Why Family Offices Are Having a Hard Time Recruiting Top Talent

As family offices grow and their operations become more complex, many find it harder to attract and retain the top-tier talent needed to manage their expanding wealth.

Recruiting challenges — from cultural fit and relatively lower compensation to a wider range of responsibilities — make it difficult for family offices to compete with hedge funds and private equity firms for high-performing professionals.

In Europe, recruitment is the top concern among family offices, according to a recent survey by HSBC Global Private Banking and Campden Wealth. Among families surveyed, 36% cited a lack of candidates with the right personal qualities, while 32% pointed to weak interpersonal skills.

The hiring emphasis is being driven in part by the expanded roles that family offices now play. About 36% of family offices have increased the number of services they provide or extended them to more family members, according to Deloitte Private’s Defining the Family Office Landscape report, published last year. Nearly one-third aim to professionalize further by hiring specialists in areas such as investing and tax planning.

“It has become much more difficult over the past decade or so to attract top talent, given the proliferation of family offices, multifamily offices and [registered investment advisers],” said Gee Smith, head of the Sequoia Sentinel Family Office at Sequoia Financial Group.

“Technology has supported this growth, allowing families at lower levels of net worth and complexity to create their own family office, further drawing on a limited pool of applicants,” Smith said, noting the select group of finance professionals with the skills required for such a role. “At times, families have become disenchanted with the overall cost to maintain the office, resulting in them merging with another office or working to commercialize the office — again drawing from the same talent pool.”

Will they fit the family?

A major challenge is cultural fit — finding someone who can adapt to the unique dynamics of a close-knit family. Michael Castine, global head of financial services at ZRG Partners in Greenwich, Connecticut, once interviewed 34 family members before even beginning a search for an executive role.

“And when we came down to the final few candidates, they were met by, like, 37 members of the family,” Castine said. “So when I met the person that got the job, I knew that he was the right person.”

Some candidates may be put off by the broad scope of responsibilities. Kay Shah, a director in the family office division of StevenDouglas, an executive search firm headquartered in Fort Lauderdale, said she often warns candidates coming from firms like KPMG or Goldman Sachs about the realities of the job.

“‘Well, you do know that you probably won’t have an expense account,” she tells them. “You might have to go in and do your boss’s dry cleaning. You might need to pick up the daughter from the airport even though you’re a CFO.’”

Other obstacles include the risk of working for a single client, the informality of family-dominated boards and subjective performance reviews, said Charlie Grace, managing director at Cambridge Associates and head of its Family Enterprise Solutions unit.

For some investment professionals, working for a family office can feel restrictive. "They just get bored," says Rich Bursek, president of Certuity, an investment advisory firm, who notes that single family offices can have high turnover rates. "The way they made money is very correlated to how the family made money. And that person may want to start to look at other opportunities. Let's say it's real estate and they want to branch into data centers or multifamily. They can feel very pigeonholed when it comes to the investment mandate."

The challenge intensifies for senior hires. “If you’re looking for someone to be a true leader and change the investment focus and be a representative to banks and law firms, you’re going to need a very accomplished individual,” Castine said. “And there’s only so many of them, and they’re getting job offers from a lot of other firms.”

Investment strategies have become more complex, Grace said, “especially for allocations to alternative investments like private equity and venture capital.” That increases the difficulty of finding candidates with the right skills, he said.

One Title, Many Jobs

Top executives at single-family offices are often expected to wear many hats. “Team members must have a proven ability to discuss the current state of the economy and markets; understand and recommend complex estate, philanthropic and tax planning strategies; develop productive working relationships with diverse families; communicate effectively; and successfully manage myriad family dynamics,” Smith said.

In multigenerational family offices, the internal dynamics can be particularly tricky. “Do I listen to the patriarch or matriarch, or is it the younger people that may have not quite taken the reins yet?” Castine said.

The low-key, private nature of family offices can also be a disadvantage.

“Senior talent is often looking for visibility and industry leadership roles and want to join an enterprise with a strong reputation and brand,” said Suzanne Peck, president of GenTrust, an advisory firm for ultra-high-net-worth families. “They may be less inclined to engage with an unknown family entity.”

Family offices typically offer lower compensation, according to the HSBC survey. The average CEO salary is $288,000, far below that for private equity CEOs, who make $447,000. In response, many are boosting salaries and offering bonuses, profit-sharing and co-investment opportunities to attract high-level talent.

There’s growing openness to these more competitive structures, said Shah, who is currently working with a third-generation, Miami-based family office looking to professionalize its operations. “They are very interested in providing a competitive structure that includes a third base [salary], a third bonus and a third some kind of carry or co-investment,” she said.

In some cases, families are willing to meet steep demands. Castine recalled a CIO candidate who wanted “millions of dollars” to set up a hedge fund alongside his job.

“And they allowed it because that was how he would get better returns for all of them,” Castine said. “They knew there was a risk there, but they did it, and he’s doing quite well.”

Finding the right people can require a deft touch, Shah said — and not every search firm is equipped for the task. “It’s not always about using agencies that you’ve used for all your other nonfamily office roles,” she said. “Because the family office world is so nuanced and specialized."