Investment professionals are being snapped up by single-family offices, where they are are being well compensated if they deliver results. Meanwhile, there is a parallel trend regarding experienced, erudite tax professionals.
It has been fairly common to see leading accountants and attorneys to join single-family offices. However, their responsibilities and their roles have often been managerial in nature. Now the jobs for leading tax professionals at single-family offices are expanding. Even though many types of wealth planning functions are outsourced, tax professionals are more and more being hired bu single-family offices to address the complex, ongoing needs of their rich clients.
The current trend,seen clearly among some of the wealthiest single-family offices, is for tax professionals to not only have authority concerning operations, but to also be responsible for sophisticated wealth planning. This means tax professionals take a very hands-on approach to wealth planning and identify and manage external experts. These outside specialists include lawyers, accountants, investment professionals and tax strategy administrators.
Overall, the increasing importance of high-caliber tax experts working in-house is due to the larger size of the personal fortunes involved and the recognition that astute wealth planning can dramatically contribute to and protect family wealth. That's why single-family offices that control less wealth are also adding their own in=house tax specialists.
There are a number of ways single-family offices are sourcing and recruiting tax professionals. One approach is to bring in experts they have experience working with. In a study of 74 elite private client lawyers with average annual income of $1 million or more over there last three years, 44.6% reported being approached by their clients at some point in their careers to join single-family offices.
Another approach used by single-family offices is to be highly proactive, even as they maintain a considerable level of obscurity. In conjunction with their advisors, senior management identifies a number of potential candidates. Then, sometimes directly and at other times through intermediaries, the candidates are approached to determine their general level of interest and requirements. If there is interest, a comprehensive background investigation is conducted, including an in-depth assessment of their expertise. Based on the results of the investigation, a few of the candidates are brought in to meet key individuals. At this point, if there is chemistry among the parties, an offer is usually made.
The compensation packages for talented tax professionals can easily run into more than $1 million in annual compensation, with multi-year guarantees.
Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.