Matching candidates to private-client advisories as much an art as a science. The market for high-wealth financial services may be expanding, but wealth-management firms, especially multifamily offices, face a small litany of management obstacles to sustainable growth. Not least on that list -- up there perhaps with scalability -- is the challenge of finding professionals with the skills and experience necessary for working effectively with very wealthy clients.

"It's not a crisis," says Jane Abitanta of Perceval Associates, a New York-based consultancy to wealth-management firms. "But hiring in the total wealth-management space is getting tight."

Boutique advisories

In the U.S., the wealth-management industry's growth stems from the rise of the baby-boom generation's coming of age and a correlated advance in personal and business technology over the past 30 years. As a result, the U.S. economy is twice as big now as it was in the mid 1970s. This broad-based increase has, as a nearly inevitable by-product, thrown up a great deal of private wealth.

Globally there were about 4.5 million U.S.-dollar millionaires with total financial assets of about $16.6 trillion in 1996, according to Capgemini's annual World Wealth Report. The same source pegs the number of millionaires at 8.7 million worldwide with combined assets of $33.3 trillion in 2005, with about a third of that belonging to U.S.- and Canadian-domiciled individuals and families.

Right now many boomers, who account for one in four Americans but hold roughly 40% of all private assets in the U.S., are either heading into retirement or earnestly preparing for it. As the very well-to-do among them set to work liquidating assets in preparation for retirements that could span decades and formulate plans for leaving assets to their heirs or for funding good works, they are turning, in mounting numbers, to wealth managers of various stripes. And this trend seems likely to continue through the next 20 or 30 years.

For some very high-net-worth families offices offer a balance of a rigorous fiduciary commitment with personal-goals based service.

U.S. multifamily-office assets under management went from around $152 billion in 2003 to approximately $226.5 million in 2005, according to the Family Wealth Alliance (FWA), an Oak Brook, Ill.-based consultancy to high-net-worth families that publishes an annual survey of 65 to 70 multifamily offices.

Setting benchmarks

According to the FWA's latest study of multifamily offices, "the most-pressing concerns of management center on human capital issues, including recruiting, developing, motivating and retaining professionals."

"There's a lot of demand because it's a burgeoning industry," says Chuck Meek, a senior managing director with the FWA, which recently published a survey of U.S. multifamily offices. At the same time, he adds, the problem is exacerbated by a lack of industry standards for hiring multifamily-office personnel, especially those who work directly with clients.

"There are no clear benchmarks that lay the groundwork for hiring in this industry," says Meek. As it happens, however, the FWA is busy formulating such benchmarks in consultation with multifamily offices and boutique recruiters.

"Wealth managers spend a lot of time defining the 'what' of their strategies," says Meek. "What we're doing is helping the industry put the 'who' into their strategic planning."

The FWA expects to publish its multifamily-office hiring benchmarks in 2007.

Although she doesn't weigh in on the FWA's plans specifically, M.J. Rankin of the Rankin Group, a Lake Geneva, Wisc.-based executive-search firm and consultancy to wealth-management firms, agrees that multifamily offices should view the hiring process as part of their overall business strategy. "The problem is that everybody is looking for the quick fix," she says.

Instead of one-off hiring based on a hazy conceptions of desirable attributes, says Rankin, firms should build processes for identifying candidates acquiring them and training once they're aboard -- even if it bucks trends in today's high-turnover work milieu.

Personality and culture

Linda Mack of Mack International, a Chicago-based search firm that specializes in placing wealth managers, says that finding advisors with the aplomb, empathy and specialized skills needed to work well with the ultra-rich is as much an art as it is a science, but the result can be crucial to a firm's future. "In this business you differentiate yourself by the caliber of your people."

Mack says the principal quality she looks for in a candidate is the ability to "ask the right questions, listen actively, understand the client's needs -- and then take that information and act on it." People with those qualities are hard to find, however. "You can train someone to pitch a product; the ability to become a trusted advisor who people feel comfortable opening up to is more a function of personality," she says.

Beyond those qualities, beyond even specific skill sets, it is vital that candidates mesh culturally with the firm they're matched with, says Mack. "Cultural fit is really what defines the ideal candidate."

Rankin agrees. "You have to look beyond resumes to get to the heart of [the candidate's] values, tradition and styles." In other words, there is no carbon-copy wealth manager. One might thrive in a firm serving trust babies, another might rise to the challenge of working with first-generation entrepreneurs. "It all comes down to the personalities of the people in the firm and [its] clients." -FWR

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