Wealth manager Stephen Cohn shares lessons from three decades of running a family business

By Marc Kramer 

Stephen Cohn and his brother Alan lead Sage Financial Group, a wealth-management company with 25 employees, 600 clients and more than $1.5 billion in assets. The Cohn brothers started the business with their father David in 1989. In the following interview, Cohn talks about the ups and downs of running a family business for nearly 30 years.

You started this business with your dad and your brother. Why did you guys start this business, and what did your dad do before?

Cohn: My dad had a couple of different careers. He worked at a privately held management consulting firm, and he eventually became the number-one person at the company. He realized that he had a great run there, it was a great business, he learned a lot, but it was time probably for him to do something else.

Stephen Cohn

Stephen Cohn

So, at 50 years old, he made a career change, and a very good friend of his introduced him to the insurance business. So what I think he liked was helping people, and that’s a pretty important attribute to being successful in any financial service business, when you’re out there marketing and sealing different types of products and services. We joined him 10 years later.

Were you always entrepreneurial?

Cohn: I worked for big companies and I did a lot of things on my own. When I was graduating college, I realized that I was going to be most successful and most happy being in my own business. I can’t say that I was really that thoughtful about it, but … when I was evaluating the different opportunities, my dad said, if you’re interested, you could come and we can do some things together. So I said yes, and then my brother Alan raised his hand and said, you know, I actually want to get into my own business as well.

So we used my father’s experience and a lot of relationships that he had. My brother’s business model that he learned and became very fluent with, and my energy and drive and marketing altitude, helped start Sage Financial Group.

What’s the best part of working with your dad?

Cohn: Although we weren’t equal partners from day one, over time we became equal partners, and he always treated Alan and me as though we were equal partners. He didn’t have any ego. He loved working with me and Alan and spending time with me and Alan, so he was having a blast.

The years he worked with us were the most satisfying years of his life, from a career standpoint. And the great thing about working with my dad was, he was always interested in teaching and helping us learn and grow and develop and pursue the things that we had the most interest in pursuing. As an example, in 1994, Allen and I came up with an idea that we wanted to take the concept of Sage Financial Group and apply it to the internet. So we developed a business plan and created a company called Sage Online and we presented this to our dad. … Just getting started, my dad didn’t have any idea what we were talking about. But he said, if this is what you guys want to do, I completely support it, and let’s work together and see how we can make this happen.

So we created a very successful online business. We partnered with AOL and had a joint venture with them. We built the business to a 50-person company that was completely different then Sage Financial Group. We sold it in early 2000 to a publicly held company that’s now a part of Reuters.

What was the most challenging part of working with your father?

Cohn: One of the challenges is, you always want to make your father proud. I think like anything else, when you spend a lot of time with people, that’s a great thing, and it can also be challenging at some points. We didn’t always agree on everything, but he wasn’t the kind of person who liked confrontation either. … We had the relationship where there was mutual respect and we were able to get through those issues.

When you did disagree, how did you resolve it?

Cohn: The three of us would sit down, and we’d each state our case for why we felt this was an opinion that we had. … And then eventually, it was if the two people out of three felt like they were on the same page. Then the third person had to accept the fact that that was the direction we were going to go. It was helpful having three.

What are the best and most challenging parts of working with your brother?

Cohn: Our challenges were in the early years of the business, because the two of us didn’t have the maturity that we do now, didn’t have the prospective that we do now, and we were much more  independent thinkers in a sense. We are still independent thinkers, but didn’t necessarily put ourselves in the other person’s shoes as much and take a step back and listen to what the other person’s point of view was, as much as we do now. We had the same work ethic, but there were plenty of times where we had different opinions.

Fortunately, our father helped us get through a lot of that because he was a mediator. … But we’ve gotten pass those challenges and we’ve got an amazing relationship. I couldn’t ask for a better partner.

Do you have children that may want to get into the business?

Cohn: You know, it’s possible. My oldest son is 20 now. He’s a sophomore in college and he is obviously thinking about what he wants to do. We haven’t really gotten into a lot of discussions about it yet. …  I need to sit down with my brother Alan before I sit down with my son. From a business point of view, my relationship with Alan takes precedence over my relationship with my son.

There are potentially issues between a father and son. There’s also [potential] issues between an uncle and nephew, and it brings a whole new dynamic and complexity around relationships [into] the business.

The biggest concern that we’ve always had being in business together is that family businesses don’t make it. Not only do they not make it, they in many cases fracture or splinter the family relationship. And family is most important to us; it’s more important than the business will ever be. It’s one thing for me and my brother Alan to have to work through things. You bring in another person and their wife or husband, and you know the whole situation changes dramatically and the risk increases considerably. So we’re all aware of the risk and the challenges, and we probably would want to bring in outside counsel to help us think these things through.

What percentage of your clients are family-owned businesses?

Cohn: We have more than 600 clients. Maybe there’s 10 percent that are family-owned businesses.

Does it help that you run a family-owned business when you’re talking to family-owned businesses?

Cohn: Well, it helps because you have a common area of interest, and you can relate on some level with things that they are going through. Either we’ve gone through or are going through what they’ve gone through. So, in some of those cases, you can clearly build a  different relationship.

With so many DIY asset-allocation platforms available for the consumer, and experts saying investors should just put the money in index funds, what’s the future financial planning?

Cohn: When a life client ever comes to me and says, how’s the stock market going to do tomorrow, or next year, or 10 years from now, I don’t have a crystal ball. We need to be able to provide services that are so connected intimately with the client that they wouldn’t want to share that kind of information with you through a computer or technology or some service person that they don’t even know anything about.

What is the one piece of advice you would give to someone who wants to start a family business?

Cohn: I would say that you have to be really thoughtful and mature about it. … Recognize there are going to be good times and bad times. … One piece of advice would be … to have an outside person that everybody buys into and [who is] objective. The person can be an advisor to help the family make sure they can stay together.

Marc Kramer, author of six books, is the executive in residence at the Erivan K. Haub School of Business at Saint Joseph’s University and executive director of the Private Investors Forum. Contact him at marc@kramercommunications.com.

Leave a Reply