When set up effectively, a family office can be a powerful tool for managing, growing and preserving wealth, but recruiting the right experts is a challenge and plays a pivotal role.
Many families and ultra-high net worth individuals have grown wary of leading private banks due to perceived conflicts of interest and product-centric approaches.
Moreover, the sometimes generic solutions offered by these banks may not cater to the specific needs of ultra-high net worth families. Their primary revenue model might involve pushing specific products, which could conflict with the client's best interests.
Plus, the rapidly changing global economy often means these banks sometimes miss out on predicting geopolitical and financial crises, leaving their clients vulnerable. For these reasons, many families are choosing to set up family offices to manage their wealth.
For those with substantial assets, establishing a family office can provide several advantages. Firstly, a family office offers a personalised approach to bespoke financial strategies that resonate with a family's values, goals and long-term vision. Secondly, families have more control, maintaining direct influence over investment decisions, ensuring complete transparency. Lastly, family offices diversify investments across various sectors and geographies, spreading and minimising risks.
However, setting up and running a family office comes with its own challenges, the most significant of which is recruitment. Alternative assets like infrastructure, private equity/debt, real estate and other unlisted assets demand specialised knowledge. They represent long-term commitments and require deep understanding of relevant sectors.
For instance, investing in real estate is not solely about purchasing property. It's about understanding market trends, regulatory landscapes and socio-political factors that influence property values.
Family offices with hedge funds require professionals who actually understand the mechanics of these investment vehicles, their risk profiles, and alignment with a family's long-term goals, as well as being adept at navigating rapid market changes, regulatory challenges and strategic investment pivots. To recruit these experts, it is necessary to understand this landscape, to have access to a network of professionals who fit the bill and, more importantly, be able to match the ethos of a family with the right talent.
Attracting top talent
The competition for talent in this sector is fierce, with private banks, wealth managers and private equity funds all vying for the best candidates. Offering a good salary package isn’t enough. Given their unique position in the market, family offices need to craft a compelling narrative to attract top-tier talent.
A family office must be able to present a holistic proposition that aligns with the aspirations and values of those they wish to recruit. It’s worth remembering that many investment experts prefer the distinct culture of family offices over the larger institutions.
It’s worth remembering that many investment experts prefer the distinct culture of family offices over the larger institutions
The corporate culture in big banks and large financial institutions is often rigid and governed by layers of bureaucracy. In contrast, family offices, with their leaner structures, offer a more intimate and flexible working environment. Professionals often find that their contributions have a more direct and noticeable impact, leading to higher job satisfaction.
Another primary draw of a family office is the promise of a better work-life balance. Unlike larger institutions, where long hours are often the norm, family offices, with their intimate settings, can offer professionals the flexibility to maintain a healthy equilibrium between their professional and personal lives.
Competitive compensation
While it's essential to offer a competitive base salary, family offices have the unique advantage of presenting additional financial incentives. Equity stakes or profit-sharing schemes can be compelling for potential hires, allowing them to share in the success they help create. This enhances the compensation package and also fosters a sense of ownership and alignment with the family office's objectives.
The world of finance is ever-evolving, with new tools, strategies, and markets emerging regularly. Professionals in this field often seek opportunities allowing them to stay ahead of the curve. Family offices can attract top talent by emphasising their commitment to continuous learning and growth.
This could mean providing access to advanced training programmes, workshops or even global conferences. Such opportunities not only enhance the skill set of the professionals but also position the family office as a forward-thinking, growth-oriented entity.
While big banks might lure professionals with hefty bonuses, family offices can offer stability, long-term growth, and a clearer progression path. The closer client relationships in family offices also mean professionals often get a more holistic view of wealth management, from investments to estate planning through to philanthropic ventures.
Focus on smart hiring
An effective family office ideally has a blend of seasoned professionals and younger, dynamic staff. While experienced professionals bring years of industry insights, younger talent can provide fresh perspectives and innovative strategies.
It's crucial to understand that younger professionals, although they may not have experienced significant financial downturns, possess expertise in modern financial tools and emerging sectors. A mix of both, combined with regular training and mentorship, can create a potent team.
Training sessions can help bridge knowledge gaps, introduce the team to new tools and strategies, and foster a culture of continuous learning. Mentorship programmes, where seasoned professionals guide younger team members, can help in knowledge transfer and ensuring the family's legacy and values are upheld.
If a family office is considering a global portfolio, recruiting investment staff from diverse territories can be beneficial. Such staff can offer:
- Insights into local markets and trends.
- Understanding of cultural nuances unique to their territory.
- Valuable networking opportunities through local connections.
Building a family office that maximises wealth entails a thoughtful approach to investment strategies, a blend of experienced and younger professionals, and a global perspective. By understanding the unique benefits and challenges of family offices, families can ensure they're well-equipped to safeguard and grow their wealth for generations to come.
Auria Heanley is co-founder of family office recruitment consultancy Oriel Partners
