4 Things to Consider Before You Accept a Family Office Role
The last three years have seen a proliferation of family offices in Hong Kong and China, inspired by the growth of high net worth Chinese entrepreneurs and perhaps the fear inherent in the Chinese saying, ‘wealth does not pass three generations’. These high net worth individuals seek specialist help to manage their finances and investment portfolios, to ensure their wealth supports their family and its legacy for generations to come. They open offices in Hong Kong as there is a belief that Hong Kong hosts the strongest technical skills and financial talent in Asia. Looking to source candidates from the global banks such as Goldman Sachs, Morgan Stanley and Deutsche Bank, positions of investment analyst, portfolio manager and institutional sales are available.
The family office represents an attractive employment proposition. They offer stability, work life balance and flexibility. While the sell side consistently works 12-16 hour days, operating under the threat of redundancies and shrinking bonuses, family firms often provide the flexibility to leave the office by 7pm and have consistently provided bonuses at 4-12 months base.
Candidates looking to make the move for these benefits have been prepared to take substantial pay cuts to join a family office.
However, it remains quite difficult to find family office roles. You won’t see ads or posts online as family offices like to keep a low profile on their hiring plans. They tend to approach between 1-3 agents to help in their search with a very specific job description covering global firm experience, tenure and specific sector coverage. Many will also have an idea of the gender and age that would best fit within their current team structure.
But is a family office the right fit for everyone? In our experience, the following key considerations can help candidates assess the opportunity:
1. Culture. Candidates need to be aware that the majority of family offices have their expertise in other areas such as shipping or real estate. This is often the nature of a family office background, but may impact the management style that will influence financial decisions. Also consider the personalities within the team. How well will you be able to work with the chief investment officer, investment committee or the portfolio manager if you are joining as an analyst? Global firm candidates will be used to working in large teams, whereas the family office will be a concentrated team of three to six.
2. The company investment size. If it’s a small family office with less than HK$200m, then it may need to raise funds from the public to facilitate its investment strategy. This means institutional sales might become part of your role. It also presents the risk that outside investors can withdraw their stake at any time, putting the investment goal and company stability into question.
3. Investment style. Are the owners and portfolio manager aggressive in their goals or looking for stable growth? Are they open and flexible in terms of equities focus or direct investments? Experienced and sizeable family offices have been seen to have adopted a longer term approach. This contrasts with the more aggressive 20-30 percent returns target we are seeing within the less sizeable and start-up offices.
4. Career progression. Whilst some family offices have been known to promote analysts to portfolio manager positions and provide flexibility in coverage, compared to the global sell side firms there is less opportunity for progression and changing sectors.
Candidates interested in discussing opportunities to work in small teams with greater flexibility and work life balance, are welcome to contact me. Morgan McKinley Hong Kong has strong relationships with a growing number of family offices, ranging in investment size from HK$500m to HK$10bn, across a wide range of sectors. We currently have positions available for investment analysts, portfolio managers, institutional sales and traders.