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What is the range of salaries for people that work on an investment committee for a family office / a financial institution?
Although the structure of investment committees at family offices in the United States and Switzerland vary considerably based on the number of families served, the total number of assets under management, and the types of services provided to clients, my colleagues and I have identified the average salary for a Chief Investment Officer in the Switzerland to be $267,000, although a substantial range of $101,453 to $507,175 was observed, primarily dependent on the organization being a single-family or multi-family office. Salary ranges for investment analysts could not be determined, and our findings suggest that in Switzerland, it is not uncommon for investment positions to be outsourced entirely. In the United States, the salary of a Chief Investment Officer may range from $292,000 to $314,000, while investment analysts earn an average salary of $103,031 annually. The salary range for investment analysts in the United States appears to be dependent on experience, with a range of $81,723 and $116,051 annually noted, based on being a "junior" or "senior" analyst. Additionally, compensation for Chief Investment Officers in both the United States and Switzerland include profit-sharing agreements, bonuses, equity, and co-investment opportunities.
METHODOLOGY
While researching the ranges of salaries for members of investment committees for family offices and/or financial institutions in the United States and/or Switzerland, my colleagues and I first observed that the literature more commonly refers to these organizations as "family offices," and so we have elected to use the same terminology throughout this brief. Our findings revealed that family offices can be classified based on a number of criteria, which will be discussed in greater detail below. We were unable to determine from the information provided in your request if any of these distinctions are important for your purposes. If so, we encourage you to submit an additional request to Wonder for more focused research.
We attempted to focus on family offices managing $500 million to $1 billion in assets, at your request. Unfortunately, despite exhaustively researching this topic utilizing the criteria of assets under management, we did not identify any publicly available salary ranges for members of investment committees based on this value. However, we determined that the average value of assets under management for family offices globally is $759 million. As a result of this finding, we have assumed that the average salary values we did locate for family offices in the United States and Switzerland are within your specified range for family offices with assets under management of $500 million to $1 billion, as this average falls squarely within your specified guidelines.
Below, we have provided an overview of our findings, as well as more detailed information on salary ranges in the United States and Switzerland for members of family office investment committees. Salaries published in Swiss francs have been converted to United States dollars. We also identified some employment trends that may be of interest to you.
CLASSIFICATions for family offices
Our research indicates that family offices are classified based on a variety of factors. First, one significant distinction is whether the organization is a single-family office, managing the wealth of one family, or a multi-family office, with multiple families as clients. Second, family offices can be further distinguished by the types of services provided; an administrative family office may provide bookkeeping, tax, and administrative services, while a fully-integrated family office provides administrative, tax, legal, investment services. This distinction may be significant, as administrative family offices are more prevalent in Europe than in the United States. Finally, as you are aware, family offices are often classified based on the value of assets under management. The most lucrative family offices might manage assets valued in excess of $1 billion, while a more moderate office would manage assets worth $100 million to $1 billion. Due to overhead costs, our findings indicated that it is not profitable for a family office to manage assets valued below $50 million. Worldwide, it is estimated that there are 10,000 family offices in operation.
structure of investment committees
A family office typically consists of a Chief Executive Officer, Chief Financial Officer, Chief Investment Officer, investment analysts, accountants, controllers, an attorney, and other administrative staff in support roles, all dependent on the aforementioned structure of the individual family office. For family offices with formal investment committees, the Chief Investment Officer reports to the Chief Executive Officer. Personnel working on the investment committee below the executive level are commonly termed investment analysts, and they are sometimes further distinguished as junior or senior analysts.
However, it is also significant to note that many family offices do not have formal investment committees, and the determination of which administrative positions are necessary is a critical consideration. Staffing costs are the largest component of total costs for family offices, and to remain cost-efficient, some family offices do not utilize an investment committee. It is estimated that the average cost of operation for a single-family office is 0.6 percent of assets under management. For the average family office with $759 million assets under management, this yields approximately $45.5 million in administrative operating costs. In some family offices, it is determined that a formal investment committee may not be cost-effective. For example, in one family office, investment decisions are made when the family office matches "each client to their objectives, including their financial objectives, and their risk profile." Consequently, investment decisions are uniquely made for each client, without the use of a formal committee.
salaries in the united states
In the United States, the average salary for a Chief Investment Officer increased 7.7 percent from 2016 to 2017. At the low end of the salary range, a Chief Investment Officer may earn a base salary of $292,000, and at the high end of the spectrum, average salary can be $314,000 per year.
It is critical to note that base salary is a fraction of a Chief Investment Officer's overall compensation package at family offices in the United States. For example, 64 percent of family offices in the United States offer the Chief Investment Officer the opportunity to co-invest alongside the family served, while 68 percent offer a profit-sharing agreement. Approximately 28 percent of family offices in the United States offer real equity in the operating business. Additionally, bonuses are a substantial source of compensation. In the United States, the average bonus for a Chief Investment Officer is 50 percent of base salary. Our findings revealed that at the c-suite level in the United States, bonuses are formula-based and often linked to performance. Although some research obtained on this specific aspect of compensation was published outside the time frame of a typical Wonder request, subsequent literature published confirms that bonuses for Chief Investment Officers continue to be linked closely with investment decisions that enhance organizational wealth.
For investment analysts, salary ranges are more straightforward. A review of salary databases for family office investment analysts yields a salary low of $81,723 per year to a high of $116,051 annually, although this figures may vary depending on location of the office within the United States. The average salary for an investment analyst at a family office in the United States is $103,031 per year. A review of available investment analyst positions in the United States suggests that unlike c-suite executives, investment analyst salaries are linked to experience, with the distinction of a "junior" or "senior" analyst being made at some companies.
salaries in Switzerland
Salary information is more difficult to acquire for family offices in Switzerland, and it is noted that Switzerland is renowned for "its emphasis on trust, privacy and security for its private banking clients." In fact, it is difficult even to determine the total number of family offices operating in Switzerland; while 33 single-family offices and 38 multi-family offices were identified by name, it is conservatively estimated that there are 100 total family offices operating in Switzerland in 2017.
Our findings revealed that salaries for Chief Investment Officers are slightly lower in Switzerland than the United States, at $267,000. Similarly, total compensation for Chief Investment Officers in Switzerland includes bonuses, which average 44 percent of total salary, with similar incentives, such as co-investment alongside the family. Profit-sharing agreements are more common in Europe than the United States, and although we could not further distinguish the percentage of family offices offering profit-sharing agreements in Switzerland specifically, it was noted that 69 percent of European family offices provide this perk to c-suite executives. It is also relevant that the distinction of being a single-family versus a multi-family office can determine the base salary of a Chief Investment Officer in Switzerland. While a Chief Investment Officer at a single-family office may earn between $405,740 and $507,175, the salary of a counterpart at a multi-family office may range from $101,453 to $253,587. However, while these figures provided the most meaningful quantitative data on this topic, it is noted that these figures were published outside the typical time frame of a Wonder request, which limits findings to the previous two years.
While this information may be somewhat outdated, we also identified some key employment trends regarding compensation for Chief Financial Officers in Switzerland. First, in many single-family offices, the Chief Executive Officer often occupies the Chief Investment Officer position, and in some offices, investment positions are outsourced entirely. Second, family offices managing "new wealth" in Switzerland offer more lucrative salaries to Chief Investment Officers that those managing "old money families." Third, family offices managing wealth that originated from the financial sector offer higher salaries to Chief Investment Officers. Finally, bonuses are frequently dependent on a "rate of return spread over several years," and "clawback" options are common. Unfortunately, we were not able to locate any reliable, current information regarding salary ranges for additional members of investment committees, such as investment analysts.
CONCLUSION
In summary, a Chief Investment Officer may earn a base salary of $292,000 to $314,000 in the United States, while family office investment analysts may earn between $81,723 and $116,051 annually, with an average salary of $103,031 per year. Analyst salaries are more dependent on experience, while c-suite positions are dependent on performance. In Switzerland, the average salary for a Chief Investment Officer is $267,000, although a substantial range of $101,453 to $507,175 was reported.