What is a family office?
A standard family office article usually always starts with the same question: what is a family office? Most readers will have a rough idea of what a family office is, but when it comes to the recruitment of staff for a family office this can surprisingly create a wide chasm of requirements depending on the business culture of the client. At the STEP Geneva conference in May 2011, a delegate questioned the definition of the usage of the words ‘family office’. This is because a family office can be a trust company, an independent asset manager, a private equity company with few employees, a multi-family office the size of small private bank, or a really well institutionalised single family office with 100+ staff, investing in various assets such as real estate, hedge funds or private equity. The recruitment needs of a family office can vary significantly according to the family office infrastructure. One thing is for certain: It is a complex and an opaque environment.
Family office trends:
Numerous wealth managers see the private wealth management market becoming increasingly more competitive. Targets will still be difficult to achieve; heavy risk management processes and paperwork make work more demanding and methodical. We hear through the media that clients have lost confidence in the security of alternative investments and now ask for safe investments and independence. In these conditions, we can anticipate that the family office concept will seduce more and more UHNW individuals who are now seeking a qualitative approach and customised be-spoke services rather than a sophisticated products-oriented attitude that was standard a few years ago. A significant number of wealthy families emerged worldwide with an awareness of the benefits to create an independent business such as a single family office. It was commonly agreed that US$ 250 million was a minimum requirement to create a single family office (SFO) structure and US$ 500k for a multi family office (MFO). Now, according to some of our clients, it seems that US$150 million is already a good start, allowing the beneficiaries to have a simple platform with outsourced services. It is known that MFO’s look after UHNW clients. But a new trend could be for these infrastructures to now want a closer look at smaller clients in the affluent to ultra affluent client’s bracket.
The Recruitment Paradox:
For UHNW families, one of the major issues when it comes to recruiting someone is to find the equilibrium between a trusted advisor and qualified professional. When an UHNW client decides to create his own single family office, the principal or business owner looks into his/her private network of business contacts to find them a trusted advisor. However, doing it this way can reduce the chance to tap into a pool of professionally experienced international talent. To ensure the success of a start-up like a single family office, it needs a strong executive, CEO, CIO or Head of family office at the helm. Usually because of the rather small size of the company structure and its complexity, a versatile individual with varied skills (trust, all asset classes’ investment, tax and legal knowledge across boarder, management and diplomatic skills, multi-lingual etc) is recommended. Finding these unique types of candidate is not an easy task for a recruiter. A broad spectrum of search and selection for the right candidate usually on a global basis is key to the success of the role being filled by a specialist recruiter.
Family office talent ranges from private client lawyers, to fund managers to senior bankers (investment or private), to tax and trust specialists with cross-border expertise, to accounting and financial experts with strong reporting and controlling skills to concierge professionals with first class customer services and diplomatic skills. Not forgetting the important and dedicated executive assistants, available to the client 7 days a week, 24 hours a day. Family governance, philanthropy and arts professionals are becoming increasingly popular profiles. It is worth mentioning that one type of candidate profile which can always be of interest for family office (regardless the size of the structure) are real estate professionals. This area of expertise is due to the large majority of family offices focusing their investments in the global commercial and property development markets. We at AP Executive can identify a general trend, it is recognised that ‘interpersonal skills’ are a very important requirement for our clients. Personality and chemistry is another major factor requested by our family office clients, plus, they want any staff to be professionally discreet and loyal too. Working for a family office is financially rewarding but you have to be flexible and dedicated. Employees need to offer a "tailor made customer service" mindset and not take their position for granted. Last but not least, the capacity to institutionalise the family office is also something well regarded, especially when the strategy of the family office is to grow to the next stage (Single to Multi or SFO wanting to diversify its investment activities).
What are the misconceptions about family office?
I very often have the perception that a family office environment is thought of as a type of ‘glamorous’ refuge by people I speak to who are possibly disenchanted in working for a corporate entity and looking for career advice. They feel they could strive and get the proper career path that they have always been seeking by seeking a role in this niche professional industry. Family offices are most of the time small entities built and developed by business entrepreneurs looking for key players that can bring their broad knowledge and expertise. When family offices are institutionalised the recruitment needs by our clients are even more complex. International professionals with exceptional pedigrees are mainly favoured. Working in a family office environment has got its pros and cons like any other profession. The upside is to work for a cash rich environment which has a direct reporting structure and flat decision making, without the lengthy bureaucratic procedures. Candidates usually desire the ability to be able to have direct contact with the family whilst utilising their cultural management skills with flexibility. A career in the world of Family Office is a special one and because of this our clients can ‘cherry pick’ the best candidates for the job, the competition is still fierce.