Building a Compensation Plan for Today's Market Environment

Family offices, by definition, are professional-staff intensive and allocate as much as 70 percent of total operating expenses to compensation costs-a significant portion of the budget. (See page 3 for information on FOX studies of wealth management costs and family office compensation.) In light of the current market environment, with markets contracting and budgets shrinking, it's time for family offices to take another look at their compensation plans. Family offices need to understand the role compensation can play in supporting family and family office goals. Family office goals can and should influence compensation levels, strategy, and structure.