David’s Articles

David has been writing and publishing since 2006.  

This post was written and published prior to September 2023 when David and his prior firm, Family Capital Strategy, merged with Greycourt.  Views expressed reflected David’s personal views at the time and do not necessarily reflect the views of Greycourt.  Posts and information may be out of date and should not be relied upon for investment advice.

A Family Office Hiring Crisis?

Sep 9, 2021 | Family Wealth

Photo by WJ on Unsplash

Execs are retiring, complexity is higher, who to hire?

A near-perfect storm is brewing in the family office world – a human resources one.  The family office industry is the in the midst of a sizable, double transition.   The first transition is due to longevity. From industry survey data (specifically referencing UBS’s 2019 Family Office Survey), we know that that 80%+ of family offices have been formed since the 1990s.  

The second transition that is occurring is the on-going aging of Baby Boomers and the massive amount of financial capital that will transition from one generation to the next.  In conjunction with this transition, families are selling businesses at a record pace to take advantage of tax advantages, record multiples, and large amounts of private equity dry powder.  In the last 3 weeks alone, I have heard anecdotes of quality of earnings consulting providers turning away engagements due to a lack of bandwidth, as well as investment banking practices being hamstrung by a lack of junior, analytic talent on transaction teams.  Both speak a robust demand cycle for deal activity.

So why the double transition?   The first is that for the older/oldest cohort of family offices, many are being lead by executives who are nearing the end of their careers and will need to transition their leadership.   The second transition is the rapid growth in new liquid capital driving a wave of new family office formation.  Just this summer alone, I have had introductory calls with numerous families exploring new office formation.  The short supply in these transitions is going to be senior-level talent ready to lead the family offices.  

A generation ago, offices formed in the late-90s or early 2000s, family offices operated with a lower level of aggregate complexity.  The past twenty years has seen massive growth in the numbers of areas of expertise an office might cover.  The family office of today might be charged with supporting an investment platform, planning work, risk management, estate planning, tax prep, reporting, technology, trustees/private trust company, next gen development, event planning, family councils, and philanthropic support – just to name a few.  

For a de novo office in the past, it was much easier to recruit in an expert with a more limited scope of subject matter expertise but the right ‘bedside manner’, and let on the job training build the other requisite skills.  As the family office industry has matured, today a de novo office may spin up a much broader range of initial offerings, requiring much greater expertise on Day 1. Keep in mind, these senior executives will also be tasked with leading teams of employees and interacting with the family directly.

All that to say, the rare individual who is qualified to serve in these roles will be in short supply and high demand.  Traditional recruiting pools for talent are constrained as well.  The average age of a financial advisor is 58+.  Per the ABA, trusts and estates practices have shrunk or been abandoned by many law firms.  

Greater demand and lower supply means only 1 thing – the price for talent will increase.  The Forge Family Office network in their 2019 benchmarking study of compensation noted that median cash compensation for the CEO of a family office with $1bn+ in assets totals ~$800,000.  For office between $300MM – $1bn, cash comp ranges from $400,000 – $630,000 annually.  All that to say, industry compensation levels are not low to begin with, and the highest caliber candidates will no doubt command a premium.  

As well, as we have written before, family offices function in a national market for talent.  For offices located outside of core urban areas, while the lower cost of living may be attractive, the commensurately greater level of career risk due to a lack of other family offices in market, means potential employees will have to be convinced to move out of Tier 1 and Tier 2 cities with deeper networks of family wealth.

So what’s the take-away?  First, leaders of offices and their boards need to keep succession planning top of mind.  Whether there is a plan for internal succession or a need to go out to the open market, finding the right talent will require an intentional process. Second, retention of mid-career talent will be key to monitor.  Individuals who appear ready for greater opportunity, but are finding barriers to growth in their current firm will be easy targets to recruit away.  Finally, there is a broader need to increase the depth of the talent pool more broadly across the wealth management space.


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Nashville, TN