfolio to the family's expertise, desired control, and goals.
Centimillionaires often manage different parts of their wealth in different ways. In my experience, many families combine public markets and fund managers with real estate and direct ownership in businesses. The point is to decide what each part of the portfolio is meant to do, then match the approach to the family's knowledge, priorities, and appetite for involvement.
Separate the Portfolio by Purpose
A family may use traditional diversification through funds, exchange-traded funds, index funds, or public markets for one portion of its capital. Another portion may focus on real estate that produces cash flow. A third may target direct interests in profitable operating companies, often in industries the family knows. The weights can differ substantially. There is no single allocation that fits every family.
This structure recognizes that the family may have different levels of information and control across its holdings. Public investments and outside managers can provide broad exposure. Direct investments may allow the family to apply operating or industry experience, but they also require time, oversight, and a clear way to assess opportunities. Families that made their wealth through a business may have a useful circle of competence, yet that does not mean every opportunity in the sector is suitable.
Use Experience With Discipline
Families sometimes focus direct investments where they have developed knowledge over time. For example, a family's experience in one industry can help it identify what it understands and what remains outside its expertise. I encourage families to define that strike zone before deals arrive. Write down the sectors, company characteristics, level of involvement, and reasons an opportunity would not fit.
Concentrating direct activity in familiar areas can make the work more coherent, but it also places importance on managing concentration and risk. Keep separate records for direct holdings and for investments managed through funds or public markets. Know what information you receive, who makes decisions, and how each holding supports the family's broader objectives. For help setting those boundaries, see portfolio models family offices use and how an office can think across asset classes.
Build a Process Around the Family's Choices
A portfolio design is useful only when the family can follow it. Document decision rights, reporting expectations, and the role of outside managers. An investment policy statement can record objectives and constraints. If direct deals are part of the plan, establish a consistent way to source, screen, and review them. The reasons families pursue direct investments are worth weighing against the time and operating responsibility they bring.
Do not assume that wealth alone tells you which approach to use. Start with what the family wants the capital to accomplish, what it can oversee well, and which work is better handled by outside professionals. Keep the structure understandable to family members and review it as goals and capabilities change. Investment decisions should be made with appropriate professional guidance for the family's circumstances.
Over time, many $100M+ families develop a three-prong approach to their portfolio using traditional diversification strategies which may include fund managers, ETFs/Index funds, and the public markets for a percentage of their portfolios.
Sources: Centimillionaire Strategies. Informational only, not financial, legal or tax advice.