2020 was about survival, 2021 was about revival and now, 2022 will be all about growth. Stealth mode if you like.
The new normal has been in town for quite some time so while we focus less on economic, political or social recovery, we can start planning for real success and with people being the key to that success, I thought I would share the top recruitment trends that I expect to see in the Family Office world this year.
Here’s a hint: It doesn’t involve Furlough.
We established Agreus following the economic crash of 2008. While the world was in disarray, affluent families began to take control of their own destinies, disenchanted with banks and doubting of service providers and it led to the birth of Family Offices as we know them today. We saw an opportunity in a downfall and together with Family Offices, began to see huge growth.
We are seeing the very same pattern appear today with some of the world’s major financial centres experiencing tremendous post-pandemic growth and once again, Family Offices are central to that growth.
In 2021, the Family Office community experienced a great deal of change. We witnessed a surge in Private Equity allocations, an increase in Private Investments across new and nice asset classes, a push to IPOs and a record-number of intergenerational wealth transfers.
All of these factors alongside post-pandemic economic growth led to the creation of more wealth and as a result, more Family Offices. It also mean, that as a community, we needed more talented Family Office professionals than ever before. We needed more investment analysts to oversee new asset classes, accounting professionals to manage these transactions, trust professionals to navigate talk of increased regulation and leaders to pave the way.
The surge in demand for talented Family Office professionals coincided with what was becoming an increasingly candidate-short market and as the shortage of skilled professionals continues into 2022, I predict this will be the year of attraction.
Leaders will do everything they can to attract the right talent to their Family Offices.
This will mean:
– Offering attractive starting salaries in line with market benchmarks
– Offering longer-term incentives such as co-investment opportunities
– Pledging resources towards achieving a social impact.
As Family Offices ramp up their hiring efforts to attract the very best staff, they will also place a heavy focus on retention. Retaining the exceptional staff they already have in-house.
The pandemic, while offering a platform for greater Family Office growth, served as a wake-up call for professionals. Work-life balance became ever-more important and so commuting times, flexibility and workplace culture all became vital elements of any prospective role. With remote working also taking over traditional working, professionals thought deeply about where they worked with state taxes, living space and working environment all factors in pushing many professionals away from the financial centres they once thrived in.
This led to what many have called the great resignation. In November 2021 alone, 4.5M professionals resigned in America according to the US Government. The highest monthly record in more than 20 years and a similar pattern has followed in the Family Office world with wrong hires not returning to the office after the pandemic.
With more opportunities than candidates and professionals willing to make a move to better their work-life balance, Family Office Leaders will be doing everything they can to retain the top talent.
This will mean:
– Upskilling through regular training
– Awarding long-term incentive plans
– Offering balance – both in terms of where you work and how you work and
– Growth. Not just mapping out earning potential but potential growth within the organisation.
3) Discretionary Bonuses with strings attached.
Discretionary bonuses have always been the most popular performance bonus in Family Offices. In fact, according to a survey we created in 2020, 78% of Family Offices in the UK and 74% of Family Offices in the US opt for them as a way of rewarding their staff but until recently, they haven’t worked alone. 17% of UK-based and 20% of US-based Family Offices also offered formulaic bonuses which are more structured, data-driven bonuses awarded for performance over a certain threshold and most commonly given to Investment Professionals.
In 2021 however, due to the surge in Private Equity investments and the popularity of niche asset classes such as Crypto, Family Office Leaders for the first time opted to use discretionary bonuses almost exclusively. Even for their investment professionals. After all, these individuals are responsible for a broad range of assets, each of which necessitate a unique set of requirements from the length of time, commitment and contribution involved, the skill-set and specialism required and the level of risk it calls for. All of these idiosyncrasies make valuing assets an individual and laborious task but awarding a bonus based on those valuations is near impossible.
Discretionary bonuses allow Family Office Leaders to incentivise their staff without having to navigate a complicated bonus structure and to improve this process further, in 2022 I believe we will see a move to incorporate metrics into discretionary bonuses based on everything from financial target met to deliverables.
This will mean:
Rather than Investment Professionals having formulas and Operational Staff given non-objective praise, all professionals within the Family Office environment will have a comprehensive list of deliverables, targets and objectives to meet and they will be rewarded accordingly. This will also help to align talent over a longer period of time, strengthening Family Office retention initiatives this year.
4) Doing things right.
2021 in the Family Office Community, was a year that obsessed over its ethics, regulation and risk and so I believe 2022 will be about doing things right.
From toughening up online security to improving their reputations and hiring the right people first time, Family Offices will be bringing this mission to do things correctly into the hiring process. Leaders will focus on hiring trusted, loyal and admirable professionals who are fully aligned with the vision of the Family Office over a long period of time.
This will mean:
– Thorough vetting of potential candidates
– A focus on structuring resources correctly to allow for greater scrutiny of resources
– Hiring for cultural fit, the first time and
– Not being afraid to take time to make the right decision.
These are my top predictions for the Family Office world of recruitment in 2022. What are yours?