Key Takeaways
- • Family offices are professionalising rapidly, with around 40 per cent planning to hire more staff according to Deloitte Private, and the non-family head share expected to rise from 35 per cent to 49 per cent after succession.
- • Compensation is climbing: a CIO at a $1bn family office once earned $500,000 to $750,000 in cash compensation but now can command well over $1mn, per Cowen Partners' Jacob Gamble.
- • Despite managing billions, most family offices stay lean, with investment-focused offices averaging about 17 staff (Morgan Stanley/Botoff Consulting) and JPMorgan estimating average operating costs of about $3mn a year.
- • Employers increasingly prioritise governance, trust and emotional intelligence over pedigree, though some experts warn families underestimate the cost of building in-house capabilities.
- • Many families are better served by external advisers or multi-family offices unless they hold more than $100mn in complex wealth, with Gamble noting families generally need $1bn to $5bn to justify a fully institutional investment team.
Summary
Despite overseeing large sums, most family offices remain small. Investment-focused offices employ about 17 staff on average according to Morgan Stanley/Botoff Consulting, and even those managing more than $1bn typically have fewer than 30 employees. Requirements have shifted accordingly: families now seek executives who combine investment expertise with governance knowledge and interpersonal skills. Kathleen Grace, chief executive of Fiduciary Family Office, warns that families often assume investment hiring comes first, when the bigger challenge is coordinating tax, estate and liquidity planning. JPMorgan estimates average operating costs at about $3mn a year, rising above $6mn for offices managing $1bn or more, and Grace suggests external advisers or multi-family structures suit most families unless they hold complex wealth and liquid assets above $100mn.
Compensation is a growing pressure point. Gamble says operational roles such as COOs and chiefs of staff now command far higher pay, and that a CIO role at a $1bn office has moved from $500,000 to $750,000 in cash compensation to well over $1mn. Close to 80 per cent of executives receive annual bonuses, per Morgan Stanley/Botoff Consulting. Family office base salaries are often higher than on Wall Street, while bonuses are typically smaller. Elizabeth Havens, partner at BraddockMatthewsBarrett, says institutionalised offices now compete with private equity firms and asset managers for investment talent, and that emotional intelligence matters most. Ian Barnard, chief executive of Capital Generation Partners, is sceptical that a new 'war for talent' exists, arguing that competition between banks, asset managers and family offices has long been present.
Alina Lazarescu-Abboud, principal of a Swiss family office, illustrates the lean model, with three core staff plus an external legal team and most functions outsourced. According to JPMorgan, about 80 per cent of family offices outsource at least part of their investment activities, and Deloitte says 34 per cent plan to rely more heavily on third-party providers. Gamble concludes that talent is becoming the decisive factor as these organisations grow more sophisticated.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.