Family Offices Face Competition in the Hunt for Talent
As wealth continues to grow globally at a brisk pace, the hunt for qualified talent among family offices and the wealth management industry as a whole has intensified. Meanwhile, EY reports that the number of family offices has increased from just 1,000 in 2008 to more than 10,000 today.
The perception of family offices has changed in recent years and young talent is more likely to join an emerging family office, according to Paul Westall, co-founder of London-based family office resourcing and recruitment specialist firm Agreus. “Family offices are professionalizing and becoming an attractive space for high caliber candidates. The really exclusive family offices are also sometimes competing for the top talent from the wealth management space,” he says.
Westall adds that family offices need employees who can hit the ground running, so entry-level positions are rare. However, some family offices have reached out to his team in recent years to seek younger investment analysts and fresh graduates because they lack the same relationships with top universities that banks and investment managers have.
Finance managers across the world are optimistic about industry growth but worry about the lack of people with the right skill set to fill roles, according to a recent CFO sentiment survey by Deloitte.
Matthew Thomas, European market leader for financial services at executive-search firm Korn Ferry, told Global Finance that the intersection of technology and finance has tightened the market for potential candidates. Venture capitalists, cryptocurrency exchanges and family offices are all vying for the same pool of recent graduates and experienced professionals.
These challenges appear to be global, as the finance and investment industry become more tightly integrated across borders. As part of a survey conducted last year, more than 94% of the CFOs working in Singapore told Robert Half International, a U.S. human resources consulting firm, that they find it increasingly difficult to hire and retain the right talent. Financial hubs in Singapore, Hong Kong and Tokyo are all competing with the rising number of family offices and cryptocurrency exchanges in places like Shanghai and Mumbai.
Converging Technology Trends
Richard Muschamp, partner and leader of the U.K. CFO Program, Deloitte North West Europe, told the Wall Street Journal that technology wasn’t just widening the market for financial talent, it was transforming the role of a financial professional in fundamental ways.
According to Muschamp, the rise of blockchain technology and artificial intelligence will render some roles redundant and help create new ones. Blockchain, for example, could boost productivity by reducing the compliance and recording functions in some departments. Artificial intelligence could help accounting professionals and investment analysts gleam insights from data quicker than ever before. Mobile apps and chatbots could make personal finance automation possible for a whole generation of young entrepreneurs and professionals.
All of these converging technology trends will have a direct impact on the labor market. Companies may have to reduce the number of staff in certain departments and invest in technology to boost the productivity of their high-level professionals.
The Korn Ferry Institute predicts that this technology driven, talent-tightening trend will continue into the next few decades. The shortage of finance and business services talent is already acute. By 2020, the industry will face a shortage of nearly three million people. By 2050, that could rise as high as 10.7 million, resulting in a loss of productivity estimated to be worth $1.3 trillion.
Of the 20 countries that Korn Ferry studied, India was the only one that could see a surplus of talent by 2030. This is because India’s pool of college-educated talent is projected to rise by more than 45 million by that year, covering the immense demand for talent in the emerging economy.
Family offices may have to adapt to the changing market to attract, retain and support their staff. There are specialists recruitment firms in the industry. But family offices may need to re-evaluate their recruitment and retention policies to attract the best talent.