When the ultra-rich hire family members for their private investment firms, determining the right compensation can be a complex and sensitive matter. This issue is particularly prominent among smaller family offices, where family members often receive lower salaries compared to market rates. According to Joshua Gentine, a family office consultant and third-generation heir to Sargento Foods, this practice is misguided. He argues that family members should be paid fairly, as they contribute valuable skills and experience to the firm. Gentine highlights the potential for resentment and powerlessness among family members who feel underpaid, as they may struggle to negotiate or seek alternative employment due to loyalty and familial bonds. This dynamic can create a challenging environment for the next generation, who might hesitate to ask for more compensation, fearing rejection or being perceived as greedy. Conversely, those who are overpaid relative to industry standards may feel trapped by 'golden handcuffs', unable to leave even if they desire a change. Disputes over compensation are common, even if they remain hidden, as family businesses often rely on generational expectations and self-made entrepreneurs' benchmarks, which may not align with the current market rate and increased living costs. Family offices, with their less formal compensation structures, can exacerbate these issues, leading to unfair practices such as paying all members of one generation the same amount regardless of their roles. To address these challenges, Kyler Gilbert, a business consultant, suggests involving compensation consultants and establishing committees to mediate conflicts. Trish Botoff, a compensation consultant, emphasizes the importance of millennials and Generation Z taking a more assertive approach, demanding formal compensation plans and written agreements to ensure fair treatment and transparency.
