When it comes to running a family office, one of the biggest challenges is identifying and hiring the right talent. In this week’s newsletter, Marcus Baram explores family office recruitment, speaking with experts to uncover the qualifications that make the best candidates. While it’s no surprise that cultural fit with the family is a top priority, you might be more surprised to learn that a high level of emotional intelligence is also critical for success in these roles.
Another increasingly important topic in the family office space is educating the rising generation. In response to this trend, the University of Chicago Booth School of Business has launched its Family Office Initiative, aimed at providing MBA students insights into family office structures, purpose, leadership strategies and investment goal setting.
As always, we appreciate any comments, ideas and insights that would make this newsletter more useful. I look forward to growing this family office community with your help. Please email me at [email protected].
HANDPICKED: Why it's so hard for family offices to hire the right people
By MARCUS BARAM
As family offices have expanded in the past decade, many have grown in complexity — from small teams to large organizations with layers of specialties to handle the increasingly complex investing environment and new concerns about cybersecurity and data analysis.
The importance of recruiting and retaining employees was highlighted in a recent JPMorgan Private Bank report on family offices, which found that it is the “single biggest expense” for family offices. In North America and the Asia-Pacific, family offices are especially preoccupied with those costs because “demand for talent — the main driver of costs — is outpacing supply.”
Fortunately, with the rise in remote work during the pandemic, it has been easier to attract and retain talent, according to this year's Citi Private Bank’s Global Family Office survey.
Executive search consultants who work with family offices say the hiring challenges they face involve financial, communication and governance skills; cultural IQ; and plenty of discretion.
“The most important form of capital for a family office is human capital,” said Mark Somers, founder of the London-based Somers Partnership. “Nobody in a family office wakes up and says, ‘I want the second-best CPA.’ ”
Somers promotes the idea of compound talent, in which A-team players recruit other A-team players so that excellence in a family office becomes ingrained. “It’s a virtuous spiral,” he said.
Somers and other recruiters outline a long list of traits and skills that are essential for family office staffers but can be rare even among highly successful finance professionals who come from banks, private equity firms and hedge funds.
Stewardship and longevity
“You might get the very best return from investing in some industry that some people in the family feel is distasteful,” Somers said. “So there are considerations like that to weigh before going for just the most profit, thinking about the reputational damage to the family.”
Another important trait in a world of job-hoppers seeking ever-bigger paydays is a commitment to longevity. “No family wants to bring in new talent every couple of years and expose them to the inner workings of their life,” said David Chie at California-based Palo Alto Staffing, who mainly recruits for family offices founded by tech entrepreneurs.
Emotional intelligence and communication
Somers said new hires often need to act as a bridge between a founder and the family, which requires diplomatic skills to facilitate communications “with spouses, children, service providers, ex-wives, distant relatives, financially illiterate members of the family and those who are unengaged.” That also applies to connecting different generations when it comes to sustainable investments, technological improvements and a transition to digital reporting.
"We look for a very high level of EQ [emotional intelligence],” Chie said. In addition, humility — “which honestly is quite interesting to look for because you’re usually looking at the top talent.”
Expert generalist and concierge services
Brian Adams, a Nashville-based partner at Mack International, said he looks for people who can be "expert generalists,” which can be rare in a financial world that is increasingly specialized. “Families need a generalist about all the facets of wealth management,” he said.
“Where people from finance struggle is that they need to know about tax, compliance, risk mitigation, accounting, cybersecurity, the ability to be a controller. And people who come from structured organizations often really struggle with such a mandate.”
In addition, Adams said, some staffers may have to take on traditional concierge services like booking travel arrangements or connecting with art dealers.
Cultural fit and discretion
“Technical skills or investment success is one thing, but the real challenge is the culture fit,” Adams said. “Do you have a service heart — to serve a family that you'll never be a family member of and to realize that if it's important to the family, it's important to the family.”
Discretion is absolutely key, since staffers are privy to so many of the family’s financial and personal secrets. “If you have enough situational awareness and EQ, you’ll automatically understand this,” Chie said. And not having that trait is a deal-breaker, said Somers, adding, "There are many examples of family office pros being sacked for being indiscreet.”
Advantages and disadvantages
In attracting the best finance professionals, family offices have a leg up on other firms because compensation can also include co-investing opportunities. “The ability to invest side by side, to participate in LP investments, to be a co-GOP — that’s a big allure,” said Adams. It can also function as a tool to retain talent — family offices can “use their balance sheet to have an existing line of credit above the [applicable federal rate] and give execs access so they can draw down that line to participate in investments with the family.”
The drawback, Somers said, is that you have to accept that “there’s a cap in terms of how high you can go.” He calls it a mushroom career — where you advance to a certain level and then broaden your skills.
And it can be a case of golden handcuffs, he said. “You leave a red-blooded, go-getting PE firm looking for new clients, but a family office is not looking for new clients. That makes it difficult to leave after a few years and try to take on a role that involves business development. It can be a cul-de-sac.”
University of Chicago launches family office curriculum, research program
By ANDREW COHEN
The University of Chicago Booth School of Business has launched the Family Office Initiative (FOI), an education, research and networking program for the global family office sector.
MBA students will be able to take the family office course starting in the winter of 2025, with topics such as family office structures, purpose, effective leadership and defining investment goals. Additional courses will be made available in the future, with potential topics being family psychology and dynamics, risk management, asset allocation and governance.
“The family office sector has grown markedly in the last 20 years and should continue to grow. As a result, it is now a meaningful part of the investing universe,” said Steven Neil Kaplan, the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago. “We plan to include a research effort that will help us better understand the sector, and the research will help inform the materials and resources we produce to help family office leaders manage and run their offices.”
The FOI will also include events, starting with the invite-only Family Office Summit , scheduled for May 13-14, 2025, and expected to gather 200 current and future family office leaders.
The Family Office Initiative Steering Committee consists of 50 industry leaders including Pritzker Private Capital co-founder Paul Carbone, Greenville Asset Management CEO Quan Mac and Morrow Bailey, managing director of the Haslam family office HF Capital.
“There is substantial demand in the market for talented, well-educated family office professionals; insightful family office research; and in particular for an unbiased, noncommercial forum to have a free and open exchange of ideas among family office leaders,” Carbone said. “There really are no comprehensive family office academic programs like the one we envision. Booth has the interest, resources and will to quickly become a leader in the growing, dynamic family office industry.”
The University of Chicago holds a historical connection to family offices. The school was founded by oil tycoon John D. Rockefeller, who is widely considered to have established the first full-service single-family office in the United States in 1882.
LOOSE CHANGE
Perigon Wealth eyes M&A growth with 3 hires: The San Francisco-based registered investment adviser, with $8.2 billion in client assets, has expanded its leadership team as the firm prepares for continued growth through mergers and acquisitions.
Nikki Beach debuts grand reopening of Dubai property: Launched in 2016 as one of the first beach clubs in the region, Nikki Beach Dubai now features a vibrant design, an expanded air-conditioned restaurant with stunning views, refreshed daybeds and a state-of-the-art DJ booth.
Emma Gwyther on crafting luxury experiences that define a lifestyle: The CEO and founder of Interluxe Group has long been a fixture in the luxury space and has helped some of the most iconic automotive brands create memorable events that capture the essence of luxury.
Help us with a story: We’re working on a story about family office collectors who view art as an investment. If you have any comments on the topic, reach out to [email protected].