Royce Stone Capital CEO Tarek Omar says the character traits that make entrepreneurs successful can also be their Achilles heel and lead to their downfall
His article draws on psychology, economics and spirituality to examine the art of keeping money
He sets out a framework for entrepreneurs to manage themselves and their wealth more effectively
Tarek Omar, chief executive of Melbourne-based Royce Stone Capital, is urging entrepreneurs to examine their own character traits if they want to keep their wealth. In an article published October 21 titled "Why a lot of successful entrepreneurs lose it all," Omar argues that the traits that make entrepreneurs successful are a double-edged sword that can also make them susceptible to losing what they have built.
Why Winners Lose
Omar asks a question many people have wondered about: why do so many people who are exceptionally good at making money end up broke? He compares many successful entrepreneurs to lottery winners, most of whom, he says, lose their wealth. In his view, both groups lack the capacity to hold wealth because their unconscious patterns are not strong enough for the money that arrives.
"A person's balance sheet only tells me where they are today, but their character will tell me where they will be tomorrow."
— Tarek Omar, CEO, Royce Stone Capital
Making money and keeping it, he contends, require two opposing sets of character traits held together at the same time, which few people possess. "Most people were taught how to make money, few were taught how to hold it," he says.
Omar draws on his own business experience. When he sees a new-money entrepreneur in a Ferrari or Lamborghini, he says, there is a good chance they will not be able to afford that car in five years' time. In his opinion, new-money entrepreneurs who want to prove themselves to others face the highest risk of losing it all, because their decisions are based on ego rather than practicality. By contrast, he says some of the wealthiest high-net-worth investors who work with him on private investments still drive a 20-year-old ute, which he sees as frugality and a secure sense of self that needs no outside validation. "Feeling secure in the four inches between your ears is priceless," he says.
Keeping Wealth Needs Different Rules Than Making It
The Traits That Cut Both Ways
Omar calls the entrepreneur's strengths their Achilles heel, and identifies four traits behind success that also create vulnerability:
Risk-taking: entrepreneurs endure risks most people would avoid to reach the top half percent, but keeping wealth demands some degree of risk aversion.
Rebelliousness: breaking from convention creates new ideas, but rebellious behaviour channelled the wrong way can lead to harmful choices.
High drive: it can fuel positive work addiction, but can just as easily be hijacked by cheap sources of dopamine and turned into negative addiction.
"Dirty fuel": Omar contends that most high performers are driven by an insecurity they rarely admit, such as bullying, absent parents or financial hardship. He warns that entrepreneurs chasing external success to heal that void may feel lost when the success arrives but the void remains.
"The very traits that make entrepreneurs successful, such as taking risks, being rebellious, and having high drive, unfortunately also make them very susceptible to their brain being hijacked by cheap sources of dopamine such as drugs, gambling and sex addictions."
— Tarek Omar, CEO, Royce Stone Capital
The Art of Keeping Money
Preserving wealth, Omar argues, means switching from the mindset of a warrior to that of a statesman or stateswoman. The traits that built the wealth should be redirected rather than discarded. He lists the qualities he believes help entrepreneurs keep it:
Accountability: while helping a family office, Omar saw a patriarch give each of his three children a business to run with contractual KPIs required to keep their roles, while he remained the ultimate owner. Omar says entrepreneurs should treat their own lives like a business, with structures within families and in their own self-management.
Getting rid of the noise: he asks entrepreneurs to confront the suppressed trauma and masking habits that lead them to act against their own interests, and to do the deep work of healing.
Long-term thinking: most entrepreneurs who get into trouble chase shortcuts and short-term gratification, whereas wealth is built over years and decades.
Detachment from the material world: trouble begins, he argues, when the ego rather than the person is steering the ship.
Connection to a higher power or purpose: he says most of the successful family offices he knows, whether Jewish, Muslim or Christian, draw on faith to give life meaning first and capital direction second.
"Money is an excellent servant, but a terrible master."
— Tarek Omar, CEO, Royce Stone Capital
Building the Portfolio
As a specialist in private investments, Omar suggests risk-loving entrepreneurs, especially those prone to gambling, favour assets that are hard to liquidate quickly and work with a wealth manager. His list of asset types includes:
A diversified mix of commercial and industrial property
Direct lending private credit
Direct private equity
Blue-chip stocks
Government and corporate bonds
Some precious metals and collectables
Venture capital
He argues that a portfolio's core assets should generate enough income to fund the entrepreneur's lifestyle and any investments in riskier assets, while the principal capital is protected by all means. These are Omar's views and general information only, not personal investment advice, and readers should seek advice suited to their own circumstances.
"The moral of the story is that if you've got money, you need to create accountability."
