One of the key factors in ensuring the success of a single family office (SFO) is its ability to attract and retain top talent. SFOs require that associates have an incredible breadth of skills in order to meet the unique (and often complicated) needs of the extraordinarily wealthy families they serve. An employee’s expertise must go beyond that of that of just managing and investing assets; most of the time, they manage the family’s full financial well-being including investments, tax planning, family governance, philanthropy, and even concierge services and art collection management. This myriad of skills—and the fact that family offices are often relationship-driven—make employees extremely valuable to the SFOs that employ them.
So, how can SFOs keep this talent on board and attract new, qualified employees?
Benchmarking your firm’s executive compensation programs and processes against competitors is one way to ensure you’re remaining an attractive option for SFO employees. Our 2017/2018 Single Family Office Executive Compensation Survey, conducted with Botoff Consulting, looked at how SFOs operate across the country, and uncovered insights into what firms are doing to retain talent.
Is your family office incorporating the use of employment agreements?
Employment agreements typically outline the obligations and expectations of the company and the employee, along with details about the structure of the compensation package. Having an agreement in place can work to the benefit of both the family office and the employee. They protect the family office by outlining employment arrangements, and often define a core set of health and welfare benefits for employees. And while the use of these agreements is growing, our survey found that only one-third of family offices report using employment agreements for executives across CEO, CIO, CFO, and COO positions. Incorporating the use of these agreements to define employment and departure provisions can help to ensure clarity around employment terms and mitigate the risk of future employment disputes.
Do you provide structure around annual incentives given?
The survey revealed that most family offices award annual bonuses, but about 59 percent of those increases are discretionary. Without a formal structure to award bonuses, it can be hard to set goals and create alignment between the family and the family office’s strategy. Employees often feel more fulfilled with concrete goals to work toward and development plans to follow—resources that are becoming more common as the industry matures. Family offices should consider incorporating more structure into annual incentives to help executives better understand expectations and meet objectives.