Expanding family offices are finding themselves spoilt for choice in recruiting and retaining executive talent to help them navigate an increasingly complex and diversified investment space.
After a six-week pause, family offices have returned to pre-coronavirus lockdown levels of activity in hiring new staff, according to leading family office recruiter Agreus Group. Professionalised families were depending less on outside institutional advisers as they had in the past. They sought talented professionals as they entered ambitious direct and co-investment deals just as lockdown redundancies thrust skilled, experienced and connected candidates back onto the crowded job market.
Family Offices Investing in Venture Capital 2020, a new research study by Campden Wealth with SVB Financial Group, identified where families needed access to expertise—76% of family offices invested directly in companies and 26% sourced their own opportunities.
Co-investments made-up 19% of the average venture portfolio for a family office. Almost all (92%) of families surveyed invested alongside other families and/or venture funds to share expertise and due diligence. One family having expertise on staff that partner family offices did not could encourage in dealmaking and returns.
Nearly half (47%) of families engage in impact or environmental, social and corporate governance venture capital, the report said.
“Interest is growing, particularly amongst the next gen, and as family offices appreciate that returns are not necessarily compromised.”
Staffing requirements also evolved in step with the direction and demands of family offices investments. The Family Offices Investing in Venture Capital study reported 63% of family office principals said their capital allocation to venture will stay the same or increase, despite the coronavirus pandemic.
“However, family offices may deploy capital more slowly, place greater emphasis on quality managers, and move further towards sector diversification.”
CampdenFB spoke with Paul Westall (pictured above), director of the London and New York based family office recruiter Agreus Group, about the state of family office hiring disrupted by Covid-19. We asked Westall if family requirements and compensations for staff have changed in the aftermath.
How would you rate the activity in the family office job market at the moment compared to a year ago?
Up until the start of lockdown the family office recruitment was the busiest it had ever been. Naturally, there was a sudden stop to all activity as conducting interviews were the last thing on our client’s minds. There was a period of six-weeks from the start of lockdown where our clients held off all recruitment activity.
Once family offices adjusted to the change in situation globally there was a pick-up in activity. Two benefits that family offices structures have in common are total control and the ability to be a lot more nimble in your decision making.
We helped two new clients set up a family office from scratch during the lockdown and there has been an uplift in enquires from clients looking to set up for the first time, an increase from the same period in the previous year. The recruitment activity from already established family offices has only reached the same level as the previous year within the past four weeks. Prior to this, during lock down, the recruitment activity levels had dropped by 30%.
Are family offices making changes to their competitive offers to attract and retain top talent?
Over the 10 years we have been helping family offices with their resourcing and recruitment, they have made significant changes in order to make their compensation competitive to attract and retain top talent. The space has also become more professionalised.
Family offices are allocating larger portions of their assets to private equity investments and hence are attracting candidates from that background. These candidates have typically had more formulaic bonus structures as opposed to discretionary. However, it is important to note that we advise family offices to structure their compensation based on the purpose and objectives of the family office, so compensation can be very specific to each family office.
Are family offices trimming their recruitment drives in the face of rising operational costs and in this era of investment uncertainty?
Family offices have always been fairly lean with their team structures and we haven’t seen any drives to cut costs by trimming their recruitment. On the contrary we have seen family offices reacting to new opportunities and having to bring in additional expertise in order to have knowledge and talent inhouse. This has been a trend over the years where family offices are relying less on external advisers such as banks. The spate of recent redundancies have flooded the market with talented professionals who are now being selectively targeted by family offices.
Which skill sets and experiences are most in demand from family offices at the moment?
There is always a demand for finance and accounting staff with family offices however, there are no trends on recruitment currently. We are helping clients recruit across a wide range of skill sets from investment staff, accounting, operational and support.
Are family offices making progress in gender balance and diversity initiatives?
There is still a lack of gender balance and diversity within family offices. From our recent Global Family Office Compensation Benchmark Report it showed on average across the globe 70% of staff are male. This is more a reflection of the talent pool from which the staff are attracted. It is important to add that from our experience, family offices show no prejudices in this regard and recruit based on the cultural fit rather than gender. Some of the most successful family offices we work with are led by women.
Is the UK’s departure from the EU deterring European talents from seeking employment in UK family offices?
We aren’t seeing this as an issue at this stage. Language skills are always an advantage within family offices as the principals often have multijurisdictional projects, where additional language skills will only be a positive.
How are family offices adapting to staff working from home, if at all?
Family offices are all very different and each have approached this differently. Some have had staff in throughout the whole pandemic, where legally possible, whereas some are working fully remotely. I think going forward, the trend will be for a balance of both. There is still a need for face time and when working in a small team this can be easier to manage.