New York — A significant number of private investment firms catering to ultra-wealthy clients are grappling with recruitment and retention challenges, according to a recent survey. Nearly 67% of family offices reported hurdles in hiring and keeping crucial staff, painting a troubling picture within this specialized sector.

The survey, conducted by wealth manager AlTi Tiedemann Global and research firm Campden Wealth, found that the pool of qualified talent is dwindling, leading to heightened competition among firms. Approximately 54% of respondents expressed concerns about retaining skilled employees, while 80% reported struggles in hiring new talent. This trend is particularly pronounced among larger family offices, where 92% of firms managing assets exceeding $1 billion indicated recruitment difficulties.

Industry experts underscore that the retention issues stem not only from competitive salary concerns but also from a perceived lack of long-term career growth in family offices. Erik Christoffersen, head of AlTi’s multifamily office practice, noted that 55% of those surveyed view the absence of clear advancement opportunities as a significant barrier. In contrast, only 26% cited pay as the primary issue.

While larger family offices often have the financial means to offer competitive salaries, they face an alarming turnover rate. Reports indicate that these firms experience an employee departure approximately every nine months. Smaller family offices, particularly those managing between $150 million and $249 million, face fewer retention challenges, as they frequently rely on family members for critical positions.

As staff members age and retire, many family offices are under pressure to identify and recruit new talent. This challenge is further compounded by fierce competition from institutional investors eager to tap into a diminishing pool of qualified investment professionals. “I’m not sure family offices are ready for the sticker price shock that comes with attracting and retaining top-tier talent,” Christoffersen stated.

In order to combat these issues, family offices are encouraged to revisit their organizational structures, maximizing the skills of existing employees and introducing more engaging job responsibilities. Improved benefits and enhanced flexibility, such as options for remote work, can also help keep talent in-house.

Amid ongoing market volatility, the need for top-notch talent is more critical than ever. Christoffersen highlighted that the last decade saw a period of low cost of capital and minimal volatility, benefiting virtually all investment strategies. However, the current environment demands a more active approach to investment, deviating from reliance on passive index funds.

To bridge operational gaps, smaller family offices are advised to consider outsourcing certain functions. By leveraging external expertise, these firms can navigate the complexities of the market more effectively while focusing on their core competencies. As the financial landscape evolves, family offices must adapt their strategies to remain competitive in the increasing war for talent.