Family offices are increasingly professional and that means paying more for top talent

Morgan Stanley research shows higher compensation for US family office professionals.

The wealthiest individuals and families in the U.S. are demanding more from their family offices, including more wealth and investment management, which is driving higher incentives for the best talent.

The latest biannual compensation report from Morgan Stanley’s single family office advisory group reveals that 94% of staff in family offices had received or will receive an annual salary increase in 2023, outpacing the general U.S. market.

It also found that bonuses were at or above the level of 2022 as part of greater incentives to retain and attract the best talent amid a shortage for all roles but especially for those in accounting, tax, investment and support.

Almost six in ten respondents reported the use of long-term incentive compensation plans, including 47% of firms with under $1 billion in AUM, and 72% with over $1 billion in AUM.

“What we’re seeing today is an increasing sophistication and formalization of family office structures, and it’s important for compensation plans to reflect this,” said Valerie Wong Fountain, head of family office resources partner and platform management at Morgan Stanley. “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.”

Morgan Stanley recently revealed that its financial advisors will have to generate more revenue in 2024 to retain current levels of take-home pay.

WIDER TALENT POOL

The report was conducted in collaboration with family office data firm Botoff Consulting and polled 400 U.S. family offices with more than three quarters of participating families having net assets of at least $500 million.

Along with becoming increasingly professional, strategic, and proactive in addressing family needs, family offices need talent with enhanced skill sets and seeking this in a wider pool.

The research also discovered that women comprise nearly one-third of executive roles in family offices, outpacing U.S. corporate data for women in C-suite and leadership roles.

The full report is on the Morgan Stanley website.