The 2022 Global Family Office Community Retreat in the South of France

by Agreus Co-Founder, Paul Westall.

As the world began to hear and deal with the news of the passing of Her Majesty, Queen Elizabeth II, I was on my way to the annual Global Family Office Community Retreat held in the South of France.

While we spent much of the weekend and first part of this week discussing Queen Elizabeth’s magnificent reign, achievements and the impact both have had on the UK and many parts of the world, we continued with our agenda which was to discuss the Future of Family Office.

With more than 50 family members and Principals gathered to discuss the next five years of Family Office, there was much to discuss and I thought I would share with you our key takeaways.

1. New Investments:

Every Family Office is as different as the family behind them but some of the key areas of interest at the moment include AgriTech, Aerospace and Venture Capital with a particular interest on start-ups and impact. This follows on from a year of incredible interest in Private Equity which has required a focus on more analysts than ever before.

Hiring needs have changed to meet the demand for new and niche asset classes but they have changed for a variety of reasons.

2. Hiring Needs:

While 2021 was all about organising teams and transactions in an era of uncertainty, 2022 is all about finding Investment, Legal and Compliance staff to deal with their increased investment appetites, potentially impending regulations and ongoing professionalisation.

In the last year, Family Offices have required Legal Counsel to professionalise and move towards transparency in a post-Archegos era. They are seeking the help of Compliance Managers; both internally and externally, to safeguard against impending regulation particularly in the US and Investment Analysts to deal with increasingly diversified investment portfolios. Something more than 60% of Family Offices have moved to since the coronavirus pandemic. While new and niche asset classes require new investment analysts, Family Offices continue to invest in areas with precedent and a history of high returns.

3. Talent Shortage:

While every headline refers to the fact that there are indeed ‘more opportunities than candidates for the first time since records began’, there is not necessarily a talent shortage. There is a great deal of incredible talent, they are just not perhaps readily available or in the locations that Family offices need them. This is where global mobility is really interesting and something the USA is doing incredibly well, matching candidates and opportunities in different states but while Brexit continues to make this difficult in much of the UK and Europe, these are two other things that Family Offices can do to attract and retain talent:

• The first is making job vacancies truly attractive. This does not mean selling a lifestyle full of private assets and big bonuses, it is about compromising on the things that Family Office Principals are typically averse to. This includes hybrid or flexible working. For many candidates, the pandemic has re-shaped their priorities. Items that were once considered luxury or nice-to-have are now considered non-negotiables and Family Offices need to ensure they are doing everything they can to attract the talent willing to make a move.
• The second is focusing heavily on retention. Family Offices who already have a strong workforce and critical team members must focus on retaining them as naturally, there are more opportunities than ever before and you never quite know what competitor Family Offices are offering.

This includes ensuring your compensation is benchmarked, you are offering training and development, a voice in decision-making – where necessary and applicable and most importantly, long-term incentive plans. Offering a reason for your Family Office professionals to stay with you for the long-term. This includes the likes of carried interest, co-investing and deferred loans.

4. The Great Wealth Transfer:
   

In my opinion this is the biggest issue facing Family Offices right now. Not only do Family Office Principals have to strategically plan for today but they must ensure there is a successor and a succession plan in place to prepare for tomorrow.

Principals do not usually like to think about their replacements as they have often built their Family Office and family wealth or at least sustained it for a great period of time. Not only is this alone a difficult conversation but there are two parts of the discussion that often get forgotten.

While many Leaders think of succession planning as having a suitable leader in place to replace them and continue their legacy, what many neglect is that you must also ensure you have a successful leadership team in place to support your successor.

This is something the Royal Family have done tremendously well. We have created a guide to Succession Planning, inspired by Her Majesty, Queen Elizabeth II and will be sharing this following the period of Royal Mourning.

5. Regulation:

This conversation started with Archegos which is not the first big scandal to hit the Family Office space and it certainly will not be the last. What it is also not, is an inherent Family Office problem and certainly not one the entire community should be held accountable for.

When you are the wealth creator you often have a larger risk appetite, you have nothing to lose but everything to gain but while the first generation are often prone to more aggressive risk taking, they are certainly not on the level of Archegos which is once again a rarity. It is also a far cry from the second, third and fourth generations we see today who are far more risk averse. The current generation of leaders are very careful in not only preserving their wealth but ensuring it makes an impact inside and outside of their family.

Regulation and disclosure would be terrible for Family Offices. Their very existence relies upon their confidentiality and not only would this go against their very DNA but it would unpick the extraordinary effort that went into passing the Dodd-Frank Act some 10 years ago. Perhaps the biggest loss of all would be how it could deter UHNWI’s and Families from establishing Family Offices. The most influential and fluid investors today and the very entities that form the backbone of investments in technology, pharmaceuticals, making a social impact and delivering change in the world we live in. The very entities that are reinjecting life back into the global economy by supporting the SMEs.

Ultimately, Family Offices are facing a wide variety of challenges today. Principals are anticipating more regulation; they are struggling to find and retain the top tier of talent and they have the incredible pressure placed upon them to find the ideal successor during what is being described as the Greatest Transfer of Wealth the world has ever seen.

That being said, there are a lot of positives to take away from the retreat. Principals are more open-minded than they ever have been before, investing in new and niche asset classes in a bid to not just diversify their portfolios but make a tremendous impact. They are fearful of greater regulation but they are preparing for a worst-case scenario, arming their teams with Legal, Compliance and Trust professionals to fight their way through any changes that come their way resulting in a remarkable era of professionalisation.

Finally, while having to compete with more organisations and fellow Family Offices for the very best talent, Family Offices are placing a new focus on benchmarking compensation, learning and development and doing everything they can to embed professionals into their Family Office for the long-term. Something that from our experience, can only guarantee success.