A Widening Service Gap

Family offices were still nascent when Skye Young started working as the chief of staff to a chairman of Bain Capital more than 10 years ago. And after she left the private equity firm to work at, establish, and lead different single-family offices across the U.S. (she also led family-office services at Cercano Management, the multifamily office formerly known as Vulcan Capital and part of the late Microsoft billionaire Paul Allen’s family office), Young did not cross paths with many people like herself.

“It wasn't an industry like it is now. The true OGs, if you're of the SFO world, it is such a small circle,” said Young, now a managing director who leads personal services at Parere Advisory, a consultancy to family offices.

The number of professionals with 15 or more years of experience working at a single-family office is not large, and the list of those with previous corporate business experience is even shorter. Among that narrowed group, even fewer have worked at multiple single-family offices and have been exposed to different ways of doing things, Young told Modus.

Deloitte estimates there are 3,550 single-family offices in North America, and 68% have been established during the past 25 years. According to a survey this year of 302 U.S. offices by Botoff Consulting, offices have an average of 10 direct employees and four contracted ones. Some employees are often responsible for philanthropy, legal, accounting, investment management and other duties.

If half of the average-size staff at all the single-family offices in North America were dedicated to personal services — acting as an assistant and managing properties, culinary services, care for family members, security, art and other collections, cars, boats, and more — that would mean there are only 17,750 professionals with any level of personal services experience, let alone a breadth of expertise across so many things.

The problem is that family offices don’t want to hire someone with little or no experience. Just like they desire the best CEO, chief investment officer and other professionals, they want the best nannies, housekeepers and others. They seek personal-service magicians who, beyond the typical tasks, never say no, can help produce family videos like Netflix documentaries, have someone on speed-dial for last-minute $95,000 Super Bowl tickets, and more.

“Nowadays, job descriptions are 12 to 15 pages long, and they're like, ‘I want someone who has, essentially, gone to the moon and figured out how to have clean drinking water on Mars. I want them to work 120 hours a week.’ And for an unexceptional salary, given the skills, experience, and requirements they're looking for. Everybody wants a unicorn and there aren't that many unicorns to choose from,” Young said.

The supply of qualified candidates has never been able to meet the demand. However, the increasing number of family offices and the growing popularity of personal services are widening the gap.

Young said that the Covid-19 pandemic also exacerbated the talent shortage. While most people were confined to their homes during lockdowns, the wealthiest families chartered yachts around the Mediterranean, bought 50-acre properties in Montana, and did other things so that they could lower their risk of getting sick and didn’t have to wear masks. Other ultra-high-net-worth families noticed and have decided that personal services are worth the cost — at all times, not just the unprecedented ones.

Family-office employees exclusively handle 66% of personal services, 59% of property management, and 59% of family care in-house, according to Botoff Consulting. The same survey found that offices used a combination of in-house and outsourced employees for 26% of personal services, 27% of property management, and 15% of family care. Small percentages of offices exclusively outsourced those things or didn’t offer them at all.

Parere Advisory has begun offering family offices a training program for personal service employees to give them frameworks, approaches, and the mindset they need, regardless of what category of problems they face. These roles require someone to be or become an “expert generalist,” Young said.

Young and other professionals say family offices will always choose to employ personal service professionals if they can. A family office is a cost center, so to speak, deemed worth the expense by its beneficiaries. Outsourced services provided by wealth management firms, banks, accounting firms and even some law firms are fundamentally different and might fail to achieve the level of trust or service a family really wants.

“With families, you can't put a price tag on some of these services that they need. The commercial side — those [companies] they're seeking the services from — constantly have pressure on the internal people to become a profit center, and they can't necessarily justify that internally,” Richard Wolkowitz, founder of the family-office consultancy Xylogenesis, told Modus.

Brian Weiner founded Family Office Resource Group, or FORG, last year to offer accounting, family governance, cybersecurity, risk management and other white-labeled, outsourced services to single-family and commercial companies. It also provides them with concierge or personal services.

FORG already counts eight single-family offices as clients and several wealth management and other firms that will extend its services to their clients. Weiner said he was pleasantly surprised by how quickly some of the largest accounting firms and banks have engaged his company. But he wasn't shocked; the demand for services is huge and growing.

“We’re getting adoption much faster than even we anticipated, which is exciting,” Weiner said. “We're dealing with things like jet chartering, house managers, art curators, and other services like that. We needed to make sure that we had the people involved who are best-in-class, if you will. That took us a little bit of time. Now, we're at the point in our cycle where we're very confident in the offering.”

Some offices might never have the scale or level of need to insource some personal services. Others may outsource some things before committing to full-time employees. Nonetheless, professionals helping family offices with personal services say there is more than enough work to go around.

In a way, personal services is a misnomer. Working for a single-family office is more than just service. Young says that family offices expect an exceptional experience akin to how restaurateur Danny Meyer defines it: a combination of service (the technical delivery) and hospitality (how you make someone feel emotionally). Great hospitality, whether at a family office or elsewhere, requires that the customer be first above all. There's no room for ego. For many, that's hard, and perhaps a contributor to the shortage of personal service employees.

“What being part of a family office is about is that everything that you are doing is in service to someone else. And some people, I think, really, really struggle with that approach, or that job, at the end of the day,” Young said.

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