Inside the Mind of the Family Office Leader

Family offices operate in times of heightened complexity – growing multigenerational families, nascent younger investors, and shifting socioeconomic dynamics, as well as technology innovations alongside cyber risks and potential regulatory pressures – and the landscape is rapidly evolving.

As a result, family offices must have forward-thinking leaders willing to professionalize the office, upgrade the executive team, instill a culture of stewardship, and ensure the highest degree of sophistication to serve diverse stakeholders.

At Russell Reynolds Associates, we’ve observed the family office’s changing talent needs firsthand, which prompted us to deepen our understanding of the family office leader. We set out to learn the shared attributes, behaviors, and characteristics that lead to success in this role, so as to better identify, assess, and develop the family office leader of the future – and to help families better understand the leaders who are so crucial to their operations.

Our research approach was twofold. First, we analyzed the Hogan psychometric test scores of over 30 family office leaders, with a focus on common personality traits and values. Next, we conducted over a dozen interviews with family office leaders across the US, uncovering insights that provided additional context around our identified Hogan psychometric trends. Via these combined efforts, we learned that:

• Family office leaders bring a quiet confidence to drive successful outcomes with adaptability, composure, and grace
• Four key behavioral characteristics define the family office leader
• Compared to financial services CEOs, family office leaders tend to be more direct, pragmatic, measured, and risk conscious in their leadership

Family office leaders bring a quiet confidence to drive successful outcomes with adaptability, composure, and grace

Since the establishment of the first family offices in the 19th century, there are now an estimated 8,030 single family offices globally, with over $5 trillion in total estimated wealth with expected growth to $9.5 trillion by 2030. Despite unprecedented change, the one constant has been the invaluable role of family office and family enterprise leadership.

Today, family office leaders must manage myriad responsibilities. As family wealth skyrockets, the question of what – or rather, who – drives the strategic agenda is now central to that discussion. This is further complicated by family office’s unique circumstances and risk factors (see Figure 1):

Figure 1: Circumstances and risk factors impacting family office leadership

_{Source: Russell Reynolds Associates interviews. N = 14 family office leaders. Data collected and analyzed in H2 2024.}

While most leaders would be daunted by the idiosyncratic nature of the family office landscape, family office leaders tend to bring:

• A quiet confidence that drives successful outcomes even in the most challenging circumstances
• Adaptability, composure, and grace across numerous forces
• Distinguished gravitas that inspires confidence when dealing with generational differences, investment and estate planning issues, and day-to-day office operations, among other challenges

By aligning their values to serve a unified mission, family office leaders can effectively drive a vision of success for the whole family.

Four key behavioral characteristics define the family office leader

After analyzing the Hogan psychometric test scores of 34 family office executives and including the insights from more than a dozen interviews, we uncovered four key behavioral characteristics that define the family office leader.

The four key behavioral characteristics that define the family office leader:

• Thoughtful listening and transparent communication
• Prudent and informed decision-making
• Professional, grounded, and humble advisory style
• Resilient and reliable leadership

_{Source: Russell Reynolds Associates interviews. N = 14 family office leaders. Russell Reynolds Associates proprietary analysis of Hogan psychometric data. N = 34 family office leaders. Data collected and analyzed in H2 2024.}

1. Thoughtful listening and transparent communication

Family office leaders demonstrate a transparent communication style, as indicated by their scores on measures pertaining to social proactivity and interpersonal style. They adeptly lead meetings, balancing listening with a readiness to state their views, and will skillfully address difficult topics. They navigate conversations with a keen sense of timing and an appropriate degree of urgency, leading others to conclusions via a thoughtful set of questions as opposed to telling them the answers. While these leaders are prepared to assert their views, they are also mindful and considerate of the impact their actions will have, ensuring their stakeholders feel heard and understood.

2. Prudent and informed decision-making

Family office leaders show a prudent and informed decision-making style through their scores on measures of learning style, process-orientation, and curiosity. They are diligent learners who stay on top of trends in their space, invest in their and their team’s professional development, and stay highly attuned to new information concerning their clients. Their strong learning inclination is complemented by a methodical decision-making approach. These leaders will think before they act, minimizing unnecessary risks and increasing their propensity to make high quality decisions. They are thoughtful stewards of the family’s resources, as noted by their scores on a commercial orientation measure.

3. Professional, grounded, and humble advisory style

Family office leaders demonstrate a professional and humble advisory style, as indicated by their scores on measures pertaining to composure, consistency, visibility, and pleasure-seeking. They will remain calm and consistent in the face of changing circumstances, staying on task even when challenged or provoked. They voluntarily share credit with others and find comfort when leading quietly from behind, fostering buy-in – even from unorthodox or obstinate stakeholders. Their understated confidence and dependable approach to challenges strengthens their credibility, garnering the trust and acceptance of their clients and team.

4. Resilient and reliable leadership

Family office leaders model a resilient leadership style through their scores on measures of drive and energy, resilience, and conscientiousness. They are hardworking leaders who will earn the followship of others through their commitment and drive. They model a steadfast and resilient approach to challenges, bringing others together during difficult times and motivating their teams to continue pressing forward. And when facing adversity, they are relentlessly reliable in following through on their commitments.

Each of these behavioral characteristics represent shared tendencies and keys to success as a leader in the family office setting. Through these interviews, we uncovered how some of their common personality traits and values enable these leaders to meet the unique challenges they consistently face in a family office setting. For those who aspire to get to this position or for organizations looking to identify and/or select leaders who can be successful, these four behavioral characteristics provide a blueprint for consideration.

Compared to financial services CEOs, family office leaders tend to be more direct, pragmatic, measured, and risk conscious in their leadership

To further our understanding of family office leaders, we then compared these Hogan scores to the broader Hogan database of financial services CEOs. Our results found six statistically significant differences between the two datasets (see Figure 2):

Figure 2: Differences between family office leaders and financial services CEOs

_{Source: Russell Reynolds Associates proprietary analysis of Hogan psychometric data. N = 34 FO leaders relative to FS CEO database.}

These differences correlate to the following tendencies (see Figure 3):

Figure 3: Tendencies of family office leaders and financial services CEOs

The overall takeaway: family office leaders are generally more direct in their leadership style compared to their counterparts in financial services. They bring a grounded and measured style that helps them navigate complex and, at times, emotional stakeholder dynamics. Adept at managing risks, they broker solutions with a healthy degree of pragmatism and consideration. For family office leaders who want to expand their networks and public visibility, they have an opportunity to be more active in social engagements.

The future of family office leadership

With the demand for family office leaders on the rise, our research reveals the critical capabilities to look out for when identifying, selecting, and developing leaders for these complex and nuanced roles. These four key characteristics create the foundation for leaders to be stewards of the family’s resources, while shepherding the organization alongside the family’s strategic needs and vision.

1. Thoughtful listening and transparent communication
   
2. Prudent and informed decision-making
   
3. Professional, grounded, and humble advisory style
   
4. Resilient and reliable leadership

The modern era continues to challenge family offices, making it critical to ensure the highest degree of leadership sophistication and nuance. The demands on these leaders will only continue to rise, testing their ability to navigate ever-increasing complexity. While there is no silver bullet for leadership, our research has clearly identified standout characteristics that enable family office leaders to succeed in this unique context.

Authors

Jeff Warren leads Russell Reynolds Associates’ Family Office Practice. He is based in Los Angeles.
Sean Dineen is a senior member of Russell Reynolds Associates’ Leadership Advisory group. He is based in Boston.
James Baek is a member of Russell Reynolds Associates’ Financial Services Knowledge team. He is based in New York.
Jerry Doaty is a member of Russell Reynolds Associates’ Leadership Advisory group. He is based in New York.
Randy Octuck is a member of Russell Reynolds Associates’ Leadership Advisory Knowledge team. He is based in San Francisco.