Australia’s secretive family offices in decade-long boom

Until COVID-19 hit, Australia experienced the longest period of growth without a recession among developing countries since World War II. Australians are the fourth-richest citizens globally, according to UBS data, and account for more than 3 per cent of the world’s millionaires.

But the country is facing a plethora of economic challenges and the number of Australian millionaires shrank by about 20 per cent in 2022 due to rising interest rates, volatile asset values and currency depreciation.

The KMPG report estimates that the growing family office space now employs 10,000 to 20,000 people. Australian family offices’ CEOs are among the best paid in the world, earning on average between $396,000 and $500,000, compared with $280,000 to $380,000 in the US.

“They are prepared to pay for someone who is culturally aligned with them … and are prepared to pay a premium,” Langsford said, adding that the tight Australian labour market could also play a role in the findings. “I haven’t seen them pull back yet,” she added, when asked whether higher interest rates and a slowing economic outlook were affecting remuneration considerations.

Australian family offices are dramatically lagging their global peers in gender diversity, with 92 per cent of CEOs and 88 per cent of staff male, while in the UK 63 per cent of office CEOs are men.

“Founders of business in Australia are still heavily skewed toward males,” Langsford said. “There has been a line of succession to the older males. It’s becoming less and less the case, but there is still a historical lag there.”

Australian offices are smaller than all other regions where family offices were surveyed including the US, the UK, Europe, Asia and the Middle East. Over half in Australia were made up of less than five employees.

While family offices are known for retaining staff over decades, more than 30 per cent of family office professionals surveyed said they would be looking for a new role over the next year. Burkitt said family offices can struggle with recruitment. “As we see consolidation of super funds, there will be a fallout of talent and the family office world is a natural recipient,” Burkitt said. “[But] they are hard to identify [for job candidates as] they are not visible. You see them in the Rich List but getting in contact with them is much more difficult.”

Known for their extreme privacy, prominent family offices have only just started to build public-facing websites as they start to look for outside employees and investment.

A major focus for families is succession and the survey found just over 40 per cent of respondents had a plan in place. Some families are looking for corporate structures which moderate how wealth is passed on to the younger generation.