(Dow Jones) Family-office recruiters are seeing a pick-up in activity after a bad year and a half.
At the same time, some boutique headhunters are feeling more
pressure from national search firms with a new-found interest in this
potentially lucrative niche of wealth-management.
Family offices, which number a few thousand and cater to
families with hundreds of millions of dollars, are non-commercial
investment- and wealth-management outfits that typically serve the
descendents and charities of a single individual. Multifamily offices
are commercial entities, usually either investment advisers or trust
companies, that advise multiple high-net-worth families.
“Last year wasn’t a good year at all,” says Jeffrey Rankin,
founder of Lake Geneva, Wisc.-based Rankin Group, a firm that
specializes in executive searches for family offices. “Families had a
deer-in-the-headlights look for a good year and a half” after the
financial crisis of late 2008.
Industry research bears out this impression. In its 2008
survey of single-family offices, Wheaton, Ill.-based Family Wealth
Alliance, a consultancy to ultra-high-net-worth families, found that
recruiting senior staff with the requisite skills and experience was an
overarching priority. In its latest survey, recruiting had fallen off
the chart. Instead, family offices focused on cost cutting and fretted
about their viability as standalone entities.
Things seem to have improved in recent months, however.
Family offices, including some owned by the richest families in the
world, have tapped Rankin Group to fill vacancies or add new
capabilities.
“Families are realizing that they can’t stand pat and wait
for a recovery that may still be years off,” says Rankin. “They
understand that they have to make changes.
Business activity is still nowhere near pre-downturn levels.
In 2007, Rankin says his firm was scrambling to meet demand for
family-office professionals.
Linda Mack of Mack International, a Chicago-based search
firm that specializes in placing wealth managers, agrees. Business has
picked up this year, but it’s not as frenetic as it was in 2007 and
well into 2008, she says.
“In ’09, everybody was avoiding spending money. If they
didn’t absolutely have to replace someone, they didn’t,” says Mack,
referring pointedly to the single family-office realm. Among commercial
multi-client family offices recruiting was a bit brisker: “Anyone with
a good book of business who wanted to move, could”–though in the
darkest days of the downturn many experienced advisers held off for
fear of landing in the next Bear Stearns or Lehman Brothers, she adds.
Now, with organic recovery for the family-office-search
business in the air, Rankin sees another sore spot for boutiques, like
his and Mack’s, that traditionally held sway in the space. “The search
business has been commoditized to a degree I’ve never seen before,” he
says.
The perception that one executive search is much like
another has prompted several big-name headhunters-he names Los
Angeles-based Korn Ferry and Chicago-based Heidrick &
Struggles-to pursue family-office mandates, according to
Rankin.
In fact, Heidrick & Struggles has been placing senior
executives in family offices for at least a decade, according to Renee
Neri, an New York-based engagement manager with the search firm’s
asset- and wealth-management practice.
In recent years though, it has been making “more of a push”
into the space-and the initiative is paying off. “Our family-office
activity has absolutely increased,” says Neri. And unlike the
boutiques, she says it was about as brisk during Wall Street’s recent
crisis as it is now.”
Rankin doesn’t think big search firms can compete with niche players for long.
“Big firms can’t afford to have their people take the time it
takes to understand a family office’s needs,” he says, adding that the
process from engagement to hiring can take up to eight months. “The big
banks may go to the big firms; family offices have special
requirements.”
Mack takes a similar view of her large competitors. “I don’t
think it will be attractive to them in the long run,” she says.
“Family-office searches are better suited to boutiques where the
partners are doing the actual work.”
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