The Interview

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A lot has happened since I entered the family office ecosystem. 

Family offices have become a much more prominent part of the market, regularly showing up as lead investor across many asset classes, and GPs and asset managers have responded by setting up specialized teams to cover them. Their number has grown steadily, especially in the case of what we call Small Family Offices. And those family offices have demonstrated substantial capability in institutionalizing themselves: Over are the days of the ‘European family office’ following blindly into overpriced pre-IPO deals - many of the family officers in our network are among the smartest multi-asset investors we know.

Taken together, it’s unsurprising that we at Cape May receive frequent requests from affluent individuals and families thinking about setting up a family office of their own. 

Long-term readers know that the topic of family offices is one of the ‘content cornerstones’ of this newsletter. We’ve written about what family offices are, and how they evolve. We’ve talked about why they (don’t) raise external capital. Last week, in a perhaps slightly adjacent topic, we talked about how investors, including family offices, should think about defining their Alpha. All of those are topics on the structural side of family offices.

But what is perhaps even more important is the question of people, meaning who you hire for your family offices. We’ve covered this topic in Becoming A Family Officer, where we explored some of the common paths into a family office. But today, let’s be a bit more specific: Let’s talk about the interview process, and especially the questions that you as the owner should ask your prospective family officer.

As with any job, there’s no guarantee that what you learn in an interview will translate to the actual job. But you can do your best to ask tough questions to avoid any unexpected surprises - in either direction. 

Looking to set up your own family office, but not sure whether your size and objectives justify the time and expenses? Or already certain that you want to set up your own, but are struggling to find the right candidate?

Me and my colleagues at Cape May Wealth Advisors have helped numerous affluent individuals and families in family office-related questions, ranging from structure to process to hiring. We’d love to help you as well - don’t hesitate to reach out.

The Interview Process

How does the typical family office interview process look like? 

• Definition of the Role. Are you looking for a generalist or a specialist? Do you need certain asset class skills? Will the person work closely with you in an office, or is it a remote role? What is your budget? All typical questions, as in any hiring process.
  

• Identification of the Candidate(s). That could be through the direct network of the owner(s), like a former Head of Finance or trusted relative. But it could also be through recruiters or simply a job posting on LinkedIn or comparable websites.
  

• First Interview. The first interview typically revolves around Motivation and Personal Fit (more on that below), and less on Technical Abilities. What you typically want to achieve is to get to know the candidate in a 30 to 45 minute call or meeting to make sure that they fit what you are looking for, and ideally also get an alignment
  

• Second Interview. A more in-depth, longer discussion. That might mean a deep-dive into their professional performance to confirm their previous statements on Motivation and Personal Fit, but also insight into their Technical Abilities and other relevant skills (i.e. leadership, legal/tax, etc.). Depending on the size of the family and/or family office, the second interview might also be split across multiple shorter interviews.
  

• Case Study. Not always, but often done, to get an insight into how a candidate thinks, and of course their Technical Abilities (i.e. financial modelling, project management, etc.).

It is at that point that a owner/family typically decides whether they want to pursue a hire. They make an offer to the candidate, and typically conclude the process with reference checks. It’s also starting to be more common for the desired hire to conclude reference checks on the family, i.e. to get an understanding of how they work. They might also have some sort of informal get-together, like dinner or drinks with the relevant stakeholders.

The Interview(s)

For the two interviews, there are three key areas that we’d recommend that owners/families should focus on: Motivation, Personal Fit, and Technical Abilities.

First, Motivation. 

There is a very much overused, but somewhat correct saying that ‘if you know one family office, you know one family office’, meaning that they can be very different in how the owners made their money, what they want to achieve, and how they want to invest the money. The owners’ answers to those questions have substantial impact on what kind of person can best suit their family office needs.

Hence, we recommend that you ask your potential hire for their motivation to make a leap from whatever they are currently doing, to working for you as a family officer. There’s a number of nuances to this:

• How do their prior experiences and goals match with what you are looking for? If you want to build a family office that is highly active in direct investments, with the pay package to go with it, you likely want a private equity ‘shark’, and not your diligent, careful wealth manager (someone like me). Vice-versa, if you’re just looking to achieve a stable 5% return through liquid investments, you don’t want someone who brings you a new obscure direct investment every week.
  

• Does what you are offering match their long-term outlook? There are some valid cases where individuals want to switch from a higher-intensity career path into a more stable, long-term family office job. However, make sure that it doesn’t just fit today, but also for two, five, maybe even ten years - you likely don’t want someone who comes aboard for the exciting times of structuring the family office from scratch to then depart next year when the day-to-day might get a bit more ‘boring’.
  

• Are they made for the peculiarities of a family office job? Family offices can be very different in how they are set up, and how they act. However, with the very rare exception of a very institutional family office, the work will always deviate to some degree from a comparable job at a ‘regular’ institution. Examples include the owner(s) making binding decisions that the investment team disagrees with, low-impact but high-priority analytical or private tasks for the family, or even outright private matters.

Unlike other regular jobs, making sure that there is definite motivational fit is crucial. In a family office, there’s typically no other professional option if the desired role doesn’t work out. If someone joins and turns out not to be a good fit, the only option is typically to part ways.

Second, Personal Fit. While Motivation is perhaps the ‘high-level view’, Personal Fit is deeper and more specific on topics such as work style and other preferences.

• How often do you expect to see/hear from one another? In past family office jobs, I talked to my owner(s) essentially every day. But I know family officers that might only talk to their owner(s) once a week or once a month for varying reasons, or might even be fully independent with only a quarterly touchpoint through an investment committee meeting. Someone with prior experience might be okay with fewer touchpoints - a junior person less so.
  

• How does working together look like? Are you a very analytical person who wants to get into the nitty-gritty of a financial model, or do you just want to hear the concrete action points? Do you trust your family officer do to the right choices and give them significant freedom in achieving results, or are you maybe more on the side of micro-management?  A mismatch here can be fatal.
  

• Common interests and goals. Perhaps also somewhat related to the motivational side, but ideally you’d hire a family officer whose long-term interests, whether professional or private, match your own. Perhaps you are a successful SaaS entrepreneur who wants to dabble in angel investing but doesn’t want to browse through data rooms and investment agreements, which might be perfectly solved through hiring an analytical former venture analyst looking to learn from a skilled operator. It also doesn’t hurt to get along in private matters - I always enjoyed getting to have a beer or two with my former bosses at BLN (and still do).

Personal fit might be the part that might be more akin to a traditional interview process. But don’t underestimate it. Especially in small family offices, you might be working exclusively with your designated hire for a long, long time.

Third and last, Technical Abilities.

Unless you come from a professional investing background, there’s a good chance that the person across from you might know more about the matter than you. You can ask specific questions about individual asset classes and how they built their experience in prior roles. But more so, I would think about getting an understanding of technical ability relative to your individual situation. 

• Do they understand the tasks at hand? As I’ve said earlier, family offices roles can range from highly specific to extremely vague. You want to make sure that a potential hire understands what you are looking for, and doesn’t just bring the necessary skillset, but also can apply it in the desired way. For example, if a candidate is a stock picking expert, but the family only wants to buy ETFs, they need to understand that the family’s goals have priority over their professional preferences. In regards to vague tasks, there might even be the case that the family knows nothing but that they want a family office, with the exact structure and goals still to be defined - and an ideal candidate should be able to take the family through this process.

• Do they have the required skills, or know how to build them? Especially for generalist roles, its challenging to find someone who truly covers all areas that a family office might touch, ranging from investment-related matters to legal work to taxes to niche personal matters (think vacation homes and private jets). While an ideal candidate for such a role should bring experience in at least a majority of those topics, it’s equally important for a candidate to know how to build knowledge in a topic that they know nothing about.
  

• Do they know their weaknesses and blind spots, and know how to address them? Especially in regards to investment-related work, I hold the strong view that a good investor should know where they can add value (Alpha), and where not. Unless explicitly agreed upon, you don’t want an investor to take your hard-earned money to build experience in an asset class where they have none. Many family officers in our network are experienced investors in specific asset classes like real estate or venture, and can likely generate great returns for their owners in those asset classes - but will probably have asset classes where they have little to no knowledge. A good family officer should know their weaknesses, and should know how to make up for them, for example by picking managers to cover the asset class or to simply go for an index fund (or asset class equivalent). 

Lastly, if you’re worried of not being able to ask the right technical questions, don’t be afraid to ask a trusted investor from your network to conduct another interview round of their own. Especially as you might get ‘invested’ in a hire based on their motivation and personal fit, it can’t hurt to have a third party to ensure that they can actually do what is asked.

A final remark: A good interview should not be one-sided interrogation. It should be an open dialogue where the prospective family officer is given the chance to also ask tough questions, to which they should also receive truthful answers. Especially in tight-knit organizations like a family office, intellectual honesty is incredibly important. For owners who made their money as entrepreneurs, their instinct is often right, but not always - so if you as the owner don’t know something (yet), don’t pretend that you know better.

Making the Decision

So you interviewed who you think is the ideal candidate. But how can you be sure? Family office roles are by nature vague and rapidly changing. Even if you did the work ahead of time and worked hard to know exactly what profile you are looking for, there is a good chance that that ideal profile might look very different six months down the line. 

The answer is a bit poetic, but hasn’t failed me yet: If you interviewed a great candidate, you will know it. 

Perhaps they only ticked eight out of the ten boxes you were looking for. But they were truthful about their weaknesses in box #9, and on second thought, you maybe realize that box #10 isn’t so important after all. Or you feel convinced that they can build the necessary skills later on. More importantly, for a good candidate, the related factors will typically also fall in place. Maybe they’re asking for a slightly higher salary that you were initially willing to pay, but you are willing to take the risk, or they are okay with starting slightly lower in return for a above-average salary progression. Or you wanted someone in-office, but understand that they might not want to uproot their family on day one - and are okay with a hybrid setup for the first months. Or, or, or…

On the other hand, if you interviewed someone and are not sure if they are the right fit, take that as a sign. It’s when owners reach out to us asking to bridge a gap in compensation expectations. Or when they ask us if we think that a candidate came on too strongly and seemed too much like a dealmaker rather than a family officer. It’s not a sales role where you hire someone that you might let go after six months when they don’t hit their sales targets - it’s a role requiring substantial levels of trust, and full alignment between owner and family officer. Don’t make the mistake of hiring someone that doesn’t give you a good gut feeling.

Perhaps one final little anecdote in regards to family office hiring. One experience that I found very telling is that some of the most inspiring entrepreneurial personalities that I’ve met are deeply insecure about the prospect of hiring their first family officer. Why should someone take the leap to work for them and their family full-time? Why would a great hire want to switch from an 100% investing role to one where they have to deal with accountants, subscription agreements, and holiday rentals?

And in our view, it’s because those entrepreneurs misunderstood the fantastic opportunity they are giving to their prospective family officer: The chance to help an owner (and their family) take their hard-earned wealth and to transform it into a resilient family office that will hopefully outlast the owner and perhaps even subsequent generations. And of course, to have the chance to work with them across many asset classes and a wide variety of topics that can be found in few other professions out there. It’s a truly unique job, and a true calling to many of my former family office peers that rightfully never want to switch back to the ‘other side’ again.

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