Family Office
Study Shines Light On What Family Office Professionals Are Paid
A major report examines pay and compensation trends in the world's family offices sector, and examines trends in hiring, location and structure. The proliferation of reports on FOs also shows how their profile is higher than ever before.
A global study of family offices finds that 80 per cent of
professionals working in them get a performance bonus that can be
more than 200 per cent their basic salary. And 58 per cent
secured a salary rise last year amidst higher inflation.
The figures come from Agreus Group, the
consultancy, and KPMG Private Enterprise - part of KPMG - in their 115-page 2023
Global Family Office Compensation Benchmark Report. The
findings are based on responses from more than 650 FO
professionals worldwide.
Some 40 per cent of FOs plan to hire staff this year, the report
said.
With as many as 8,000 single-family offices around the world,
overseeing tens of trillions of dollars (exact hard numbers are
hard to pin down), FOs wield a large financial club, and the
compensation of their staff is an increasingly important topic.
Many FOs are structured as limited liability companies and
partnerships, sometimes because of tax considerations in
jurisdictions such as the US. (For information, note that
this news service works on an exclusive basis with Highworth
Research, a data and research organisation tracking the
sector. To register for a free trial,
click here.)
“2022 was all about recovery, retention, and regulation with an
objective of building up and giving back. Family offices began to
turn their attention away from the effects of macroeconomic
factors and instead looked to review the affairs of the families
they serve and put structures and relevant planning in place to
protect their wealth in light of potential legislative changes
and reputation management,” the report’s authors said.
Family offices typically cost from 0.1 per cent to 0.5 per cent
of total assets under management to run, the study
found.
Tapping into a trend that accelerated dramatically during the
pandemic, the report said 74 per cent of FOs enable people to
work from home.
Drilling into the data, the survey found that 58 per cent of
respondents said they had received an uplift in salary in 2022;
41 per cent received a rise of 6-10 per cent, and 20 per cent
chalked up a rise of more than 15 per cent. Of all those getting
a raise, 36 per cent said it was caused by inflation.
On bonuses, 60 per cent of those questioned received a
discretionary bonus; 26 per cent received a formulaic one; 20 per
cent had no bonus and 13 per cent took home more than
100 per cent of their salary but the most commonly awarded bonus
was 21-30 per cent of salary taken home by 20 per cent of
professionals. As far as long-term incentive plans (LTIP) are
concerned, 23 per cent of FO professionals received them, of
which the most common structure was carried interest.
Some 41 per cent of FOs expanded their team sizes last year and
40 per cent said they intend to hire in 2023.
In what remains a largely male-dominated occupation, 21 per cent
of all FO professionals identified as female. The UK has the
highest share of female CEOs, at 37 per cent. In Asia, all CEOs
were male. In Europe, 80 per cent were male, and in the
Middle East, the percentage was 75 per cent.
Almost a third (30 per cent) of FOs had more than
location.
In other details, the report said 52 per cent of FOs
had succession plans; most family offices had fewer
than five employees but a quarter had 20 or more.
“While family offices began to think about compensating their
staff for the long term, the huge strain on talent that we
witnessed in 2022 means that family offices will standardize
their compensation, embed long term, incentive structures and
professionalise their entire approach to recruitment,” the report
said.
“To address this issue, UHNW families are increasingly
introducing employee participation schemes like profit sharing,
rise in B corps and interest in employee ownership trusts,
whereas on the personal side family offices are devising
professional compensation structures that incentivise excellence
and ensure longevity in their new hires.”
“This will see the likes of carried interest, co-investment
opportunities and long-term performance bonuses rise in
popularity and for the first time, they will not just be offered
to C-suite family office professionals but instead, anyone deemed
critical.
The report said 42 per cent of participants answered from North
and Central America, 29 per cent from Europe, 10 per cent from
Australia, 9 per cent from Asia and 7 per cent from the Middle
East. The remaining 3 per cent of respondents answered from
Africa, the Caribbean, and South America.
Editor’s note: The business of producing reports and surveys
about family offices is getting crowded, potentially leading to a
law of diminishing returns in their impact. By our reckoning, the
following reports come out, not including the KPMG/Agreus
one:
-- UBS Global family Office Report;
-- Credit Suisse SFO Survey Report;
-- BlackRock Global Family Office Survey;
-- Citi Report – Direct Investment by Family Offices;
-- Dentons Family Office Direct Investing Report;
-- Goldman Sachs Family Office Survey;
-- North America Family Office Report – RBC (& Camden);
-- Morgan Stanley Single Family Office Best Practice;
-- PwC Family Office Deals Study; and
-- The Global State of Family Offices – Cap
Gemini.
This news service intends to undertake a “meta-study” of these
reports to see what common points – and striking differences –
exist. To comment, email tom.burroughes@wealthbriefing.com