Compensation is a significant expense for a family office, and it’s one that’s important to get right: Pay too much, and the family office is wasting money. Pay too little, and it will be difficult to recruit or retain top executives and staff.
Data on pay rates can be a helpful tool when determining compensation, and the recently released Single Family Office Compensation Report from Morgan Stanley Private Wealth Management and Botoff Consulting contains a wealth of information.
The survey of over 400 single family office in the United States offers detailed data on over 30 key family office positions, from CEO to trust assistant. It offers pay ranges for each position: median pay plus the 25th and 75th percentiles.
The survey also provides a high-level look at compensation trends:
- More than 90% of family offices report that they gave employees salary increases in the past year. The top drivers of salary increases were individual performance (66%) and family office salary surveys (65%).
- Bonuses are common: 81% of executives and 78% of staff received bonuses for their 2022 performance. These bonuses were most commonly due to individual performance (73%) and investment performance (56%).
- Almost 60% of family office report using long-term incentives.
The survey explains four common drivers of compensation decisions:
- The competitive market: This can include industries that compete with the family office for talent. Geography is also important: The survey lists geographic differentials for metro areas where salaries differ from the national average, from 0 to 10% in Miami and Portland to 15%-25% in San Francisco and New York City.
- Performance: The performance of the individual, the team, the entire family office, or the portfolio can affect compensation.
- Characteristics of the family office: The size and complexity of the firm, AUM, and the compensation philosophy of the family all come into play.
- The position: The scope and level of responsibility affect compensation for a given role.
