Mack International President Co-Facilitates session for the Opal Financial Group’s Private Wealth Management Forum–West, in Napa Valley, California, October 26-28

Linda C. Mack of Mack International recently co-facilitated a private, closed door session during the Opal Financial Group’s Family Office and Private Wealth Management Forum. The session explored “Compensation in Family Offices” and covered trends, challenges and best practices.

The conference, entitled, “Harvesting the Returns,” was the latest in Opal’s Private Wealth Series events for high-net-worth individuals and family offices. Investment strategies such as Private Equity, Venture Capital, and Technology were familiar themes throughout the conference. Investment managers and thought leaders came together with families to explore ways in which to build their wealth and ensure strong Family Office structure and strategies.    

Not only are we seeing an increase in the use of long term vehicles, but …a trend toward using multiple incentive vehicles…for long term retention.

Linda Mack co-facilitated the final day’s private session along with Trish Botoff, Principal Consultant of Botoff Consulting. This closed door session was organized for family office principals and executives, multi-family offices, foundations and accredited high-net worth individuals to address issues relating to executive compensation. The topic sparked conversation on a wide variety of challenges faced by families when deciding how to design compensation packages that serve both executive leadership and Family Office goals and objectives.

“No two Family Offices are structured exactly alike, but they all have one thing in common,” said Linda. “Each must be careful to construct and test compensation plans to be sure they are rewarding executive behavior that benefits the long term goals of the family. Testing incentive plans against various extreme scenarios, like 2008, is important to prevent unintended outcomes affecting one or both parties.”

Linda cited an increased trend in more Family Offices using long term vehicles as part of compensation packages: “Each family must determine and define their compensation philosophy and their parameters regarding these vehicles.” Co-investing, carried interest and deferred supplemental compensation are some of the most often used incentives. “Not only are we seeing an increase in the use of long term vehicles, but we are also seeing a trend toward using multiple incentive vehicles to accomplish different objectives. For example, a family may use one vehicle to incent and reward performance and another for strategic long term retention purposes.”

Ms. Botoff presented highlights from the 2015 SFO Executive Compensation Study, conducted by Fidelity Family Office Services and Botoff Consulting. It is regarded as the most robust compensation study done to date on Family Office executive compensation. Trish addressed key challenges around benchmarking family office positions and compensation.

“It is difficult to get ‘apples to apples’ comparisons,” noted Linda. “Family Office title nomenclature can be misleading. You really need to examine the scope and content of each position to get appropriate comparisons.”

Further studies are being planned to provide deeper and broader information.

Linda and Trish concluded the session with a review of compensation Best Practices. Linda highlighted the fact that compensation packages must serve both the family and the executive and talked about developing initiatives to successfully engage and retain executive leadership: “It’s essential to retain high performing talent. Since incentives absolutely drive behavior, it is critical to design plants that are in sync with family objectives. Retention doesn’t just happen. It is incumbent upon the family to understand what motivates their executives and to develop strategies to engage and retain them for the long term.”

About Mack International LLC
Mack International is the premier, boutique retained executive search and strategic management/human capital consulting firm serving national and international clients in the family office, family business enterprise and the wealth management industries on national and international basis. Founded in 2002, the firm has achieved an exceptional track record of success as evidenced by its unmatched industry expertise, in-depth market knowledge and unparalleled track record of success. Founder and President, Linda C. Mack has established proprietary methodologies such as the Mack 360© and is credited for having coined the term “expert generalist” in the industry.

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