Behind the barricades in family office talent battle - Professional Wealth Management

The world's wealthiest families are increasingly seeking professionals who can manage billions while handling governance, succession and complex family dynamics, according to Professional Wealth Management. Family offices, once informal operations run by advisers or accountants, are becoming more institutional as rising global wealth, liquidity events and multi-generational complexity drive demand for experienced talent. Jacob Gamble, a principal at US-based Cowen Partners Executive Search, says founders stepping back and next-generation demands for structure are prompting hires of CFOs, CEOs, chiefs of staff and formal boards. Demand is less cyclical than in most of financial services, he says, driven largely by newly created offices following business sales or IPO windfalls.

Despite overseeing large sums, most family offices remain small. Investment-focused offices employ about 17 staff on average according to Morgan Stanley/Botoff Consulting, and even those managing more than $1bn typically have fewer than 30 employees. Requirements have shifted accordingly: families now seek executives who combine investment expertise with governance knowledge and interpersonal skills. Kathleen Grace, chief executive of Fiduciary Family Office, warns that families often assume investment hiring comes first, when the bigger challenge is coordinating tax, estate and liquidity planning. JPMorgan estimates average operating costs at about $3mn a year, rising above $6mn for offices managing $1bn or more, and Grace suggests external advisers or multi-family structures suit most families unless they hold complex wealth and liquid assets above $100mn.

Compensation is a growing pressure point. Gamble says operational roles such as COOs and chiefs of staff now command far higher pay, and that a CIO role at a $1bn office has moved from $500,000 to $750,000 in cash compensation to well over $1mn. Close to 80 per cent of executives receive annual bonuses, per Morgan Stanley/Botoff Consulting. Family office base salaries are often higher than on Wall Street, while bonuses are typically smaller. Elizabeth Havens, partner at BraddockMatthewsBarrett, says institutionalised offices now compete with private equity firms and asset managers for investment talent, and that emotional intelligence matters most. Ian Barnard, chief executive of Capital Generation Partners, is sceptical that a new 'war for talent' exists, arguing that competition between banks, asset managers and family offices has long been present.

Alina Lazarescu-Abboud, principal of a Swiss family office, illustrates the lean model, with three core staff plus an external legal team and most functions outsourced. According to JPMorgan, about 80 per cent of family offices outsource at least part of their investment activities, and Deloitte says 34 per cent plan to rely more heavily on third-party providers. Gamble concludes that talent is becoming the decisive factor as these organisations grow more sophisticated.