Morgan Stanley Family Office Compensation

Morgan Stanley Family Office Compensation

BENCHMARKING REPORT

Prepared by Botoff Consulting, LLC on behalf of Morgan Stanley

MORGAN STANLEY FAMILY OFFICE COMPENSATION

Foreword

Morgan Stanley's Single Family Office Advisory, part of the Signature Access platform within Family Office Resources, was established to provide unique, customized resources to single family offices as well as families who are considering establishing one. As staffing decisions are among the most important ones that the owners of a single family office will make--and staff compensation the greatest ongoing expense--we decided to offer an in-depth study on family office salaries and incentive compensation. To that end, we are pleased to present this report on family office compensation, developed in partnership with Botoff Consulting. Our hope is that the benchmarks it provides will help inform your decisions about compensation levels for your staff. We want to thank all who participated in this important study, and express our appreciation to Botoff for their input and analysis. We hope you will find it useful.

Sincerely,

David Bokman Managing Director Head of Family Office Resources Morgan Stanley

Valerie Wong Fountain, CFA? Managing Director, Head of Signature Access Family Office Resources Morgan Stanley

Reliable data resources are a critical tool used across industries to help guide compensation decisions. Botoff Consulting addresses the limited amount of family office compensation data sources by leading a number of family office compensation studies. In capturing market trends and best practices, we are able to provide our clients with the highest level of service and exercise a distinctive, competitive consulting process.

We are pleased to share with you a copy of the Morgan Stanley Family Office Compensation Benchmarking Report. In partnering with Morgan Stanley, we hope to provide a majority of family offices with valuable compensation data and best practices that are essential to the family office market.

Botoff Consulting is committed to providing and developing meaningful resources to help guide compensation practices for family offices and enterprises. Deriving our own proprietary data continues to be a primary goal in consulting with family offices on executive compensation.

We hope you find this information relevant and of interest.

Sincerely,

Trish Botoff Managing Principal and Founder Botoff Consulting

MORGAN STANLEY PRIVATE WEALTH MANAGEMENT | 2019

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MORGAN STANLEY FAMILY OFFICE COMPENSATION

About the Report

Morgan Stanley partnered with Botoff Consulting to provide a compensation benchmarking study for our clients, along with trends impacting compensation in family offices.

? Data is presented for an array of positions commonly found in family offices ? The study presents a composite of market data from a variety of data sources

reflecting family office and general industry roles ? Data was aged to January 1, 2019 (aging of market data

to a common date is a standard practice)

Data Sources

Data was developed using a compilation of research that Botoff Consulting conducted with Fidelity Family Office Services, Mack International and McNally Capital, as well as other proprietary databases. Specific studies referenced in this report include:

? 2017?2018 Single Family Office Investment Team Compensation Survey; conducted with McNally Capital and Mack International

? 2017?2018 Single Family Office Executive Compensation Survey; conducted with Fidelity Family Office Services

? 2017 Family Office Compensation Trends Survey; conducted with Fidelity Family Office Services

The sponsors of this survey retain all intellectual property rights. Unauthorized use, duplication, or distribution without prior written permission is prohibited.

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MORGAN STANLEY FAMILY OFFICE COMPENSATION

Table of Contents

Trends Impacting Compensation 6 Compensation Overview 8 Drivers 9 Components 10 Geographic Considerations 11 Market Trends12 Salary Increases13 Annual Incentives 14 Long-Term Incentives15 Market Data Analysis 20 Position and Level Descriptions 23 Market Data 26

INCLUDED POSITIONS Chief Executive Officer Chief Investment Officer Portfolio Manager Investment Analyst Chief Financial Officer Controller Tax Manager Accountant Bookkeeper General Counsel Chief Operating Officer Executive Assistant House/Property Manager

Key Observations

? 87% of family offices review and adjust compensation on an annual basis

? Over the past two years, almost all participating family offices have provided salary increases

? Nearly 40% of family offices report salary increases between 4% and 10% or more, which outpaces the national average of 3%

? As family office AUM increases, family offices typically will transition from having family members serve in executive roles to employing nonfamily members

? Compensation for executives is directly correlated with AUM, especially from a total direct compensation perspective

? 84% of participating family offices report awarding bonuses last year, up from 80% the previous year

? The use of formalized annual incentive plans is a growing trend, however, a majority of family offices still award discretionary bonuses, creating a gap with best practices

? More than half of the family offices reported the use of long-term incentives for their executives, increasing to nearly two-thirds for investmentfocused family offices

? Overall, co-investment opportunity and deferred bonus/incentive compensation are the most prominent vehicles used for long-term incentive plans

? New York City and San Francisco continue to lead the country in cities that command a geographic premium for compensation

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