Mack International President Facilitates session for the Opal Financial Group’s Family Office Forum in Newport, Rhode Island July 24-26, 2017

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

It's not enough to just keep up--you have to stay at the forefront.

Linda C. Mack, founder and president of Mack International, LLC, the premier retained executive search and family office strategic management/human capital consulting firm, was invited to be a facilitator for the Opal Financial Group’s 2017 Family Office & Private Wealth Management Forum at the Gurney’s Newport Resort & Marina in Newport, Rhode Island.

The conference was the latest in Opal’s Private Wealth Series events for high-net-worth individuals and family offices. The agenda was comprised of sessions dedicated to investment strategies, healthcare, cyber security, governance, legacy building and managing technology. A few were private closed door sessions including one on compensation led by Linda Mack. The three day event brought investment managers and thought leaders together with families to explore ways in which to build their wealth and ensure strong Family Office structure and strategies.

During the closed door family only lunch session, Linda Mack presented “Compensation and Pay Structures for the Family Office World.” She was joined by Brandon Rath, an executive with a Family Office who led a subsequent part of the session with a “Peer to Peer Discussion on Investment Techniques.” Linda’s presentation encompassed trends, challenges and best practices in Family Office executive compensation, shedding some light on the “million dollar question”—“How and how much should Family Office executives be paid?”

According to Mack, a competitive market for talent and the widespread access of information are two of the drivers requiring families to be more intentional about their compensations practices, just to keep pace. “We are seeing trends toward a more professional overall approach including a better definition of compensation prior to hiring…employee agreements and more clearly defined long and short term incentive plans are clearly becoming increasingly prevalent. Successful families are also monitoring their structures and packages more carefully to stay competitive with the market in attracting and retaining key talent to meet their objectives.”

In terms of best practices, Linda related several compelling stories about CEO and CIO compensation structures. These stories demonstrated the need for and value of having well-designed compensation structures. Linda emphasized the importance of testing incentive plans under various scenarios to insure the family is spared any unintended surprises. “Incentives do work – they drive behavior, so be careful that you are driving the behavior that will lead to achieving family objectives. They must be aligned.” She also stressed the importance of documenting plans and detailing provisions in writing. “We have seen too many “hand shake” deals--and it’s a big risk for both parties. What happens, for instance, if a principal dies unexpectedly? How can you insure that everything is handled as originally agreed upon? Documenting the details of an agreement is important to prevent unfortunate misunderstandings.”

One of the biggest challenges in compensation is benchmarking. “Until recently, data on family office executive compensation was extremely limited. Small sample sizes, inadequate data, difficulty defining competitive benchmarks combined with job title and job scope/content inconsistencies are some of the key factors that have contributed to frustration around the topic,” said Linda. In the last couple years that has begun to change. Linda cited key findings revealed through two studies conducted by Fidelity Family Office Services and Botoff Consulting: the 2015 SFO Family Office Executive Compensation Survey and the 2017 Family Office Trend Survey. “These two studies have given us a deeper dive into family office structures, executive roles and trends regarding salaries, incentives and benefits.” Linda invited the attendees to participate in two current surveys being conducted to benefit family offices worldwide: the 2017 SFO Executive Compensation Survey (update to the 2015 survey) and the 2017 SFO Investment Professionals Compensation Survey being conducted by McNally Capital, Mack International, and Botoff Consulting.    

Compensation continues to captivate the attention of Family Offices as one of the hottest topics in every conference, with Mack International often invited to lead the discussion. “As the family office market becomes more competitive and the war for key talent intensifies, the emphasis on professional practices grows. It’s not enough to just keep up---you have to stay at the forefront. We are happy to share our perspective as thought leaders on this pivotal issue whenever we are asked.”

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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