When hiring family office leaders, the simplest way to screen candidates may be to screen for credentials: a CPA with tax experience, for example, or a CIO with an elite investment pedigree. These technical skills are easy to quantify and compare. But if the family office’s primary needs are tax optimization or portfolio construction, those functions can be outsourced to highly specialized firms.
The rationale for building an in-house team is different: management talent, cultural fit and the ability to foster cohesion across a complex ecosystem of advisors and family members. Yet those qualities can also be difficult to assess.
“When hiring the lead family office executive, I typically see recruiters zeroed in on, ‘I need to go get a CPA with 10 years of experience, or I need to go get a lawyer with estate experience,’” says Ed Drake, an outsourced family office executive. “They’re so zeroed in on the technical skills that they really don’t pay attention to what really makes a family office work: Somebody has got to glue this virtual family office team together and get them to work as a true team.”
Technical competence is important, of course — but it is not what differentiates an acceptable family office hire from a great one.
“The technical skills are sort of table stakes. You need people to be good at their job, because otherwise, you should outsource to people that are really good at their job,” says Justin Huang, director of family office advisory for Wingspan. “But the reason why you would hire someone in-house is the privacy and trust element. It’s very hard to diligence, I would say, but trust has to be the absolute number one thing you look for.”
Technical ability is readily available and easy to assess.
“There’s not a lack of technical talent out there,” Drake says. “You can either hire it through a firm, or you can hire it and bring it on your team.”
What is scarce is the combination of technical skills and the people management and project management skills that make a family office run smoothly.
“It’s the ability to get all these different people to work together on a common mission for the family enterprise, which in many cases is a complex ecosystem of people,” Drake says.
Core hiring criteria: trust and alignment
Leading a family office function involves very personal relationships with family members — which means both the family members and the family office professionals need to like and trust each other. In-person meetings are the best strategy for this two-way diligence.
“The principal should have multiple in-person meetings with the people they’re hiring in a setting where it doesn’t feel so professional: have a drink, have a dinner, meet the family, go on a hike, just so you get a sense of what the person is like,” Huang says. “These people are managing capital and having interactions with your family, and so you have to make sure that you align both on the personality side, but also the culture side.”
Likability is not superficial — it can help with retention and resilience in a lean family office team.
Likewise, skills such as leadership, planning, project management and team coordination are often undervalued in the recruitment process.
“It’s the management talent that you’re really looking for,” Drake says. “The people management side of this is really the crucial part.”
An expanding role
Family office roles often test people skills more than technical mastery. Senior family office leaders must be able to communicate clearly, translating complex concepts for family members with a range of financial knowledge. They must be able to navigate ambiguous situations, as well as complex family dynamics. And the role inevitably includes tasks outside the formal job description.
Family office leaders may be surprised to learn, for example, how much of their role involves being an educator.
“There could be a lot of the family, and maybe even the principal, that doesn’t quite understand some of the market or economic dynamics that really impact how the family office allocates,” Huang says. “When you’re very talented at something, breaking it down to very basic terms is not always natural. It’s not an insignificant part of the job: It’s very important for the family to know what’s going on with their capital, and so there’s a lot of patience required for that.”
A position in a family office is “similar to working in a very well-funded startup,” Huang says. “There are a lot of odd jobs here and there that aren’t intensive enough to warrant hiring a dedicated person, but at the end of the day, the job needs to go somewhere.”
Cultural misalignment can become expensive quickly: Family offices tend to have lean staffs, so any turnover is disruptive.
“People don’t tend to leave family offices because they aren’t good at their job, or they’ve failed. They leave because they’re not happy,” Huang says. Alignment and likability can help prevent that. “Family offices are very flat, so there’s only so much title inflation and comp inflation that you can provide. The likability factor is another way to retain people outside of just financial compensation.”
To find family office leaders capable of stewarding both capital and relationships over time, it may help to slow down the hiring process to allow it to expand beyond credential screening.
“The goal of the family is to get the hire right. It’s a really important decision and shouldn’t be rushed,” Huang says. “A lot of these very important hiring processes take a lot longer than a typical executive search firm or a headhunter that places finance professionals, for example. These should take longer, because there need to be multiple touchpoints.”