Crucial times for family offices: Background checks and beyond are nonnegotiable for new hires
The candidate for a job as the new senior vice president of sales at a large multi-family office had been divorced for beating his partner. The potential new hire who claimed to have worked for Hillary Clinton said the former secretary of state wasn’t available to give a reference. The prospective nanny for the children of a family office member had had a restraining order filed against her by an ex-boyfriend, who accused her of harassment.
These experiences highlight for family offices the importance of thoroughly interviewing job candidates and doing background checks when necessary. These job seekers’ flawed histories were all uncovered by investigative firms hired by family offices to do due diligence on candidates for positions that would have put them in close contact with ultra-high-net-worth families, where they would have access to the families' financial dealings and some of their most intimate secrets.
It’s a crucial process for many companies, and even more so for family offices that tend to have small staffs.
“It’s so key for family offices to do the proper due diligence when hiring,” said Brian Willingham, whose Katonah, New York-based firm, the Diligentia Group, exposed the nanny candidate after her vicious comments on social media about her parents “raised a yellow flag” and prompted further research into her background.
“Part of the fraud triangle," Willingham said, "is having opportunity [the two others are pressure and rationalization], and a small family office is perfect for potential fraud.”
The reason that family offices come to Teresa Leigh Home + Family Office is that “they’re looking for a deeper dive, to really understand who that job candidate is,” Leigh said. Family offices are “so intimate both on the intelligence level and in terms of interfacing with clients and friends and family of clients — it’s a very different world for even longtime corporate employees to step into.”
But such due diligence needs to be handled delicately, requiring a balance of healthy skepticism and personal courtesy.
Recently, it was revealed that a security firm vetting job candidates for Bill Gates' family office asked women sexually explicit questions about pornography and their sexual histories.
“That’s unprofessional and illegal,” said Paul Viollis, CEO of Viollis Group International, which performs background checks and security assessments for affluent people and families.
To serve a family office or the UHNW community, Viollis said: “You must understand their culture. Every family has its own needs and risk levels — you have to know that before you do a background search. What info do they need, and what do they want?”
Background checks include basics such as criminal records — “to make sure they’re not a convicted sex offender or charged with murdering someone,” Willingham said — as well as financial history. “If you’re hiring a CFO, and they owe the federal government a million dollars, that would be something very relevant because they’re managing your money.”
In addition, a social media analysis and interviews with the appropriate people — finding people who may know the applicant but not necessarily someone the person put down as a reference — can provide a sense of the job candidate's personal life and “whether or not it fits with the values of the company.”
When Leigh looks at potential candidates, she uses a minimum of 16 references and asks for eight personal and eight professional to really get a sense of them and uncover flaws.
And when it comes to interviewing the candidate, it’s all about the questions and closely watching their reactions.
“We’re looking for the tell — the sudden shift in conversation when a particular topic is raised; they’re avoiding talking about something,” Leigh said.
Other things to look out for in interviews: How do they explain gaps in their resume? Are they gossipy about former clients or bosses?
“If you have the right interviewer, I will take that over any polygraph,” Viollis said. “It’s all about the way you ask. I can ask you a question that is leading, that can get me whatever I want.”