Today’s job market increases wages for workers in many industries, and domestic workers and property managers are no exception. As the threat to normal life posed by the pandemic diminishes with each passing day, ultra high net worth families (UHNW) are reassessing their lifestyle and service needs. Fortune has risen for many, and these families are willing to spend money to fulfill their desire for exceptional levels of service in their homes. The current hiring market for domestic staff is one of the busiest in two decades, and UHNW individuals with estate staff need to focus on retention or risk losing the staff who keep their estate — and their lives — running smoothly.
Finance professionals working with UHNW families should be aware of staffing and retention best practices and considerations so they can effectively support their clients through any challenges and risks that may arise. The latest from Morgan Stanley Compensation Report for Estate and Household Staff provides benchmark compensation data from approximately 300 participating families/family offices for probate, home and property management, family care, meal preparation, and security positions to help UHNW individuals achieve appropriate salary and benefit levels for internal probate and appoint household staff.
The results show that UHNW families offer 45% of management and 36% of employees raises that are higher than the broader US market. Families that base their salary decisions on a compensation strategy push wages even higher. There is still a clear correlation between pay and the number of employees, length of service, number of properties and number of families. This shows that families with larger holdings and employees – and likely a more formalized pay scale – offer higher compensation.
More than a third of incumbent employees have less than two years’ tenure with their families and 59% have less than five years’ tenure – indicating a high turnover rate. This could be due to the fact that the salaries of employees with shorter tenure (0-2 years) are higher than the salaries of employees with 3-10 years of tenure, so permanent employees may be at risk of being hired elsewhere .
Customer best practices
So what does this mean for customers? Although employers around the world feel pressure to retain top talent, due to the personal and confidential nature of the services, UHNW families may need to prioritize bonding more than other organizations. There is a greater need for rigorous recruiting and hiring practices to avoid attrition and ensure the talent they hire and invest resources in stays. Today, families conduct much more thorough investigations, including background checks, psychometric tests, and subject interviews.
While compensation is undoubtedly an important factor in employee retention, the development of defined and consistent HR processes is also crucial for families, including onboarding, benefits and regular performance management, including training and performance reviews. Benefits common to estate and domestic workers include competitive vacation policies, paid sick leave and public holidays, 401(k) plans with matching contributions, and medical insurance.
More specific to the role of these employees, planning is becoming increasingly important: informing employees in advance of days they need to work is becoming increasingly important to show respect for employees’ time. Student loan repayments or education and training opportunities, such as B. Courses that allow employees to continue their education reassure employees that their employer – the family they work for – has an interest in improving their lives and future prospects.
In addition, the report noted an increasing mix of traditional roles with more modern lifestyle demands, such as: B. Personal Assistants to Executives, Real Estate Operations Managers, Personal Assistants to Family and more. This hybridization can help positions cover a wide range of needs with fewer staff, giving them higher salaries and room for growth. It also gives families the ability to justify full-time hiring versus part-time, shared, or outsourced agency support.
Ultimately, however, payment is the most important factor in ensuring that your customers’ employees feel valued and rewarded appropriately. Beyond normal pay increases based on seniority, seniority and performance, families may also need to spend more to offset increased living and housing costs, particularly in rural areas that have been particularly hard-hit by past waves of migration due to the pandemic were cities in less dense areas. It is important to consider these factors when making payment decisions.
As wealth management professionals, it is important to help UHNW clients make informed decisions as issues such as compensation impact their broader financial plan. Data is important to show clients what compensation trends are directly impacting their employees, especially in light of ongoing market volatility and a challenging job market. By providing these best practices and guidance, clients will be empowered to make the best decisions to retain the talent that will help them run their businesses successfully.
Valerie Wong Fountain is Managing Director and Head of FOR Platform & Partner Management at Morgan Stanley Private Wealth Management
Morgan Stanley partnered with Botoff Consulting to produce its 2022 Estate and Household Staff Compensation Report.