The US still holds a lead worldwide when it comes to compensation, although Asia has the highest range of salaries. finews.asia takes a look.
It might come as a surprise to some, but the term family office, at least in English, appears to be a uniquely American creation.
That, anyway, appears to be one of the takeaways from a joint report (registration required) drafted by KPMG Private Enterprises and Agreus, a recruitment consultancy specific to the industry. According to them, the family of eponymous financier John Pierpoint Morgan first started using the term a year after his death in 1838.
It was then popularized by the Rockefeller family four decades later and the concept has now grown to encompass 20,000 family offices, of which 3-6,000 are based in the US alone.
Conceptual Struggle
But almost from inception, many of them have struggled when it comes to compensating employees who are not actual family members.
«To add to the pressure, most of the professionals that family offices search for have backgrounds in the very benchmarked environment of professional services and investment banking and are accustomed to a consistent and familiar compensation structure,» the authors of the report indicate.
That is what prompted the two organizations to draft a benchmark report for 2023 that takes a closer look at salaries, careers, and demographics for those types of institutions around the world. And with more than 650 single-family office professionals participating, the 2023 report holds one of the world’s largest datasets on specific industry compensation levels.
Daydreaming of Escape
The report also comes at a very timely juncture given that dyed-in-the-wool bankers and finance professionals are increasingly apt to indulge in escapist daydreams because of near-permanent industry restructuring and increasing compliance burdens that often lead to barely tolerable administrative complexities.
The thought of moving to a smaller, more nimble institution is often seen as the veritable light at the end of the tunnel, particularly if they get comparable levels of pay and, of course, bonuses.
When it comes to money, one of the key findings of the report was that 58 percent of family office employees internationally saw their compensation increase in 2022. Employment opportunities also increased, with 41 percent of all institutions expanding the size of their team, with roughly the same proportion intending to do so this year.
US Leadership
Still, the key point for any banker will be how much they can expect to get. Here the US, as the most mature market in the world with the highest concentration of family offices, continues to lead. When it comes to take-home pay, a family office CEO can expect to get $264,000-330,000 annually, with an additional bonus of about a fifth to almost a third on top of that.
Still, there are others who get paid even more at those very same institutions. According to the report, 39 percent of chief investment officers get paid more than $1 million every year. Still, a very significant proportion of CEOs do not have to feel too bad about that, as almost 13 percent of them also get more than $1 million annually.
In Asia, the situation is slightly different. That salary bands are the widest, with the typical CEO taking home from just below $120,000 and going all the way to $370,000. Singapore has the largest share of regional family offices at 59 percent and an interesting facet of the findings is that the chair gets paid significantly more than any other officers, unlike in other regions, which makes one think they are more likely to be external employees that are not direct family members.
Double Bonus
The Middle East is also somewhat atypical. Annual compensation lies between $264,00-330,000, although half of them can earn 200 percent more than that as an additional bonus. Also of note is that more than three-quarters of chief financial officers fall into the same or higher pay bands as the CEOs do, as do half of the region’s chief operating officers.
In the UK, the typical family office CEO gets paid between $250,000-340,000 in salary, with an additional bonus of up to half that on top. Here the chief investment officer is paid roughly the same, while internal legal counsel gets more annually than both. Another noteworthy feature is the compensation of the chair. Exactly half have the highest pay bands of all officers, which seems to suggest the ones at the top are not family members, while those on the other end, at relatively paltry thresholds, suggest the exact opposite.
Last and Least
Europe brings up the tail of the major regions, with salaries for CEOs falling between $216,000-288,000, a relatively modest amount compared with other regions. Bonuses are also lower and usually comprise about one-fifth to almost a third of annual compensation.
Besides the UK, which comprises 62 percent of all European family offices, Switzerland ranks first with a market share of 8 percent, followed by Monaco at 6 percent.
Work Environment
But pay is not everything. Before any banker or finance professional tries to make a jump, they should probably consider what type of work environment they will be getting into. One of the key findings of the report was that slightly more than a quarter of family offices managed between $250-500 million dollars and just 6 percent managed more than $5 billion.
They also remain indisputably male, with only a fifth of family office professionals identifying as female. The UK had a higher percentage of female CEOs at 37 percent than other regions while Asia went completely the other way. There, all CEOs are male.
These are also not big places to work at, which is another consideration for corporate types. When it came to the size of the actual teams, 31 percent of the institutions surveyed had less than 5 employees and a quarter have more than 20.
