Here's how much it pays to control the fortunes of America's wealthiest people — and why it's escalating
- 40% of CIOs managing wealth for America's richest are being paid $1 million or more.
- Family offices in the US are increasingly managing more money in-house and competing for talent.
The world's richest rely on elite money managers to maintain their family fortunes. And they're paying handsomely for it— specifically in the US.
About 40% of US family offices, the private investment offices that preserve wealth for the ultra-wealthy, are paying their chief investment officers $1 million or more, according to a report from KPMG and UK-based recruitment firm Agreus Group. Only 17% of CIOs in Asia (which are mostly based in Singapore) earn more than 1 million Singapore dollars or about $740,000 and 6% in Europe make at least €1 million ($1.1 million), according to the report.
The findings, based on surveys of 635 family office leaders, didn't find any CIOs in the UK, Middle East, and Australia making as much as chief investors in the US.
While family offices have propped up across the globe, they are an American invention. J.P. Morgan is credited for launching the House of Morgan in the 1830s to manage family offices, and J.D. Rockefeller established his own in the 1880s.
That means US family offices are often more mature and institutionalized than in other regions. They go beyond handling taxes and philanthropy and manage the majority of their investments in-house, rather than outsourcing the process to a Wall Street firm or other investment specialists, the report noted.
As Insider has previously reported, wealth managers for billionaires like Jeff Bazos, the Waltons, or Elon Musk tend to stay under the radar. And their duties can run the gamut, from buying sports teams to testifying under oath, as Jared Brichall did at Musk's defamation trial.
Family offices in the US have also been increasingly competing with private equity firms to directly buy stakes in privately-held companies and other more esoteric investment opportunities. And competing with the Blackstones and Apollos of the world of private equity does not come cheap.
"This has created challenges for the family offices in attracting and retaining talent as the time horizons for return on these investments for private equity are generally shorter than the time horizon for family offices," said the report. Family offices need to be creative and competitive with the bonuses and other compensation perks of the private equity industry.