Winning the Talent War: What the Data Says About Family Office Compensation in 2026

On May 6, Katten hosted its annual program, "Family Office Compensation and Talent: 2026 Trends and Planning," bringing together leaders from Botoff Consulting, Mack International and Katten's own Family Offices and Employee Benefits and Executive Compensation practices. The insights below emerged from recent market surveys and experience from the presenters and questions raised during the session, laying out key takeaways and what they mean for family offices heading into the second half of 2026.

What the data tells us

Trish Botoff, founder and managing partner of Botoff Consulting, opened the program with highlights from her firm's 2025 flagship compensation survey, the most expansive proprietary dataset focused on family offices, family investment firms and private trust companies. The survey indicated that the total direct compensation for both executives and staff has increased meaningfully year-over-year and that the vast majority of family offices continue to offer annual incentive compensation, with a growing shift away from discretionary bonuses to more structured annual incentive plans leveraging individual performance, organizational performance and investment performance metrics, in that order. This ranking matters: the most sophisticated offices are incorporating more performance metrics than just portfolio returns as the sole measure of value. Long-term incentive plans continue to gain prevalence, with deferred incentive compensation remaining the most common vehicle, followed by co-investment and carried interest plans, both of which are more highly utilized by investment-focused family offices. Compensation correlates strongly with size, scope, complexity and assets under management (AUM), meaning benchmarking against a generic "family office" average is likely to be misrepresentative. If your family office has not revisited its pay structures recently, you may already be behind the market.

The supply of talent versus demand

On the talent side, Brian Adams, president of Mack International LLC, described a "huge overall uptick in activity," driven by de novo family office creation and a wave of succession demands as leaders from the baby boomer era step back. Supply of experienced talent is not keeping pace with demand. Chief Financial Officer (CFO) roles are currently the most sought-after positions to fill — strategic, tax-oriented professionals with estate-planning experience are exceptionally difficult to source — and more of these executives are gaining access to long-term incentive (LTI) programs historically reserved for the Chief Executive Officer (CEO) and investment team. If your office has not extended such programs to your CFO, it is worth asking whether the omission is creating retention risk. Adams also noted that there is a large accounting talent shortage, which family offices need to plan around: more than a third of offices participating in Botoff’s 2026 Compensation and Talent Planning Survey reported recruiting challenges in the past year, with larger offices reporting even greater difficulty. Family offices that lack a clear, competitive value proposition to targeted candidates increasingly struggle to attract the professionals they need.

One of the liveliest discussions centered on a simple audience question: after a liquidity event, who should your first hire be? Hunter Guice, partner at Botoff Consulting, recommended a family office leader or CFO. Adams suggested patience, noting that bringing over a trusted advisor from the former operating company often leads to dysfunction within a couple of years because of the gap between running a business and serving as a professional manager to a principal. He also recommended hiring a strong CFO or general counsel to put the "scaffolding" in place before pursuing investment hires, since a strategic CFO can deliver cost and tax savings that substantially exceed what investment professionals produce in basis points over a benchmark. An audience member added a nuance for larger offices: avoid hiring the CIO first, because that person will become accustomed to reporting directly to the family, creating friction if a CEO is later brought in above them. Botoff reinforced this point, emphasizing the importance of defining a compensation philosophy before hiring anyone, because unwinding misaligned compensation structures is almost always more expensive than designing them properly at the outset. 

Incentive design for compensation structures

A significant portion of the program focused on family office and incentive design. Katten Transactional Tax Planning Partner and Co-Chair of the firm's Family Office Group, Saul Rudo, walked through the "lender structure,” commonly used by family offices above a certain asset threshold, in which the family's investment partnerships engage a C-corporation family office entity through profits interests arrangements that are intended to fund the family office expenses to effectively allow the family office to deduct expenses without running into tax code limitations. This structure also facilitates granting carried interest or profits interests to executives, and professionals recruited from private equity, hedge funds and real estate are increasingly requesting them due to their favorable tax treatment: no tax at grant, with capital gains income generally flowing through based on the partnership's activity. 

Co-investment generated extensive discussion as well. The panel distinguished co-investment as a benefit (employees investing their own capital) from co-investment as compensation (where leverage or dedicated bonus pools make it a pay component). One emerging practice: dedicating a portion of an annual bonus for co-investment rather than extending loans, which avoids thorny questions around recourse, forgiveness and tax treatment upon separation. Katten Employee Benefits and Executive Compensation Partner, Meredith Sheldon O'Leary, noted that structuring co-investment loans to be non-compensatory requires careful attention to recourse, interest rates and security. When asked whether teams should be allowed to cherry-pick individual opportunities, the panel unanimously agreed that they should not be able to, as it creates misaligned incentives and undermines fiduciary posture. Vintage-year commitments were the recommended approach. 

Adams offered a compelling observation about how the "DNA" of the originating business shapes compensation philosophy: a principal from a tight-margin business will carry that orientation into the family office, while a principal from a private equity or investment background will be immediately comfortable with carry and co-investment. Over time, practices converge toward the market, and the goal of advisors is not to dictate what to pay, but to ensure decisions are made with full awareness of what the market actually looks like. 

Looking ahead 

The era of the "wink and a nod" employment and compensation arrangements is fading, and professionals in demand by family offices, including those from institutional backgrounds and other family offices, now expect transparency, structure and documentation. Families are seeking "unicorn" profiles for senior non-family roles, meaning compensation will continue to rise, and more families will recruit directly from other family offices and professional firms. On capital formation, Botoff observed that "the family office" has bifurcated into distinct iterations, including full-service offices, private investment firms and emerging hybrids, creating a more complex ecosystem that demands more nuanced compensation strategies. 

Since compensation represents the dominant share of family office operating costs, the quality of data informing those decisions matters enormously. Compensation structures should be re-evaluated every two to three years, while incentive plans should be reviewed annually. In this market, those cadences may even need to be accelerated.

Getting It Right

Family offices encountering any of the compensation and talent challenges discussed in this program, whether in connection with structuring LTI plans, navigating generational transitions, benchmarking against the right peer set or building a team from scratch, should consider whether their current frameworks are keeping pace with the rapidly evolving market. For questions on these topics, please contact Katten’s Family Offices and Employee Benefits and Executive Compensation attorneys or Trish Botoff, Hunter Guice or Brian Adams.