Average compensation for executive directors at single family offices is nearly $1.6 million, with “participant-directors” earning much more than “employee-directors,” according to a recent Rothstein Kass study.
The report, called The Compensation Variance, found that executive directors working under a participant model at SFOs earned over $3 million on average, while executive directors who worked as regular employees earned only $472,000 on average. It covered 139 executive directors at single family offices, roughly half of which were based in the US.
The wealthy family concerned and the SFO executive usually work together to reach a comprehensive strategy for compensation, said Rick Flynn, a principal and head of the Family Office Group at Rothstein Kass. Because "the needs of every family are distinct" and "no two single family offices are identical" it can be a challenge to find the right skill set, let alone evaluate compensation, he added.
The survey highlighted the following four steps in creating a compensation plan:
- Determining the parameters: “Negotiations should begin with creating and clearly articulating limitations that are acceptable to both parties. Broadly speaking, negotiations should encompass: base salary, bonus (direct and/or deferred) and benefits.”