Here is another of the segments from this news service’s recent family office investment summit in Manhattan.

We continue our round of reports from the FWR summit in New York City last month. (For our main report on the event, click here.) 

At the 2025 Family Wealth Report Family Office Investment Summit in New York, Neil Nisker (pictured) delivered a presentation that challenged conventional assumptions about portfolio construction and long-term wealth preservation. His remarks centered on a theme resonant throughout the family office community: successful investing depends less on forecasting markets and more on understanding risk, incentives, and the structural foundations of family wealth. 

Risk, incentives, and the real determinants of investment outcomes
Nisker opened by highlighting what he termed “simple truths” that many investors overlook. A central concern, he noted, is the misalignment of incentives in traditional long-only management. Managers may receive sizeable compensation even in years when clients experience losses, provided they outperform a benchmark by a small margin. As Nisker remarked, clients may “lose money, while managers get paid” – a dynamic that underscores the importance of understanding fee structures and behavioural incentives. 

He also revisited the mathematics of market drawdowns. A portfolio that falls 40 per cent requires a 66.6 per cent gain to recover, an imbalance frequently underestimated, yet experienced twice between 2000 and 2010. This reality informs his firm’s emphasis on downside protection rather than headline performance figures. “Think not only about returns,” he said, “but how much risk you are taking to achieve them.” 

Measuring risk: Beyond the Sharpe Ratio
Risk, Nisker argued, should be assessed in clear, quantifiable terms, most commonly through volatility. Standard deviation, while not glamorous, remains one of the most transparent indicators of a portfolio’s behavior through market cycles. 

He critiqued the Sharpe ratio for its backward-looking nature and reliance on an ambiguous “risk-free” rate. In its place, he introduced the firm’s proprietary Simple Investment Ratio, or Sir Ratio, named for Sir John Templeton, which measures return earned per unit of volatility. A figure above 1 is preferable; however, equities over the last century measure closer to 0.6, raising questions about whether traditional public-market risk is adequately compensated. 

Where wealth is built – and how portfolios should reflect it
Few individuals, Nisker observed, generate their first $100 million in public markets. Wealth creation tends to originate from private equity, venture capital, real estate, or operating businesses. His firm’s asset allocation reflects this reality, bearing little resemblance to the conventional 60/40 model. Their portfolios typically exhibit 3 to 4 per cent volatility, less than half that of government bonds, while incorporating a high proportion of non-traditional assets. 

These include diversified mortgages, senior secured lending, income-oriented real estate, private equity, private credit, and multi-strategy real estate. During periods of market stress, such as the Covid-19 lockdown and the 2022 60/40 decline, these portfolios demonstrated notable resilience, registering only modest pullbacks or even positive returns. 

The broader role of a comprehensive family office
Nisker underscored the importance of a multi-generational infrastructure that integrates tax, planning, bookkeeping, and education. He likened it to a football team: a talented quarterback alone cannot win without effective receivers. Educating rising-generation family members to be capable recipients of inherited wealth, he stressed, is a core responsibility of any purpose-built family office. 

His firm’s Asset Architecture™ approach evaluates the full ecosystem of a family’s wealth – operating companies, real estate, development projects, insurance, and collections – ensuring that each component fits coherently into the broader strategy. 

An “all-weather” portfolio philosophy
Rather than categorizing assets as stocks or bonds, Nisker encourages families to think in functional terms: What does an asset do? Does it stabilise returns, mitigate risk, provide inflation protection, or enhance performance? This practical framework supports his firm’s use of budgets, covering liquidity, correlation, potential return, and risk, to build portfolios capable of navigating diverse market conditions. 

The resulting allocation offers 40 per cent higher expected returns and 40 per cent less risk than a traditional 60/40 portfolio, with a Sir Ratio of 1.47 compared with 0.61 for the 60/40. Importantly, more than half the portfolio remains available daily or monthly, maintaining material liquidity. 

A closing reflection on stewardship
Nisker ended with a light anecdote about J D Rockefeller, whose comment about his son enjoying a presidential suite, “because he has something I don’t have: a rich father,” reinforced a timeless lesson about generational advantage and the responsibility that accompanies it. 

His address ultimately emphasized that enduring wealth is not built on short-term performance, but on disciplined risk management, thoughtful education, and structures designed to last across generations.