When family offices hire professional staff, they face similar challenges to any other organization in finding a person with the skills and experience they need. But they also have to find a candidate who understands the family office culture and meshes will with the family members involved.
It adds up to a complex picture of family office staffing, one that Deloitte Private’s “Family Office Insights Series – Global Edition: Defining the Family Office Landscape, 2024,” illuminates with survey data. The report offers a number of insights into both the present and the future of family office staffing.
A significant number of family offices — 40% — are currently focused on hiring, with one likely reason the fact that 36% of family offices are increasing either the number of services they provide or the number of family members who are offered their services.
As family offices scale up, they are looking at a variety of ways to add people with the expertise they need. Almost 30% are looking to further professionalize their family office by bringing in more non-family talent, often with specialized knowledge of topics such as investing or tax planning. Another way many are seeking specialists in specific areas is by outsourcing: Over one-third — 34% — plan to outsource additional services this year.
“The family office space is expanding so rapidly. One element is staff sizes are growing, but there’s the other element of family offices wanting to further professionalize,” says Rebecca Gooch, Global Head of Insights with Deloitte Private. “A number of family offices are turning more to outside professionals rather than just family members to take on key roles.”
The average family office in the survey has 15 employees — with the majority (13 of 15) being non-family members — and has $2 billion in AUM. Currently, almost two-thirds of family offices are led by a family member, including 35% by a matriarch or patriarch and 26% by a next-generation leader.
That may change, however.
“We asked family offices, who is currently leading your office? At present only 35% of family offices globally are led by outside professionals. This means the vast majority, 65%, are led by family members. But then we said, ‘Once that generation of leadership steps down, who is going to take over?’” Gooch says. “It’s really interesting the way the tides are turning: Family offices said they expect that 35% to jump up to nearly 50% of outside professionals taking over the family office once the current leadership steps down. It’s all about the maturity of the space and its evolution.”
When family offices recruit new staff members, where do they look? Common sources of candidates include:
- Financial services firms (64%)
- Accounting firms (44%)
- Consulting firms (25%)
- Other family offices (22%)
- Law firms (17%)
- Family’s operating business (17%)
While it may seem surprising that other family offices aren’t the top choice, Gooch says that may not always be practical.
“A lot of family offices really want to pull from other family offices because it’s very niche knowledge — but there are not a lot of family offices in the world. So while they would love to, it’s easier to find talent among the large consultancy or accountancy or financial institutions than it is to get people with specific family office experience,” Gooch says.
What type of background is typical for the head of a family office? Survey respondents cited a number of areas of expertise shared by many family office leaders:
- Investment/asset management background (81%)
- Strategy (73%)
- Finance, tax and legal (69%)
- Family management (69%)
Family offices do face challenges in filling positions, especially those that call for specialized skills.
“There’s just a shortage overall in the financial service industries of professionals,” says Eric L. Johnson, Deloitte’s U.S. Family Office Tax Leader. “There’s a war for talent in terms of getting the right professionals from private equity or hedge funds to serve as part of the staff of the of the family office. Because of that, the incentive compensation mechanisms that family officers are using to attract and retain talent have become more sophisticated as well.”
Another staffing-related challenge facing family offices: Candidates may not see a clear path to advance within the organization, because family offices often have a flat management structure, and leaders often stay long-term.
“You don’t have that growth potential,” Gooch says. “Let’s say you work for a large investment bank: You can make it up to a director or, after a certain number of years, a vice president. In a family office, oftentimes there are fewer opportunities to grow, and that can be one of the challenges. So, they have to be creative in other ways to be able to find and retain talent.”
