Someone once told me that single-family offices (SFOs) are like French Bourbon Kings. They might all be called by the same name, but each of them couldn’t be more different.
The SFOs I’ve worked with have certainly all had their own unique set of recruitment criteria.
Some are new, with young principals and small families, who initially need one experienced hire who is able to develop a lasting strategy. Others are into their fifth or sixth generation and support a large number of beneficiaries. They need best-in-class officers and are ready to commit the resources required to build a robust team around them. Some SFOs were created to support a specific cause or foundation and they want to hire talent out of the charity or public sectors, whilst others straddle multiple geographies or continents, and need to build a diverse polyglot office.
So, if you’re hiring for an SFO, what should you bear in mind?
A good candidate will be someone who understands smaller firms. If they’ve come from a large organisation, say a Goldman Sachs or one of the Big Four, they could be used to having a large fixed salary, a long-term incentive plan, a bonus, benefits, and so on. But ‘comp’ is not the only thing they might have become accustomed to.
When hiring for a head of finance role recently, I interviewed an MD from Citi who was not put off by the fact that the remuneration would be slightly less than she was paid in her current role. And she had all the attributes to be an excellent hire. However, when I explained that the team was ‘just’ 10 people, that her hours would not always be fixed, and that support would be excellent but finite, it scared her off. Finding the right fit in the world of SFOs is never just a numbers game.
What, then, should families pay a head of a family office, CIO, chief of staff, COO, CFO, etc? The research we’ve done has come up with 26 different structures, including co-investments, carry and performance-linked bonuses that mirror all the remuneration possibilities and pay scales found in the City. But for those who thrive in these environments, money is not, and should never be, the primary driver.
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The more successful hires are attracted by the autonomy of an SFO and the personal satisfaction of having extremely close relationships with the families themselves.
[See also: The best family office service advisers]
It is no coincidence that the most successful SFOs have teams that have been in place for many years, often decades. These executives are resourceful and are paid well; they also become excellent cultural leads for both the family and the team around them.
They say you can’t choose your family, but you can absolutely choose who manages your family’s affairs. Just make sure you choose them well.
Billy Stephenson is the managing director of Stephenson Executive Search
[See also: Spear’s 500: the 10th edition]
