Inside the secretive operation helping manage billionaire Steve Schwarzman's vast fortune

• Steve Schwarzman, Blackstone's cofounder and CEO, is estimated to be worth $57 billion.
• Schwarzman has called Blackstone his family office, but he has another family office, BI has learned.
• Inside Schwarzman's secretive family office with a name that harkens back to his childhood.

In his book, "What It Takes," Steve Schwarzman recalls being on the verge of graduating from college in 1969 with little sense of what he might do next.

A member of Yale's famed secret society Skull and Bones, Schwarzman wrote to one of its most prestigious alumni, Averell Harriman, for advice. The heir of a railroad baron, Harriman had parlayed his family's wealth into the investment bank Brown Brothers Harriman before embarking on a political career that included roles as the governor of New York, the secretary of commerce under President Harry Truman, and America's lead negotiator in the Vietnam War peace talks.

Over lunch at Harriman's Upper East Side mansion in Manhattan, the two men discussed a career in politics for Schwarzman before Harriman asked his guest whether he was "independently wealthy."

"That will make a great difference in your life," Harriman told Schwarzman, the middle-class son of a Philadelphia dry-goods-store owner. "I advise you, if you have an interest in politics whatsoever, to go out and make as much money as you can."

Schwarzman, 77, never ended up pursuing a career in politics, but as the CEO and a cofounder of the alternative-asset manager Blackstone, he has built a fortune that Bloomberg estimates is worth $57 billion — or more than the market value of Ford Motor Co.

The 24th richest man in the world, Schwarzman has used his wealth to influence various industries, including politics, real estate, and the arts, as well as culture. A vocal supporter of Donald Trump, Schwarzman is expected to have a voice in the next White House. His name adorns the New York Public Library and buildings on prominent university campuses such as Yale's and MIT's. He and his wife, Christine Hearst Schwarzman, have been guests and supporters of the Metropolitan Museum's star-studded Met Gala fundraising extravaganza. They have also been the subject of news stories for their own elaborate parties (think camels, trapeze artists, and Gwen Stefani) and many home purchases.

Little is known, however, about how the private-equity titan manages his money.

At a conference last year, Schwarzman suggested that the firm he cofounded in 1985 was sufficient to handle his financial affairs.

"I own a lot of stock, and I invest in all of our funds, so the firm is my family office," Schwarzman said at the Bank of America Securities Financial Services gathering, according to an AlphaSense transcript.

Business Insider has learned, however, that Schwarzman also has a family office with a name that harkens back to his childhood. Pennypack is run by a former Blackstone tax expert and employs dozens of people, including housekeepers, lawyers, and personal assistants, according to public records and conversations with people with knowledge of Schwarzman's money-management tactics, some of whom requested anonymity to speak about his private matters.

It's secretive, with a nondisclosure agreement at the ready for its contractors, and provides support for at least some of Schwarzman's charitable organizations and political dealings. Pennypack also helps care for and manage many of the Schwarzman family's properties.

Here's a look at what it takes to manage billionaire Steve Schwarzman's wealth.

Most of Schwarzman's wealth is tied up in Blackstone

Schwarzman cofounded Blackstone in 1985 with his former boss, Pete Peterson, and $400,000 in seed money. Today, it manages more than $1 trillion, making it the largest alternative-asset manager in the world.

He is the biggest single shareholder, with a 19% stake, surpassing institutional giants like Vanguard. Based on a recent stock price of $181.17, his stake is worth $41.7 billion, which means that more than two-thirds of Schwarzman's wealth comes directly from his equity in Blackstone.

As a shareholder, Schwarzman also benefits from cash dividends the company pays its stock owners. Public records show that in 2023, he took home $777 million in dividends, a 29% decline from the more than $1 billion in dividends he took home in 2022. Before Blackstone went public, Schwarzman received cash dividends as a partner in the firm.

Schwarzman is also the largest individual investor in Blackstone's funds, a spokesperson for him said.

"Mr. Schwarzman is the largest individual investor in both Blackstone's stock and our funds — demonstrating his full alignment with the success of the firm and its clients," the spokesperson wrote.

BI could find no evidence that Pennypack invests on behalf of Schwarzman, with no regulatory filings showing that it owns stock.

This is unusual but not unheard of, Marc Sharpe, a professor and the chair of the Family Office Association, said. He pointed to Michael Dell, the founder of Dell Computer who invests through MSD Capital but also has a separate office to manage and run his personal affairs.

"There is no single correct way to define a family office," Sharpe wrote to BI. "Oftentimes, they're described as a buffet menu of financial plus concierge services that wealthy families might utilize."

The name is linked to his childhood

The Pennypack name appears to be a throwback to Schwarzman's youth. His family lived on Pennypack Road after moving from Philadelphia to its neighboring suburbs when Schwarzman was a teenager. Property records show that his parents bought their home, which abuts Pennypack Creek, a 22-mile creek that empties into the Delaware River, in 1960 and sold it decades later, in 2004.

Pennypack LLC was incorporated in 2018 in Delaware. It's unclear whether the entity existed before in a different form, and representatives for Schwarzman declined to clarify.

According to Blackstone's 2023 annual report, it provides Schwarzman's family office with "offices, technology, and support," though Schwarzman is responsible for reimbursing Blackstone for the costs. Until this year, the company was registered to a Blackstone office address, according to corporate filings.

Like many family offices, Pennypack is secretive. According to a copy of an NDA for vendors that work with Pennypack, obtained by BI, signees are not allowed to disclose information about the "Schwarzman Group."

According to the document, the Schwarzman Group includes "all employees of Pennypack, all employees of all residences of Stephen A. Schwarzman and/or Christine Hearst Schwarzman regardless of the location of such residences; and all business entities that Pennypack manages, operates or is associated with, and the employees and agents of those businesses."

Who runs Pennypack?

Pennypack is run by John Magliano, a former Blackstone executive and accountant. Magliano's LinkedIn profile says he has been the president of a family office since 2017.

He spent more than 18 years with Blackstone, including as the CFO of its private-equity group, which runs its control investments in businesses, and as a managing director of Blackstone's tax group, which helps prepare its tax returns and studies the tax implications of business decisions. After leaving to run Pennypack, Magliano stayed on as a senior advisor to Blackstone through 2021.

Schwarzman thanks Magliano in the acknowledgments section of his autobiography, along with Paul A. White, another Pennypack executive. The pair are listed as officers in LLCs tied to a string of Schwarzman's recent home purchases, including his $32.5 million purchase of a mansion on the tony Easton Street in Nantucket, Massachusetts, which marked the largest private-home sale in the island's history at the time.

The two men are also named as officers of LLCs linked to the $43 million purchase and renovation of two historic Newport, Rhode Island, mansions: Ocean View and Miramar, the latter of which Schwarzman said he would turn into a museum when he dies. They are also named as officers of an LLC tied to Schwarzman's $100 million purchase of an estate named Conholt Park, which is about a 30-minute drive from Stonehenge in Wiltshire, England.

The staff

A person with direct knowledge of Pennypack's operations told BI that Pennypack employed over 100 people in various roles, from executive assistants to the housekeepers who clean and maintain his homes.

One employee on LinkedIn described their role at Pennypack as providing administrative support to "Mrs.," an apparent reference to Hearst Schwarzman. Listed duties included managing her personal projects and board and foundation endeavors, drafting emails, preparing her for speaking engagements, and tracking auctions for purchases.

Another Pennypack employee described themself on LinkedIn as a housekeeper.

A list of contractors obtained by BI shows that Pennypack has hired landscapers, ornamental plasterers, construction workers, and architects. The building conservationist linked to Miramar, the Gilded Age Newport home he bought for $27 million in 2021, is on the list.

Pennypack also appears to play in role in the Schwarzman's family's security. In June, the family office purchased a radio call sign tied to Ocean View in Newport. The Federal Communications Commission application said that "radios will be used to coordinate private security details."

Schwarzman's charities and politics

Pennypack's officers also play a role in Schwarzman's charitable works. Public filings show that Magliano is the treasurer and director at the Stephen A. Schwarzman Foundation, Schwarzman's main philanthropic arm. Its recent donations include $350 million to MIT for a building dedicated to the study of artificial intelligence and computing, as well as more than $220 million to create a new Centre for the Humanities at Oxford, which is set to include the study of ethics in AI.

Magliano is in charge of the foundation's bookkeeping, the filings show.

Filings show that Magliano is also a vice president and the treasurer of the Stephen A. Schwarzman Education Foundation, which runs the Schwarzman Scholars program, a master's leadership program at Tsinghua University in Beijing. The program was founded in 2016 to help foster US relations with China.

In 2022, Magliano was paid $300,000 for working 18 hours a week with the two foundations, according to nonprofit filings for the firm.

Schwarzman has long been in the political spotlight, most notably as the head of then-President Trump's Strategic and Policy Forum and as a prolific Republican donor.

Federal Election Commission filings show that Pennypack was paid over $12,000 in March for fundraising consulting by a joint PAC connected to Senator-elect Tim Sheehy of Montana.

A Schwarzman spokesperson told BI that the payment was a reimbursement for a fundraiser that he held for Sheehy.

What is a family office, anyway?

The concept of the family office can be traced to the 1838 founding of the House of Morgan to handle J.P. Morgan's fortune. Sharpe, the chair of the Family Office Association, estimated that there were now at least 3,000 family offices serving a single family in North America. Every family office, however, is just as unique as the wealthy family that's spawned it, he said.

"The term family office," Sharpe said, "is possibly the most misused, overused, and poorly used term in finance today."