Why culture and career development matter at a family office
No company, small or large, can win over the long run without energised employees who believe in the mission and understand how to achieve it
WRITTEN JULY 2020
The world of family offices is often thought of as the pinnacle for many within the wealth management industry. Whether it’s a single family office (SFO) or multi-family office (MFO), the chance to work on larger mandates for clients with more complex, multi-jurisdictional affairs, piques the interest of many.
For many, the industry lives up to expectations, and there are large numbers of people who have dedicated their careers to working with UHNW families, but for some the shine wears off after a couple of years. This isn’t good for the family they work for, or indeed for the industry, as a great deal of specialist knowledge is lost. Within wealth management and the discreet world of family offices, consistency and tenure are generally good things. So what are the challenges?
Each office is different
There is the old adage that “once you’ve seen one family office, you’ve seen one family office”. I think that’s generally true. Whilst many of the investment offices I’ve met seem to focus on investment management, real estate, and private equity, they invest in different sectors or with very different strategies, and so they aren’t all the same.
However, where I think offices differ the most are in their culture. Some have a very active principal, at others the family are very hands off. However, there are challenges in both scenarios. In the first scenario, the “risks” are around personal chemistry and whether senior employees have real autonomy. In the second scenario, whilst things can often start out rosy, motivation can slip quite quickly if the employee feels their principal isn’t that interested. It’s actually a very hard balance to find, though, as mentioned, many relationships work very well.
The challenge for many offices, however, is that they aren’t very large in any one department. How many people look after investments in each office? How many lawyers are there? Lifestyle managers and PAs? How many people manage private assets? Clearly MFOs have an advantage over SFOs where each department can be staffed by relatively few people, and career progression can be hard to come by.
Where many of us misunderstand the labour market is that we assume that people are always on a journey and are never happy with their current destination. Many are very happy with their role and would be happy not to progress again, particularly if this involves relocation, but some will want progression and all want recognition. Others will enjoy building a very close relationship with a particular family. Regardless, it’s important that leaders and families work hard to ensure there is a recognition and appraisal structure in place. Not only does “what gets measured gets done” apply, but in my experience most high quality employees enjoy being appraised.
In an article we wrote some time ago about culture and values we identified three positive outcomes of clearly defining a firm’s culture. These are particularly pertinent for firms managing external clients, namely:
- An improvement in how they treat customers and therefore, assuming the business is client centric, they will retain and attract customers easier
- A well trained and engaged workforce that demonstrates the same behaviours as a quality management team, and implements their values, will be more successful, and therefore businesses will grow quicker. Relationships with customers and suppliers will flourish making the business more dynamic
- By encouraging positive behaviours, and by feeling more engaged, colleagues will communicate better and be more willing to share best practice
Family offices work very hard to identify and attract talent, and it’s important that they also pull the right levers to retain their valuable staff.
For more information on Fram and how we may help you, please don’t hesitate to contact me on 01525 864 372 or email email@example.com
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