Women hold nearly one-third of executive positions in family offices, outperforming corporate figures for women in C-suite and leadership roles in the US.
This is according to Morgan Stanley’s Single Family Office Advisory division’s its third bi-annual compensation report: Single Family Office Compensation: A Guide, made in partnership with Botoff Consulting.
The report covers survey findings as well as trends impacting not just women, but wages and compensation in family offices.
Over 400 single family offices responded to the survey, and 77% of the participant families had a combined net worth of more than $500m.
The reliable data, which covers 1,728 employees, is intended to be a guide for family office customers as they make crucial decisions about employment and strategy.
Some of the report’s main results:
- Long-Term Incentive (LTI) pay programmes are becoming more popular, with 59% of all respondents indicating use of LTI plans. This increases with firm AUM (47% of businesses with less than $1bn AUM, 72% of firms with more than $1bn AUM);
- Annual incentive and/or bonus schemes are used by 80% of family offices;
- While most geographic premiums remain consistent with historical trends, certain negative shifts of premia has been noted in traditional “high cost” regions, and
- Due to the transfer or construction of family offices, there has been an increase in rivalry for talent and higher pay premiums in other areas (particularly in Florida, Nevada, and Wyoming).
“We deeply appreciate the amazing responsiveness, with more than 400 families participating in this survey,” said Trish Botoff, founder and managing principal of Botoff Consulting. “Our focus remains on expanding the depth and effectiveness of compensation data to empower principals and their teams to assess compensation, to align goals, and to make informed decisions to reward, retain, and motivate family office talent.”
Over half of family offices report having trouble filling all types of positions due to the fierce competition for talent in today’s market, particularly for posts in accounting, tax, investment, and support.
In the last 12 months, more than 90% of businesses say they granted compensation raises to their staff.
The usage of incentive compensation in family offices is still strong, with bonuses at or above the prior year for 82% of personnel, and salary increases in family offices continue to exceed those in the larger US market.
Valerie Wong Fountain, head of family office resources partner, and platform management at Morgan Stanley stated: “Employers across nearly any industry today can see that the talent and compensation landscape is rapidly evolving. Our research amplifies the importance of having data that breaks down trends through a lens specific to family offices.’’
Family offices are becoming more proficient, tactical, and pro-active in meeting needs of families.
They now need personnel with increasingly specialised skill sets as they include advanced platforms and systems.
In order to fulfil this requirement, family offices are hiring from an applicant pool that is steadily expanding to fill a variety of leadership and functional positions as well as expanding in-house investment teams.
To attract and keep staff, family offices must therefore provide competitive salary packages.
Fountain added: “The growing use of LTI plans is aiding in attracting that top talent, especially for offices that have in-house investment teams. Practices like deferred incentive compensation, co-investment opportunities, carried interest, profit sharing and equity can help keep talent who are excited by and invested in overall success for the family.”
According to participants, 94% of employees have already gotten or will receive annual wage increases in 2023, outperforming the overall US market.
A large number of single-family offices questioned responded that they expected to raise salaries by 5% or more, which is significantly higher than the national median, which is at its highest level in 20 years as a result of inflation and labour shortages.
The paper goes over the main pay components as well as what family offices should consider in order to put the benchmarking data into context, such as location, comparable industries, performance, business features, and the job itself.