Greater levels of cost consciousness
Perhaps the most eye-opening finding in The Global Family Office Report 2015 was that total operating costs of family offices had jumped by some 7 basis points of AUM compared with the previous year. At the time, our recommendation to family, executives and external providers was to focus on this area and actively manage it to achieve the best value possible. Encouragingly, our large-scale survey of family offices reveals that family office executives have taken this to heart. Asked whether they are more or less cost conscious, we found that over a third of family offices were more or significantly more cost conscious than they were 12 months ago.
Total operating costs have decreased
Thanks partly to this rising cost consciousness, family office executives are managing to stem the tide of the increases. Operating costs (before external manager performance fees) among multi-year participants have decreased from 2015 to 2016.
Executives benefit from the opportunity to co-invest
Around half or more of family offices across the regions currently offer their executives the opportunity to co-invest with them, making this the most common long-term benefit of their employment. Another relatively common aspect is a profit sharing agreement for executives, to help ensure better alignment.