Family Offices operate in a distinctive environment where compensation decisions extend beyond performance metrics and job descriptions. Unlike corporate structures with standardised pay frameworks, Family Offices are often shaped by legacy, loyalty, and highly personal dynamics. This makes compensation decisions complex and compensation missteps costly.
Compensation structures must align with the purpose of the Family Office. In order to construct the right compensation, you need to be aware of the purpose.
From underpaying trusted, long-serving employees to overcompensating hires who never quite fit, mistakes can undermine morale, retention, and disrupt long-term stability. As a leading expert in Family Office talent and compensation, in this article, we explore the five most common compensation mistakes and how to avoid them.
Compensation Challenges
Benchmarking compensation within Family Offices presents distinct challenges due to the limited availability of comparable data. Unlike large corporations with standardised and publicly available pay structures, Family Offices operate in private and highly confidential environments, making it difficult to access accurate market benchmarks.
At the same time, many Family Offices aim to attract top-tier talent from financial and professional services sectors, industries where competitive compensation is the norm. Yet, many Family Office Principals have generated their wealth in sectors such as manufacturing or retail, where compensation structures differ significantly. As a result, they may lack familiarity with market expectations in other industries, making it harder to establish fair, competitive, and aligned remuneration strategies.
The Mistakes
1) Underpaying Legacy Employees Out of Loyalty or Assumption
The Issue:
Founding team members or long trusted associates, often friends or early hires, frequently remain outdated on compensation packages. While loyalty is admirable, assuming they are content can backfire.
The Impact:
Pay disparity between new and legacy hires can lead to contention and resentment. Over time, it can lead to attrition and a loss of irreplaceable institutional knowledge.
The Solution:
Conduct regular compensation benchmarking and performance reviews. Agreus helps Family Offices evaluate historical pay structures in the context of today’s market, ensuring loyalty is rewarded fairly.
2) Overcompensating the Wrong Hires
The Issue:
In an attempt to secure corporate talent, some Family Offices offer inflated salaries and benefits, only to discover that the individual is ill-suited to the values and culture of a Family Office.
The Impact:
Misaligned hires often fail to integrate, affecting team morale and leading to expensive turnover.
The Solution:
Prioritise cultural alignment as much as technical competence. Agreus evaluates both cultural fit and financial fairness, ensuring compensation packages are proportionate and sustainable.
3) Lack of a Structured Compensation Strategy
The Issue:
Compensation decisions are often made informally, shaped by relationships, emotion, or hearsay, rather than data.
The Impact:
Inconsistency in pay can lead to internal inequality, confusion, and risks alienating both current and future hires.
The Solution:
Develop a formal remuneration framework that aligns with the Family Office’s vision, maturity level, and operating model. Agreus can address this challenge by using extensive industry knowledge and access to proprietary data to help Family Offices overcome these hurdles and make informed decisions. You can find more information about the Compensation consulting service we offer and the benefits it offers on our website.
4) Neglecting to Offer Long-term Incentive plans (LTIPs)
The Issue:
Many Family Offices overlook LTIPs, such as carried interest or deferred bonuses, focusing solely on base salary. In our 2023 report, we found that only a shocking 23% of Family Office professionals receive a Long-term Incentive Plan. Yet long-term incentives are fundamental in an industry built on longevity.
The Impact:
Without meaningful long-term rewards like carried interest or stock options, top talent may feel undervalued and look elsewhere.
The Solution:
Incentives do not need to be excessive, but they should be meaningful. Agreus can help you design retention-led solutions, from discretionary bonuses to LTIP that reward loyalty and performance over time.
LTIPs are also a great way to align the interests of the Family with those of the employee.
5) Ignoring Market and Regional Benchmarks
The Issue:
Using generic or outdated compensation data, especially not tailored to Family Offices, can lead to misinformed decisions, either underpaying or overpaying for roles.
The Impact:
This can limit competitiveness in hiring or create inflated expectations within the team.
The Solution:
To navigate the complexities of Family Office compensation, it's essential to use industry-specific tools such as the Agreus and KPMG Global Family Office Compensation Benchmark Report, designed exclusively for the Family Office community. It offers invaluable insight across roles, regions, and structures to support fair and strategic pay decisions.
Agreus is now developing the 2025 edition in partnership with KPMG Private Enterprise. This comprehensive study aims to bring much-needed transparency to the often opaque world of Family Office compensation by collecting data across roles, regions, and structures. It enables Family Offices to attract, retain, and reward top-tier talent with confidence.
The 2023 Global Family Office Compensation Benchmark Report, was built on insights from over 650 professionals and more than 13 years of proprietary data gathered by Agreus. It served as a vital benchmark for Family Offices around the world to standardise their pay practices, offering region-specific insights to reflect the nuances of each jurisdiction.
You can now directly contribute to the depth and accuracy of the 2025 report by participating in the survey.
Getting Compensation Right Is a Strategic Advantage
Compensation missteps do more than cost you money, they risk trust, culture, and stability. In close-knit Family Offices, even minor disparities can have ripple effects on governance and long-term performance. But these mistakes are preventable.
By embracing a data-led approach and seeking advice from Family Office specialists, Family Offices can ensure they are attracting, rewarding, and retaining the right people, now and into the future.
Agreus offers more than just data. With over 15 years of Family Office expertise, we bring invaluable insight, cultural understanding, and practical strategies that turn compensation into a competitive advantage.
To avoid these common pitfalls and build a compensation strategy that attracts and retains the right talent, contact us for a tailored conversation.