The number of family offices is increasing worldwide, driven by a growing proportion of wealthy families who want to maintain control over their financial assets and safeguard their family fortune. Within these structures, financial professionals play an increasingly important role. Beyond their technical skills, they must be able to earn the trust of their employers.

The world's first family office is believed to have been founded by John D. Rockefeller Sr. in 1882 to grow the family fortune. Today, wealthy individuals worldwide are organizing themselves by creating their own offices to manage their assets. It's important to distinguish between "multi-family offices," which offer families the opportunity to pool their wealth management, and "single" or "mono" family offices, autonomous entities designed to manage the wealth of a single family, however large it may be. In practice, families often decide to create their own structure when they have at least €100 million in assets under management. Within multi-family offices, roles are clearly defined, even standardized, and talent is often drawn from private banking. Typically, these offices include portfolio managers, investment analysts, wealth management engineers, and financial advisors.

A trusted place within the family

For single-family offices, however, roles can be more fluid. “ Very often, the creation of a family office follows the sale of a company or business by its founder,” explains Martin Louvet, senior advisor at Vauban Executive Search, a recruitment firm. “The proceeds from this sale allow for the creation of the family office, generally focused on different investment sectors. ” The management objective is clear: to ensure the long-term viability and growth of the proceeds from this sale, in order to pass them on to future generations. In this case, the CFO or general secretary who, throughout their professional career, has supported the head of the successful company, is often asked to continue their role within the family office.

A trusted advisor, it's not uncommon for him to take the helm of the newly formed entity. " The former general secretary of the company often continues his role within the family office," observes Frederick Crot, president of AFFO, the French Family Office Association. "He possesses a comprehensive knowledge of the family's history, sometimes spanning several generations. He also enjoys the family's trust. He is often the one who handles the asset, legal, and tax structuring of the new entity ." The profiles of these right-hand men to the CEO are varied. While many come from finance roles (administrative and financial manager or CFO), their academic backgrounds are not uniform. They may have climbed the ranks by supporting the growth of the family business.

A growing number of family offices

  • The increase in wealth accumulation by wealthy individuals worldwide has led to a sharp rise in the number of family offices. 
  • According to data compiled by MordorIntelligence, a business intelligence specialist, there were 7,300 family offices worldwide at the end of 2019, representing a 38% increase in just two years. North America alone accounts for 3,100 family offices, while Europe has 2,300. Asia, with its 1,300 family offices, has also seen significant growth in recent years. 
  • For many wealthy families, the 2009 financial crisis marked a real turning point. After witnessing the collapse of boutique asset managers, they chose to form family offices to secure their assets themselves, while continuing to rely on asset managers and private bankers. 
  • According to several sources, there are currently some 8,000 family offices worldwide.

A paradigm shift

According to the adage "live happily, live discreetly," these structures were, until very recently, invested primarily in real estate and tangible assets (art, vineyards, etc.). Cash and financial investments were then added to complete the allocation, while the preferred management style was that of a prudent, conservative investor. However, in recent years, experts have observed a profound shift in their approach to investing. " Families are increasingly active in managing their financial assets and choosing their investments," notes Frederick Crot. "Younger generations, in particular, are taking ownership of the financial aspect, imbuing it with their values ​​and convictions. " He emphasizes that these families are inherently close to unlisted companies and prefer to invest directly to support an organization's growth. This observation is widely shared. " Families are now taking more risks by investing in innovative companies and startups," emphasizes Martin Louvet. "This translates into a desire for more personalized and dynamic management than before ." “This risk-taking, far removed from the logic of rent-seeking, translates into a search for talent specializing in investment. “ Today, we have requests for profiles such as M&A or TS ,” explains Martin Louvet.

"Few talented individuals who have come to work in family offices then turn back to the formality and immediate performance demands of private banking."

Evelyne Brugère, Executive Vice-President, French Association of Family Offices (AFFO)

Private banking and M&A profiles

In March 2023, Dentressangle Capital, a family office formed following the 2015 sale of the transport group Norbert Dentressangle, recruited Arnault Tesnière as Investment Director. A seasoned M&A professional, he gained experience at Rallye, the holding company of the Casino Group, where he participated in numerous mergers and acquisitions. He also has experience working for a private equity fund specializing in small-cap companies. Similarly, Creadev, the investment fund of the Mulliez family (Auchan, Leroy Merlin), has established a particularly well-developed investment team. With an annual investment capacity of €250 million, the entity makes five to ten new investments each year. Creadev is therefore highly structured internally, with investment teams operating in Asia, Africa, the United States, and Europe. Within these investment teams, which vary in size, are junior profiles with five to ten years of experience, coming from transaction services and M&A, and more experienced professionals capable of sourcing deals. In this case, sector-specific knowledge of the market targeted by the family is particularly sought after. Their skill set must then include sourcing companies, valuation, pre-acquisition, and financial modeling of expected profitability. Although supported by in-house legal teams and advisors, they must also possess a strong legal background.

"Families are now taking more risks by investing in innovative companies and start-ups."

Martin Louvet, Senior advisor, Vauban Executive Search

A very long-term relationship

Beyond these technical skills, a culture of secrecy and discretion are two essential soft skills. Another prerequisite is mutual trust and an alignment of interests. “ To my knowledge, there’s no ‘transfer market’ within family offices,” explains Frederick Crot. “Indeed, a profile that suits one family for the same position will likely be completely unsuitable for another. ” In the event of a poor recruitment, the relationship ends very quickly. In fact, it’s impossible to fake it, as close ties with the family are inherent to the work of a financier. It’s therefore crucial to ensure that the new recruit shares the family’s values ​​and investment convictions. On the other hand, when both parties are in agreement, it’s often for a very long time. “ When a financier joins a family office, they stay for a very long time, even for their entire career ,” observes Evelyne Brugère, Executive Vice President of AFFO, the French Association of Family Offices.

What career development opportunities are available to these financial professionals? The role often evolves through the responsibilities assigned. " Over time, an investment specialist will be expected to manage a more substantial deal flow," explains Martin Louvet. They can then build a team and become a chief investment officer. "In this case, the CIO doesn't handle the deal vetting; they focus on portfolio construction through funds but also directly by investing in companies ," notes Frederick Crot.

A financial director or investment manager earns between 100,000 and 200,000 euros in salary

  • In Europe, the average salary of a family office CEO ranges from €200,000 to €260,000 gross per year. To this must be added bonuses that can reach up to 30% of the gross annual salary. This is according to a study by KPMG Agreus entitled "2023 Global Family Office Compensation Benchmark Report". 
  • The CEOs of these organizations are experienced, with an average age that is most often between 45 and 56 years old. They are mostly at the head of a small team (most often fewer than ten people). 
  • While the CEO role can encompass finance functions, purely financial positions also command high salary levels. According to KPMG Agreus data, the average salary for an investment manager or chief financial officer ranges from €100,000 to €200,000 gross per year. 
  • It should be noted that the highest salaries are in the United States, where a family office CEO earns between 240,000 and 300,000 euros gross annually, not including bonuses.

An answer to an increasingly strong quest for meaning

From the talent pool, the motivation to join these family-run firms lies in the very nature of the business, synonymous with long-term investment, far removed from the pursuit of immediate returns. " A family office doesn't need to go through the fundraising stage," explains Martin Louvet. "Furthermore, and unlike a fund, a family office can hold a portfolio stake for a longer period. " For a project they're passionate about, these firms are willing to dig deep into their pockets. Given that each family already has sufficient resources to maintain its lifestyle, each family office has its own distinct character, reflecting the family's affinity for a particular sector or philanthropic project. Some families are committed to education or the environment, while others develop a particular interest in art or real estate assets. While the salary level offered is largely in line with those offered in private banking or M&A, it is above all the agility afforded by the organization and the objectives pursued that attract talent. “ Within a family office, very strong bonds are formed,” concludes Evelyne Brugère. “From a human perspective, it’s an extremely enriching experience. Very few talented individuals go back to the formality and immediate performance demands of private banking. ” This certainly helps limit turnover in this sector…

Chloé Consigny for Option Finance

Published on July 13, 2023 at 11:30 AM