When it came to experience, it was far less important that the candidate had worked for a family office per se than it was that he or she had worked with the wealthy in any capacity (Exhibit 3). This is very much in line with the motivations cited for opening a family office that we discussed previously, and with our research among the affluent in general, especially those with $25 million or more in investable assets. When people are wealthy they want all of the perks and products that come with wealth, and the person best suited to provide those perks and products is a financial expert who is familiar with the high end and the needs of people like themselves.
Finally, we asked the executive directors how they got their jobs. There were four responses with similar percentages: intrafirm transition, previous professional relationships, executive search firms and professional contacts or referrals. Surprisingly, given the industry's emphasis on networking with clients, personal contacts or referrals finished a distant fifth (Exhibit 4).
However, it should be noted that when we broke down the responses by family office type, almost half of the single-family and multifamily offices relied on previous professional relationships, far and away the dominant answer, whereas intrafirm transition was the number one answer for commercial family offices as it was the firm, not the family, that did the hiring.
Furthermore, we found that as a result of the intense and myriad personal and professional demands made upon executive directors, portfolio managers are seldom considered to be top-tier candidates. Family offices are looking for individuals with a broad range and command of professional and personal talents, what we would call a wealth manager. And in order to land such qualified and coveted prospects, compensation is often directly linked to the executive director's abilities, responsibilities and effectiveness. The challenge is formidable-but, then again, so is the potential payoff.
Hannah Shaw Grove is managing director and chief marketing officer of Merrill Lynch Investment Managers. Russ Alan Prince is president of the consulting firm Prince & Associates.