New Morgan Stanley Report Reveals Major Shift in Family Office Compensation Trends

# Understanding the Shift in Family Office Compensation Practices

A recent report from Morgan Stanley, in collaboration with Botoff Consulting, has unveiled significant changes in compensation strategies within investment-focused single-family offices. These findings are pivotal for family office professionals aiming to align compensation practices with organizational strategy and asset management.

Key Trends in Compensation

The 2025 compensation report reveals that long-term incentive (LTI) plans are increasingly becoming standard in investment-focused family offices. Among these offices, 62% have adopted LTI plans, a notable rise compared to 54% across all single-family offices. This shift underscores the growing recognition of LTIs as a crucial tool for driving performance and aligning the interests of executives with the long-term goals of the family.

Moreover, the report highlights that 76% of family offices with LTI plans offer bonuses or rewards to encourage participation, suggesting that competitive compensation packages are essential for attracting and retaining top talent in a market where candidates are more discerning than ever.

Growing Family Involvement in Leadership Roles

Another significant trend is the increasing involvement of family members in leadership positions. The report indicates that family members are twice as likely to hold CEO and CIO roles in investment-focused family offices compared to the broader family office sector. Specifically, 53% of CEOs and 13% of CIOs in these offices are family members, compared to 27% and 6% respectively across all family offices.

This trend reflects a strategic move by families to take a more hands-on approach in steering their wealth management activities, ensuring that their vision and values are directly represented at the highest levels of management.

Direct Investment Management on the Rise

With families taking a more active role in leadership, many investment-focused family offices are shifting towards direct investment management. The report notes that 56% of these offices manage investments internally, as opposed to relying on external managers. This compares to 44% of all family offices that follow the same approach.

The move towards direct management allows family offices to tailor investment strategies closely aligned with their specific objectives, providing greater control and potentially better alignment with family goals.

Gender Representation in Leadership

Despite these progressive shifts, the report highlights that gender representation in leadership within investment-focused single-family offices still lags behind broader industry standards. Women occupy 24% of top positions, which is below the 29% recorded across all single-family offices. This suggests there is still work to be done to achieve gender parity in leadership roles within the sector.

Implications for Family Office Professionals

For family office professionals, these trends indicate a need to reassess compensation structures and leadership strategies. Here are some practical takeaways:

- Enhance Compensation Packages: Consider incorporating or expanding LTIs to remain competitive in attracting and retaining skilled professionals.

- Encourage Family Leadership: Engage family members in leadership roles to ensure alignment with family values and long-term objectives.

- Consider Direct Investment Management: Evaluate the feasibility of managing investments internally to maintain control and alignment with family goals.

- Promote Gender Diversity: Develop initiatives to improve gender representation in leadership, fostering a diverse and inclusive environment.

Conclusion

The findings from Morgan Stanley's report offer valuable insights into the evolving landscape of family office operations. By understanding these trends, family office professionals can make informed decisions that align with both strategic objectives and family values. As the sector continues to evolve, staying informed and adaptable will be key to sustaining success in managing complex wealth management ecosystems.