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R ESE AR CH


The


HUMAN CAPITAL


climbing cost of (human) capital


As the family office space matures, so does the recruitment and retainment of top talent from outside the family, driven by competitive C-suite salaries and bonuses—although their ranks remain stubbornly male-dominated


M


ore complex investments, professionalisation of the sector, and competition for talent is driving hefty pay increases for family office C-suite employees this year.


Family office chief executives had a pay rise of


nearly 10% in 2017, according to The Global Family Office Report 2017 (GFOR), as investments become more complex and need top teams to manage them. The average chief executive base salary is $367,000


this year, compared with $334,000 in 2016. Chief operations officers got the biggest average raise (10%), pocketing $215,000 base in 2017 compared with $195,000 the year before. Chief investment officers were paid $314,000, while chief financial officers earned $213,000. Susan Ward, managing director of UK global


family offices at UBS, says since the global financial crisis, family offices are doing less outsourcing and instead want in-house expertise. They are also taking on higher-risk assets with greater complexity in the search for elusive returns. “Willingness to spend [on staff] is being driven by


family offices moving into asset classes they are not necessarily comfortable with, as yield is hard to find.


8 CAMPDENFB.COM


They need to pay the right people to do that because they need to manage that risk,” Ward says. Also driving salary growth is the increasing


demands of regulations, levels of disclosure, and tax compliance, Ward says. Family offices in North America had the highest


returns during 2016, and their chief executives were rewarded accordingly the following year, topping the regional pay rankings earning a base average salary of $411,000. They also received the highest proportionate bonuses, 54% of base, bringing total compensation to $631,000. Their European counterparts grossed $497,000, while chief executives in Asia-Pacific and emerging markets earned $362,000 and $408,000 respectively. Josh Roach, chief investment officer at the US-


based Lloyd Capital Partners, says family offices are realising they need to pay market rate for their C-suites, and he expected salary growth to continue. “Family offices (FOs) looking to make direct


investments really need the skill-set and connectivity of a private equity professional—and we all know how those pay packages work,” Roach says. “I do not see it so much as a correlation with


investment gains, but rather a need to hire the right person with the requisite skills. This is not an easy


ISSUE 72 SUPPLEMENT | 2017


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