A surge in the number of billionaires has made Asian family offices an El Dorado for wealth managers lured by the prospect of bigger pay packages and more varied work.
What is behind the surge? Explosive wealth creation in Asia, where 814 billionaires grew their net worth by a third to $2.7 trillion, according to the latest UBS and PwC Billionaires Insights Report.Vincent Chui, head of Morgan Stanley’s wealth operations in Asia, told Straits Times in 2018 at least 10 relationship managers had left for family offices, scuppering plans to double their staff. Elsewhere, Tolaram Group, which runs a $500 million family office in Singapore, has hired former Millennium, Goldman Sachs and United Overseas Bank staff to manage $100 million of the family’s cash.
Other family offices in Asia have also poached talent from firms such as Deutsche Bank AG and Singapore sovereign wealth fund GIC, according to media reports.
And it isn’t hard to see how—families are able to offer more flexibility in compensation and incentive packages, whereas in larger institutions, hiring and retention is overseen by a human resources department with stricter rules on salary and bonuses.
Last year’s base annual salary for a family office chief investment officer and portfolio manager averaged $312,000 and $202,000 respectively, according to The Global Family Office Report 2018 by Campden Wealth. On top of it, the two positions got average bonus pay outs of 24% and 15%.
On average, a senior relationship manager at a private bank earned $169,000 in Singapore last year, according to the Robert Half Salary Guide.
However, a higher pay packet is not the only thing persuading wealth managers to jump ship—the prospect of more varied work, bigger influence in decision making and working directly on deals is also a huge motivation. Family offices require employees to have an incredible breadth of skill, which goes beyond just managing and investing assets—they run the family’s full financial well-being, including tax planning, governance, succession and philanthropy.
And this myriad of skills make these employees not only valuable, but also extremely rare, with families now finding themselves competing in order to attract and retain the talent required.
For family offices, benchmarking the firm’s compensation packages against competitors is one way to ensure it is an attractive option, while rewards systems can keep talent on board, says Catherine Grum, head of family office services at KPMG.
But with a shortage of experienced talent, to serve the burgeoning Asian family office space, families may find themselves having to pay out more than ever to attract, retain and support their staff or risk losing staff to rival family offices.