Informing Solutions to Today’s Talent Landscape: Morgan Stanley Publishes Single Family Office Compensation Report

Morgan Stanley's Single Family Office Advisory group today released its third bi-annual compensation report in collaboration with Botoff Consulting, which presents survey findings along with trends impacting compensation in family offices. The findings contain responses from over 400 single family offices, with 77 percent of participant families having a total net worth of over $500 million. Reporting data on 1,728 employees, the trusted data is meant to serve as a reference to help shape all-important staffing decisions and strategy for family office clients.

Against today’s competitive talent backdrop, more than half of family offices report recruiting challenges across the board, specifically with accounting, tax, investment and support roles. More than 90 percent of firms report that they gave employees salary increases in the previous 12 months. Salary increases in family offices continue to outpace the broader U.S. market and the use of incentive compensation in family offices remains strong, with bonuses at or above the prior year for 82 percent of staff.

“Employers across nearly any industry today can see that the talent and compensation landscape is rapidly evolving. Our research amplifies the importance of having data that breaks down trends through a lens specific to family offices,” said Valerie Wong Fountain, Head of Family Office Resources Partner and Platform Management at Morgan Stanley. “Evaluating the factors that make each firm unique and drawing insights on how they impact compensation, this data is meant to empower families and family offices to make informed decisions. With access to benchmarking data, family offices can evaluate their compensation strategies to recruit and retain adept talent, and ultimately drive long-term success for the family.”

Additional key findings in the report include:

• Women comprise nearly one-third of executive roles in family offices, outpacing U.S. corporate data for women in C-suite and leadership roles.
• The use of Long-Term Incentive (LTI) compensation plans continues to grow, with 59 percent of all respondents reporting using LTI plans. This increases with firm AUM (47 percent of firms with under $1B AUM, 72 percent of firms with over $1B AUM).
• 80 percent of family offices utilize annual incentive and/or bonus plans.
• While most geographic premiums continue to align with historical trends, some downward shifting of premia has been observed in traditional “high-cost” markets.
• Other markets have experienced increasing competition for talent and compensation premiums resulting from family office relocation or establishment (notably in Florida, Nevada and Wyoming).

“We deeply appreciate the amazing responsiveness, with more than 400 families participating in this survey,” said Trish Botoff, Founder and Managing Principal of Botoff Consulting. “Our focus remains on expanding the depth and effectiveness of compensation data to empower principals and their teams to assess compensation, to align goals, and to make informed decisions to reward, retain, and motivate family office talent.”

Family offices are becoming increasingly professional, strategic and proactive in addressing family needs. They are incorporating more advanced platforms and systems, and now require staff with more sophisticated skill sets. To meet this demand, family offices are recruiting from a steadily widening pool of talent to fill a broad spectrum of leadership and functional positions, as well as growing in-house investment teams. As such, family offices need to offer competitive compensation packages to attract and retain top talent.

“What we’re seeing today is an increasing sophistication and formalization of family office structures, and it’s important for compensation plans to reflect this,” added Fountain. “The growing use of LTI plans is aiding in attracting that top talent, especially for offices that have in-house investment teams. Practices like deferred incentive compensation, co-investment opportunities, carried interest, profit sharing and equity can help keep talent who are excited by and invested in overall success for the family.”

Participants reported that 94 percent of staff had received or would receive an annual salary increase in 2023, outpacing the general U.S. market. The majority of single family offices surveyed reported planned salary increases of five percent or more – well above the national median, which is at the highest level in 20 years as a result of inflation and labor shortages.

The report also discusses the key drivers of compensation and what factors family offices should evaluate to contextualize the benchmarking data, including geography, competing industries, performance, firm characteristics, and the position itself.

The complete study, plus more information on how it was conducted, can be found here: Single Family Office Compensation: A Guide | Morgan Stanley

Morgan Stanley's Single Family Office Advisory is part of Signature Access within Family Office Resources, a platform of specialized services for ultra high net worth clients to enhance Morgan Stanley's Wealth Management capabilities. Morgan Stanley Private Wealth Management is the division within Morgan Stanley Wealth Management that is exclusively focused on the ultra high net worth client segment. By providing advice founded on a culture of excellence and driven by global insight, Morgan Stanley Private Wealth Management is devoted to helping clients preserve and grow their financial, family and social capital.

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