The next generation of heirs is rewiring family offices — and triggering a talent war

• IMD’s new Global Family Office Report says heirs are reshaping offices and driving a talent crunch.

• Demand for CIOs, ESG experts, and tech specialists is rising across family offices, the report says.

• IMD researchers say family offices face tightening talent markets as NextGen priorities grow.

The next generation of leaders wants their family offices to look different from those run by their parents — and that shift is driving fierce competition for a new class of talent.

A new report from IMD’s Global Family Business Center and the Family Business Network, based on 186 survey responses and 65 interviews with family principals across six continents in the first two quarters of this year, found that family offices are rapidly evolving as younger heirs step into leadership roles.

The report said younger family members increasingly prioritize impact investing, sustainability, technological innovation, and diversity and inclusion — particularly in the advisors and specialists they choose to hire.

As a result, they seek advisors who can navigate these areas — and job listings have surged for individuals with these skills, including alternative investment analysts, ESG specialists, and chief information officers who can modernize systems and streamline operations.

But the supply of qualified candidates “has not kept pace,” the report warned.

Family offices require a blend of hard technical skills and softer traits — trustworthiness, discretion, emotional intelligence, and the ability to work inside complex family systems — that’s rare even in top-tier finance.

This “changing of the guard,” the report said, has created an acute scarcity of talent and a “highly competitive market for top-tier professionals.”

Family offices are multiplying rapidly, with Deloitte estimating a 31% increase from 2019 to late 2024, as founders cash out and heirs prepare for a historic wealth transfer, according to the IMD’s report.

“By and large, we can see that there just isn’t enough talent available for the families and their family offices,” Peter Vogel, one of the report’s authors and Director of the IMD Global Family Business Center, told Business Insider.

Vogel, also a professor of family business and entrepreneurship, said that the first big hires are usually investment-focused — people with backgrounds in private equity, private debt, real estate, or venture capital.

Families that care about sustainability or impact will add ESG (environmental, social, and governance) expertise and impact-metrics skills on top, he added.

Beyond technical chops, Vogel said families increasingly look for candidates who bring emotional intelligence, trustworthiness, and experience handling family dynamics — qualities he described as essential but hard to find.

But even when families are willing to pay, the pitch isn’t always as attractive as it looks.

“One of the big questions is, what is the value proposition for a top shot to join a family office?” Vogel said.

Vogel said that for senior hires like CIOs or CEOs, family offices offer limited upward mobility: once you reach the top job, there’s nowhere else to go except a larger family office.

Vogel added that while family-office compensation can be strong, it often falls short of the millions of dollars top performers can earn in big banks, private equity, or hedge funds — especially without co-investment or carried interest.

Michael Kosnitzky, Co-Leader of Pillsbury’s Private Client & Family Office practice, previously told Business Insider that family offices are increasingly structuring “golden handcuffs” — long-term incentive packages designed to make it costly or unattractive for executives to leave — and carried-interest-style deals to stop their CIOs and dealmakers from being poached by rival funds or other family offices.

On top of that, Vogel said, the market itself is opaque.

The term “family office” isn’t regulated, and titles are vague, he said, which makes it harder to find talent because roles vary widely from one office to another, and there’s no standard job description. Many professionals also don’t publicly name the families they work for.

“There’s no big, qualified database of people saying, ‘hand up, I’m a family office person,'” Vogel said.

For now, families are improvising: pulling trusted bankers into newly created offices, experimenting with incentive packages, and relying heavily on headhunters and word of mouth, he said.

Read the original article on Business Insider