U.S.-based hedge fund professionals for the first time are showing considerable interest in working for family offices. This interest must be good news for family offices, as many consider finding and retaining top-level talent one of their primary challenges going forward.
Hunter Advisors, a retained executive search firm that specializes in the hedge fund, family office and endowment sectors, found in a survey of hedge fund portfolios managers and senior analysts that upward of 90% were interested in exploring opportunities at family offices, but that 75% had never spoken with a family office about employment, while only 10% were in active discussions.
Respondents expressed several concerns about working for a family office. One was the organization’s culture with its potential for nepotism, involvement of unqualified family members, family politics, and lack of autonomy and transparency. Another was the small scale of the family office compared with other investment firms, evidenced by constrained resources, lack of infrastructure and limited access to the sell-side. Finally, there was the perception that one’s career would plateau in the family office environment.
However, offsetting these concerns were the promise of long-term stability of capital that would enable them to look toward long-term growth of family assets; the opportunity to work with an accomplished and financially sophisticated family leader; and the prospect of stability of compensation and the opportunity to co-invest with the family.
Hunter Advisors, discussing survey results in the Family Office Association newsletter, said family offices that want to take advantage of the hedge fund talent pool must be willing to make accommodations: by being more visible and transparent to prospective hirees about the opportunities of managing family wealth; by professionalizing their operations in terms of offering autonomy, appropriate compensation and career development; and by innovating in order to order to overcome comparative disadvantages in the investment world.
Michael S. Fischer is a New York-based financial writer and editor and a frequent contributor to Wealth Manager.